© 2011 Pearson3 - 13 Project ManagementPowerPoint presentation to accompanyPowerPoint presentation to accompanyHeizer and ...
© 2011 Pearson3 - 2OutlineOutline Global Company Profile: BechtelGroup The Importance of ProjectManagement Project Plan...
© 2011 Pearson3 - 3Outline - ContinuedOutline - Continued Project Controlling Project Management Techniques:PERT and CPM...
© 2011 Pearson3 - 4Outline - ContinuedOutline - Continued Determining the Project Schedule Forward Pass Backward Pass ...
© 2011 Pearson3 - 5Outline - ContinuedOutline - Continued Cost-Time Trade-Offs and ProjectCrashing A Critique of PERT an...
© 2011 Pearson3 - 6Learning ObjectivesLearning Objectives1. Use a Gantt chart for scheduling2. Draw AOA and AON networks3....
© 2011 Pearson3 - 7Learning ObjectivesLearning Objectives5. Calculate the variance ofactivity times6. Crash a projectWhen ...
© 2011 Pearson3 - 8Bechtel ProjectsBechtel Projects Building 26 massive distribution centers in justtwo years for the int...
© 2011 Pearson3 - 9Bechtel ProjectsBechtel Projects Building liquid natural gas plants in Yemen $2billion) and in Trinida...
© 2011 Pearson3 - 10Strategic Importance ofStrategic Importance ofProject ManagementProject Management Bechtel Project Ma...
© 2011 Pearson3 - 11 Single unit Many related activities Difficult production planning andinventory control General pu...
© 2011 Pearson3 - 12Examples of ProjectsExamples of Projects Building Construction Research Project
© 2011 Pearson3 - 13Management of ProjectsManagement of Projects1. Planning - goal setting, defining theproject, team orga...
© 2011 Pearson3 - 14 PlanningObjectivesResourcesWork break-downstructureOrganizationSchedulingProject activitiesSt...
© 2011 Pearson3 - 15Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Befo...
© 2011 Pearson3 - 16Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Befo...
© 2011 Pearson3 - 17Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Befo...
© 2011 Pearson3 - 18Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Befo...
© 2011 Pearson3 - 19Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Befo...
© 2011 Pearson3 - 20 Establishing objectives Defining project Creating workbreakdown structure Determiningresources F...
© 2011 Pearson3 - 21 Often temporary structure Uses specialists from entire company Headed by project manager Coordina...
© 2011 Pearson3 - 22Project OrganizationProject OrganizationWorks Best WhenWorks Best When1. Work can be defined with a sp...
© 2011 Pearson3 - 23A Sample ProjectA Sample ProjectOrganizationOrganizationTestEngineerMechanicalEngineerProject 1 Projec...
© 2011 Pearson3 - 24Matrix OrganizationMatrix OrganizationMarketing Operations Engineering FinanceProject 1Project 2Projec...
© 2011 Pearson3 - 25The Role ofThe Role ofthe Project Managerthe Project ManagerHighly visibleHighly visibleResponsible fo...
© 2011 Pearson3 - 26The Role ofThe Role ofthe Project Managerthe Project ManagerHighly visibleHighly visibleResponsible fo...
© 2011 Pearson3 - 27Ethical IssuesEthical Issues1. Offers of gifts from contractors2. Pressure to alter status reports to ...
© 2011 Pearson3 - 28Work Breakdown StructureWork Breakdown StructureLevel1. Project2. Major tasks in the project3. Subtask...
© 2011 Pearson3 - 29Level 4Compatible withWindows MECompatible withWindows VistaCompatible withWindows XP 1.1.2.31.1.2.21....
© 2011 Pearson3 - 30Project SchedulingProject Scheduling Identifying precedencerelationships Sequencing activities Dete...
© 2011 Pearson3 - 31Purposes of ProjectPurposes of ProjectSchedulingScheduling1. Shows the relationship of each activity t...
© 2011 Pearson3 - 32Scheduling TechniquesScheduling Techniques1. Ensure that all activities are plannedfor2. Their order o...
© 2011 Pearson3 - 33 Gantt chart Critical Path Method(CPM) Program Evaluationand ReviewTechnique (PERT)Project Manageme...
© 2011 Pearson3 - 34A Simple Gantt ChartA Simple Gantt ChartTimeJ F M A M J J A SDesignPrototypeTestReviseProduction
© 2011 Pearson3 - 35Service For a Delta JetService For a Delta JetFigure 3.4PassengersBaggageFuelingCargo and mailGalley s...
© 2011 Pearson3 - 36Project Control ReportsProject Control Reports Detailed cost breakdowns for each task Total program ...
© 2011 Pearson3 - 37 Network techniques Developed in 1950’s CPM by DuPont for chemical plants (1957) PERT by Booz, All...
© 2011 Pearson3 - 38Six Steps PERT & CPMSix Steps PERT & CPM1. Define the project and prepare thework breakdown structure2...
© 2011 Pearson3 - 39Six Steps PERT & CPMSix Steps PERT & CPM4. Assign time and/or cost estimatesto each activity5. Compute...
© 2011 Pearson3 - 401. When will the entire project becompleted?2. What are the critical activities or tasks inthe project...
© 2011 Pearson3 - 415. Is the project on schedule, behindschedule, or ahead of schedule?6. Is the money spent equal to, le...
© 2011 Pearson3 - 42A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network ConventionsActivity o...
© 2011 Pearson3 - 43A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network ConventionsActivity o...
© 2011 Pearson3 - 44A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network ConventionsActivity o...
© 2011 Pearson3 - 45AON ExampleAON ExampleActivity DescriptionImmediatePredecessorsA Build internal components —B Modify r...
© 2011 Pearson3 - 46AON Network forAON Network forMilwaukee PaperMilwaukee PaperAStartBStartActivityActivity A(Build Inter...
© 2011 Pearson3 - 47AON Network forAON Network forMilwaukee PaperMilwaukee PaperFigure 3.7CDAStartBActivity A Precedes Act...
© 2011 Pearson3 - 48AON Network forAON Network forMilwaukee PaperMilwaukee PaperGEFHCAStartDBArrows Show PrecedenceRelatio...
© 2011 Pearson3 - 49H(Inspect/Test)7DummyActivityAOA Network forAOA Network forMilwaukee PaperMilwaukee Paper6F(InstallCon...
© 2011 Pearson3 - 50Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform ...
© 2011 Pearson3 - 51Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform ...
© 2011 Pearson3 - 52Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform ...
© 2011 Pearson3 - 53Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform ...
© 2011 Pearson3 - 54Forward PassForward PassBegin at starting event and work forwardBegin at starting event and work forwa...
© 2011 Pearson3 - 55Forward PassForward PassBegin at starting event and work forwardBegin at starting event and work forwa...
© 2011 Pearson3 - 56ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperStart00ES0EF = ES + Activity time
© 2011 Pearson3 - 57ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperStart000A22EF of A =ES of A + 20ESof A
© 2011 Pearson3 - 58B3ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperStart000A2203EF of B =ES of B + 30ES...
© 2011 Pearson3 - 59C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3Start000A220
© 2011 Pearson3 - 60C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3Start000A220D473= Max (2, 3)
© 2011 Pearson3 - 61D43 7C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3Start000A220
© 2011 Pearson3 - 62E4F3G5H24 8 13 1548 137D43 7C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3...
© 2011 Pearson3 - 63Backward PassBackward PassBegin with the last event and work backwardsBegin with the last event and wo...
© 2011 Pearson3 - 64Backward PassBackward PassBegin with the last event and work backwardsBegin with the last event and wo...
© 2011 Pearson3 - 65LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 137D43 7C22 4B30 3Star...
© 2011 Pearson3 - 66LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 15D43 7C22 4B30 ...
© 2011 Pearson3 - 67LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 1510 138 134 8D4...
© 2011 Pearson3 - 68LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 1510 138 134 8D4...
© 2011 Pearson3 - 69Computing Slack TimeComputing Slack TimeAfter computing the ES, EF, LS, and LF timesfor all activities...
© 2011 Pearson3 - 70Computing Slack TimeComputing Slack TimeTable 3.3Earliest Earliest Latest Latest OnStart Finish Start ...
© 2011 Pearson3 - 71Critical Path forCritical Path forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 1510 138 134...
© 2011 Pearson3 - 72ES – EF Gantt ChartES – EF Gantt Chartfor Milwaukee Paperfor Milwaukee PaperA Build internalcomponents...
© 2011 Pearson3 - 73LS – LF Gantt ChartLS – LF Gantt Chartfor Milwaukee Paperfor Milwaukee PaperA Build internalcomponents...
© 2011 Pearson3 - 74 CPM assumes we know a fixed timeestimate for each activity and thereis no variability in activity ti...
© 2011 Pearson3 - 75 Three time estimates are required Optimistic time (a) – if everythinggoes according to plan Pessim...
© 2011 Pearson3 - 76Estimate follows beta distributionEstimate follows beta distributionVariability in Activity TimesVaria...
© 2011 Pearson3 - 77Estimate follows beta distributionEstimate follows beta distributionVariability in Activity TimesVaria...
© 2011 Pearson3 - 78Computing VarianceComputing VarianceTable 3.4Most ExpectedOptimistic Likely Pessimistic Time VarianceA...
© 2011 Pearson3 - 79Probability of ProjectProbability of ProjectCompletionCompletionProject variance is computed byProject...
© 2011 Pearson3 - 80Probability of ProjectProbability of ProjectCompletionCompletionProject variance is computed byProject...
© 2011 Pearson3 - 81Probability of ProjectProbability of ProjectCompletionCompletionPERT makes two more assumptions:PERT m...
© 2011 Pearson3 - 82Probability of ProjectProbability of ProjectCompletionCompletionStandard deviation = 1.76 weeks15 Week...
© 2011 Pearson3 - 83Probability of ProjectProbability of ProjectCompletionCompletionWhat is the probability this project c...
© 2011 Pearson3 - 84Probability of ProjectProbability of ProjectCompletionCompletionWhat is the probability this project c...
© 2011 Pearson3 - 85Probability of ProjectProbability of ProjectCompletionCompletionTimeProbability(T ≤ 16 weeks)is 71.57%...
© 2011 Pearson3 - 86Determining ProjectDetermining ProjectCompletion TimeCompletion TimeProbabilityof 0.01ZFigure 3.15From...
© 2011 Pearson3 - 87Variability of CompletionVariability of CompletionTime for Noncritical PathsTime for Noncritical Paths...
© 2011 Pearson3 - 88What Project ManagementWhat Project ManagementHas Provided So FarHas Provided So Far1. The project’s e...
© 2011 Pearson3 - 89Trade-Offs and ProjectTrade-Offs and ProjectCrashingCrashing The project is behind schedule The comp...
© 2011 Pearson3 - 90Factors to Consider WhenFactors to Consider WhenCrashing a ProjectCrashing a Project The amount by wh...
© 2011 Pearson3 - 91Steps in Project CrashingSteps in Project Crashing1. Compute the crash cost per time period.If crash c...
© 2011 Pearson3 - 92Steps in Project CrashingSteps in Project Crashing3. If there is only one critical path, thenselect th...
© 2011 Pearson3 - 93Steps in Project CrashingSteps in Project Crashing4. Update all activity times. If the desireddue date...
© 2011 Pearson3 - 94Crashing The ProjectCrashing The ProjectTable 3.5Time (Wks) Cost ($)Crash Cost CriticalActivity Normal...
© 2011 Pearson3 - 95Crash and Normal TimesCrash and Normal Timesand Costs for Activity Band Costs for Activity B| | |1 2 3...
© 2011 Pearson3 - 96Critical Path and Slack TimesCritical Path and Slack Timesfor Milwaukee Paperfor Milwaukee PaperFigure...
© 2011 Pearson3 - 97Advantages of PERT/CPMAdvantages of PERT/CPM1. Especially useful when scheduling andcontrolling large ...
© 2011 Pearson3 - 98Advantages of PERT/CPMAdvantages of PERT/CPM5. Project documentation and graphicspoint out who is resp...
© 2011 Pearson3 - 991. Project activities have to be clearlydefined, independent, and stable in theirrelationships2. Prece...
© 2011 Pearson3 - 100Project Management SoftwareProject Management Software There are several popular packagesfor managin...
© 2011 Pearson3 - 101Using Microsoft ProjectUsing Microsoft ProjectProgram 3.1
© 2011 Pearson3 - 102Using Microsoft ProjectUsing Microsoft ProjectProgram 3.2
© 2011 Pearson3 - 103Using Microsoft ProjectUsing Microsoft ProjectProgram 3.3
© 2011 Pearson3 - 104All rights reserved. No part of this publication may be reproduced, stored in a retrievalsystem, or t...
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  1. 1. © 2011 Pearson3 - 13 Project ManagementPowerPoint presentation to accompanyPowerPoint presentation to accompanyHeizer and RenderHeizer and RenderOperations Management, 10eOperations Management, 10ePrinciples of Operations Management, 8ePrinciples of Operations Management, 8ePowerPoint slides by Jeff Heyl
  2. 2. © 2011 Pearson3 - 2OutlineOutline Global Company Profile: BechtelGroup The Importance of ProjectManagement Project Planning The Project Manager Work Breakdown Structure Project Scheduling
  3. 3. © 2011 Pearson3 - 3Outline - ContinuedOutline - Continued Project Controlling Project Management Techniques:PERT and CPM The Framework of PERT and CPM Network Diagrams and Approaches Activity-on-Node Example Activity-on-Arrow Example
  4. 4. © 2011 Pearson3 - 4Outline - ContinuedOutline - Continued Determining the Project Schedule Forward Pass Backward Pass Calculating Slack Time andIdentifying the Critical Path(s) Variability in Activity Times Three Time Estimates in PERT Probability of Project Completion
  5. 5. © 2011 Pearson3 - 5Outline - ContinuedOutline - Continued Cost-Time Trade-Offs and ProjectCrashing A Critique of PERT and CPM Using Microsoft Project to ManageProjects
  6. 6. © 2011 Pearson3 - 6Learning ObjectivesLearning Objectives1. Use a Gantt chart for scheduling2. Draw AOA and AON networks3. Complete forward and backwardpasses for a project4. Determine a critical pathWhen you complete this chapter youWhen you complete this chapter youshould be able to:should be able to:
  7. 7. © 2011 Pearson3 - 7Learning ObjectivesLearning Objectives5. Calculate the variance ofactivity times6. Crash a projectWhen you complete this chapter youWhen you complete this chapter youshould be able to:should be able to:
  8. 8. © 2011 Pearson3 - 8Bechtel ProjectsBechtel Projects Building 26 massive distribution centers in justtwo years for the internet company WebvanGroup ($1 billion) Constructing 30 high-security data centersworldwide for Equinix, Inc. ($1.2 billion) Building and running a rail line between Londonand the Channel Tunnel ($4.6 billion) Developing an oil pipeline from the Caspian Searegion to Russia ($850 million) Expanding the Dubai Airport in the UAE ($600million), and the Miami Airport in Florida ($2billion)
  9. 9. © 2011 Pearson3 - 9Bechtel ProjectsBechtel Projects Building liquid natural gas plants in Yemen $2billion) and in Trinidad, West Indies ($1 billion) Building a new subway for Athens, Greece ($2.6billion) Constructing a natural gas pipeline in Thailand($700 million) Building 30 plants for iMotors.com, a companythat sells refurbished autos online ($300 million) Building a highway to link the north and south ofCroatia ($303 million)
  10. 10. © 2011 Pearson3 - 10Strategic Importance ofStrategic Importance ofProject ManagementProject Management Bechtel Project Management: Iraq war aftermath International workforce, constructionprofessionals, cooks, medical personnel,security Millions of tons of supplies Hard Rock Cafe Rockfest Project: 100,000 + fans planning began 9 months in advance
  11. 11. © 2011 Pearson3 - 11 Single unit Many related activities Difficult production planning andinventory control General purpose equipment High labor skillsProject CharacteristicsProject Characteristics
  12. 12. © 2011 Pearson3 - 12Examples of ProjectsExamples of Projects Building Construction Research Project
  13. 13. © 2011 Pearson3 - 13Management of ProjectsManagement of Projects1. Planning - goal setting, defining theproject, team organization2. Scheduling - relates people, money,and supplies to specific activitiesand activities to each other3. Controlling - monitors resources,costs, quality, and budgets; revisesplans and shifts resources to meettime and cost demands
  14. 14. © 2011 Pearson3 - 14 PlanningObjectivesResourcesWork break-downstructureOrganizationSchedulingProject activitiesStart & end timesNetworkControllingMonitor, compare, revise, actionProject ManagementProject ManagementActivitiesActivities
  15. 15. © 2011 Pearson3 - 15Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Before Start of project Duringproject Timeline project
  16. 16. © 2011 Pearson3 - 16Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Before Start of project Duringproject Timeline project
  17. 17. © 2011 Pearson3 - 17Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Before Start of project Duringproject Timeline project
  18. 18. © 2011 Pearson3 - 18Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Before Start of project Duringproject Timeline project
  19. 19. © 2011 Pearson3 - 19Project Planning,Project Planning,Scheduling, and ControllingScheduling, and ControllingFigure 3.1Before Start of project Duringproject Timeline projectBudgetsDelayed activities reportSlack activities reportTime/cost estimatesBudgetsEngineering diagramsCash flow chartsMaterial availability detailsCPM/PERTGantt chartsMilestone chartsCash flow schedules
  20. 20. © 2011 Pearson3 - 20 Establishing objectives Defining project Creating workbreakdown structure Determiningresources Forming organizationProject PlanningProject Planning
  21. 21. © 2011 Pearson3 - 21 Often temporary structure Uses specialists from entire company Headed by project manager Coordinates activities Monitors scheduleand costs Permanentstructure called‘matrix organization’Project OrganizationProject Organization
  22. 22. © 2011 Pearson3 - 22Project OrganizationProject OrganizationWorks Best WhenWorks Best When1. Work can be defined with a specificgoal and deadline2. The job is unique or somewhatunfamiliar to the existing organization3. The work contains complexinterrelated tasks requiring specializedskills4. The project is temporary but critical tothe organization5. The project cuts across organizationallines
  23. 23. © 2011 Pearson3 - 23A Sample ProjectA Sample ProjectOrganizationOrganizationTestEngineerMechanicalEngineerProject 1 ProjectManagerTechnicianTechnicianProject 2 ProjectManagerElectricalEngineerComputerEngineerMarketing FinanceHumanResources DesignQualityMgtProductionPresidentFigure 3.2
  24. 24. © 2011 Pearson3 - 24Matrix OrganizationMatrix OrganizationMarketing Operations Engineering FinanceProject 1Project 2Project 3Project 4
  25. 25. © 2011 Pearson3 - 25The Role ofThe Role ofthe Project Managerthe Project ManagerHighly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:1. All necessary activities are finished in orderand on time2. The project comes in within budget3. The project meets quality goals4. The people assigned to the project receivemotivation, direction, and information
  26. 26. © 2011 Pearson3 - 26The Role ofThe Role ofthe Project Managerthe Project ManagerHighly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:1. All necessary activities are finished in orderand on time2. The project comes in within budget3. The project meets quality goals4. The people assigned to the project receivemotivation, direction, and informationProject managers should be: Good coaches Good communicators Able to organize activitiesfrom a variety of disciplines
  27. 27. © 2011 Pearson3 - 27Ethical IssuesEthical Issues1. Offers of gifts from contractors2. Pressure to alter status reports to mask delays3. False reports for charges of time and expenses4. Pressure to compromise quality to meetschedules Project managers face many ethicaldecisions on a daily basis The Project Management Institute hasestablished an ethical code to deal withproblems such as:
  28. 28. © 2011 Pearson3 - 28Work Breakdown StructureWork Breakdown StructureLevel1. Project2. Major tasks in the project3. Subtasks in the major tasks4. Activities (or work packages)to be completed
  29. 29. © 2011 Pearson3 - 29Level 4Compatible withWindows MECompatible withWindows VistaCompatible withWindows XP 1.1.2.31.1.2.21.1.2.1(Work packages)Level 3DevelopGUIsPlanningModuleTestingEnsure Compatibilitywith Earlier VersionsCost/ScheduleManagementDefectTesting1.1.11.2.2 1.3.21.3.11.2.11.1.2Work Breakdown StructureWork Breakdown StructureFigure 3.3Level 2SoftwareDesignProjectManagementSystemTesting1.1 1.2 1.3Level 1Develop Windows 7Operating System 1.0
  30. 30. © 2011 Pearson3 - 30Project SchedulingProject Scheduling Identifying precedencerelationships Sequencing activities Determining activitytimes & costs Estimating material &worker requirements Determining criticalactivities
  31. 31. © 2011 Pearson3 - 31Purposes of ProjectPurposes of ProjectSchedulingScheduling1. Shows the relationship of each activity toothers and to the whole project2. Identifies the precedence relationshipsamong activities3. Encourages the setting of realistic timeand cost estimates for each activity4. Helps make better use of people, money,and material resources by identifyingcritical bottlenecks in the project
  32. 32. © 2011 Pearson3 - 32Scheduling TechniquesScheduling Techniques1. Ensure that all activities are plannedfor2. Their order of performance isaccounted for3. The activity time estimates arerecorded4. The overall project time is developed
  33. 33. © 2011 Pearson3 - 33 Gantt chart Critical Path Method(CPM) Program Evaluationand ReviewTechnique (PERT)Project ManagementProject ManagementTechniquesTechniques
  34. 34. © 2011 Pearson3 - 34A Simple Gantt ChartA Simple Gantt ChartTimeJ F M A M J J A SDesignPrototypeTestReviseProduction
  35. 35. © 2011 Pearson3 - 35Service For a Delta JetService For a Delta JetFigure 3.4PassengersBaggageFuelingCargo and mailGalley servicingLavatory servicingDrinking waterCabin cleaningCargo and mailFlight servicesOperating crewBaggagePassengersDeplaningBaggage claimContainer offloadPumpingEngine injection waterContainer offloadMain cabin doorAft cabin doorAft, center, forwardLoadingFirst-class sectionEconomy sectionContainer/bulk loadingGalley/cabin checkReceive passengersAircraft checkLoadingBoarding0 10 20 30 40Time, Minutes
  36. 36. © 2011 Pearson3 - 36Project Control ReportsProject 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
  37. 37. © 2011 Pearson3 - 37 Network techniques Developed in 1950’s CPM by DuPont for chemical plants (1957) PERT by Booz, Allen & Hamilton with theU.S. Navy, for Polaris missile (1958) Consider precedence relationships andinterdependencies Each uses a different estimate ofactivity timesPERT and CPMPERT and CPM
  38. 38. © 2011 Pearson3 - 38Six Steps PERT & CPMSix Steps PERT & CPM1. Define the project and prepare thework breakdown structure2. Develop relationships among theactivities - decide which activitiesmust precede and which mustfollow others3. Draw the network connecting all ofthe activities
  39. 39. © 2011 Pearson3 - 39Six Steps PERT & CPMSix Steps PERT & CPM4. Assign time and/or cost estimatesto each activity5. Compute the longest time paththrough the network – this is calledthe critical path6. Use the network to help plan,schedule, monitor, and control theproject
  40. 40. © 2011 Pearson3 - 401. When will the entire project becompleted?2. What are the critical activities or tasks inthe project?3. Which are the noncritical activities?4. What is the probability the project will becompleted by a specific date?Questions PERT & CPMQuestions PERT & CPMCan AnswerCan Answer
  41. 41. © 2011 Pearson3 - 415. Is the project on schedule, behindschedule, or ahead of schedule?6. Is the money spent equal to, less than, orgreater than the budget?7. Are there enough resources available tofinish the project on time?8. If the project must be finished in a shortertime, what is the way to accomplish thisat least cost?Questions PERT & CPMQuestions PERT & CPMCan AnswerCan Answer
  42. 42. © 2011 Pearson3 - 42A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)A comes beforeB, which comesbefore C.(a) A B CBA CA and B must bothbe completedbefore C can start.(b)ACCBABB and C cannotbegin until A iscompleted.(c)BACABCFigure 3.5
  43. 43. © 2011 Pearson3 - 43A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)C and D cannotbegin until bothA and B arecompleted.(d)ABCD BA CDC cannot beginuntil both A and Bare completed; Dcannot begin untilB is completed. Adummy activity isintroduced in AOA.(e)CAB DDummy activityABCDFigure 3.5
  44. 44. © 2011 Pearson3 - 44A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)B and C cannotbegin until A iscompleted. Dcannot beginuntil both B andC are completed.A dummyactivity is againintroduced inAOA.(f)ACDB A BCDDummyactivityFigure 3.5
  45. 45. © 2011 Pearson3 - 45AON ExampleAON ExampleActivity DescriptionImmediatePredecessorsA Build internal components —B Modify roof and floor —C Construct collection stack AD Pour concrete and install frame A, BE Build high-temperature burner CF Install pollution control system CG Install air pollution device D, EH Inspect and test F, GMilwaukee Paper ManufacturingsMilwaukee Paper ManufacturingsActivities and PredecessorsActivities and PredecessorsTable 3.1
  46. 46. © 2011 Pearson3 - 46AON Network forAON Network forMilwaukee PaperMilwaukee PaperAStartBStartActivityActivity A(Build Internal Components)Activity B(Modify Roof and Floor)Figure 3.6
  47. 47. © 2011 Pearson3 - 47AON Network forAON Network forMilwaukee PaperMilwaukee PaperFigure 3.7CDAStartBActivity A Precedes Activity CActivities A and BPrecede Activity D
  48. 48. © 2011 Pearson3 - 48AON Network forAON Network forMilwaukee PaperMilwaukee PaperGEFHCAStartDBArrows Show PrecedenceRelationships Figure 3.8
  49. 49. © 2011 Pearson3 - 49H(Inspect/Test)7DummyActivityAOA Network forAOA Network forMilwaukee PaperMilwaukee Paper6F(InstallControls)E(BuildBurner)G(InstallPollutionDevice)5D(PourConcrete/Install Frame)4C(ConstructStack)132B(ModifyRoof/Floor)A(BuildInternalComponents)Figure 3.9
  50. 50. © 2011 Pearson3 - 50Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform a Critical Path Analysis The critical path is the longest paththrough the network The critical path is the shortest time inwhich the project can be completed Any delay in critical path activitiesdelays the project Critical path activities have no slacktime
  51. 51. © 2011 Pearson3 - 51Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform a Critical Path AnalysisTable 3.2Activity Description Time (weeks)A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2Total Time (weeks) 25
  52. 52. © 2011 Pearson3 - 52Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform a Critical Path AnalysisTable 3.2Activity Description Time (weeks)A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2Total Time (weeks) 25Earliest start (ES) = earliest time atwhich an activity can start, assumingall predecessors have been completedEarliest finish (EF) = earliest time atwhich an activity can be finishedLatest start (LS) = latest time atwhich an activity can start so as to notdelay the completion time of the entireprojectLatest finish (LF) = latest time bywhich an activity has to be finished soas to not delay the completion time ofthe entire project
  53. 53. © 2011 Pearson3 - 53Determining the ProjectDetermining the ProjectScheduleSchedulePerform a Critical Path AnalysisPerform a Critical Path AnalysisFigure 3.10AActivity Nameor SymbolEarliestStartESEarliestFinishEFLatestStartLS LatestFinishLFActivity Duration2
  54. 54. © 2011 Pearson3 - 54Forward PassForward PassBegin at starting event and work forwardBegin at starting event and work forwardEarliest Start Time Rule: If an activity has only a single immediatepredecessor, its ES equals the EF of thepredecessor If an activity has multiple immediatepredecessors, its ES is the maximum ofall the EF values of its predecessorsES = Max {EF of all immediate predecessors}
  55. 55. © 2011 Pearson3 - 55Forward PassForward PassBegin at starting event and work forwardBegin at starting event and work forwardEarliest Finish Time Rule: The earliest finish time (EF) of an activityis the sum of its earliest start time (ES)and its activity timeEF = ES + Activity time
  56. 56. © 2011 Pearson3 - 56ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperStart00ES0EF = ES + Activity time
  57. 57. © 2011 Pearson3 - 57ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperStart000A22EF of A =ES of A + 20ESof A
  58. 58. © 2011 Pearson3 - 58B3ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperStart000A2203EF of B =ES of B + 30ESof B
  59. 59. © 2011 Pearson3 - 59C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3Start000A220
  60. 60. © 2011 Pearson3 - 60C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3Start000A220D473= Max (2, 3)
  61. 61. © 2011 Pearson3 - 61D43 7C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3Start000A220
  62. 62. © 2011 Pearson3 - 62E4F3G5H24 8 13 1548 137D43 7C22 4ES/EF Network forES/EF Network forMilwaukee PaperMilwaukee PaperB30 3Start000A220Figure 3.11
  63. 63. © 2011 Pearson3 - 63Backward PassBackward PassBegin with the last event and work backwardsBegin with the last event and work backwardsLatest Finish Time Rule: If an activity is an immediate predecessorfor just a single activity, its LF equals theLS of the activity that immediately followsit If an activity is an immediate predecessorto more than one activity, its LF is theminimum of all LS values of all activitiesthat immediately follow itLF = Min {LS of all immediate following activities}
  64. 64. © 2011 Pearson3 - 64Backward PassBackward PassBegin with the last event and work backwardsBegin with the last event and work backwardsLatest Start Time Rule: The latest start time (LS) of an activity isthe difference of its latest finish time (LF)and its activity timeLS = LF – Activity time
  65. 65. © 2011 Pearson3 - 65LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 137D43 7C22 4B30 3Start000A220LF = EFof Project1513LS = LF – Activity time
  66. 66. © 2011 Pearson3 - 66LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 15D43 7C22 4B30 3Start000A220LF = Min(LS offollowing activity)10 13
  67. 67. © 2011 Pearson3 - 67LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 1510 138 134 8D43 7C22 4B30 3Start000A220LF = Min(4, 10)42
  68. 68. © 2011 Pearson3 - 68LS/LF Times forLS/LF Times forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 1510 138 134 8D43 7C22 4B30 3Start000A2204284204100
  69. 69. © 2011 Pearson3 - 69Computing Slack TimeComputing Slack TimeAfter computing the ES, EF, LS, and LF timesfor all activities, compute the slack or freetime for each activity Slack is the length of time an activity canbe delayed without delaying the entireprojectSlack = LS – ES or Slack = LF – EF
  70. 70. © 2011 Pearson3 - 70Computing Slack TimeComputing Slack TimeTable 3.3Earliest Earliest Latest Latest OnStart Finish Start Finish Slack CriticalActivity ES EF LS LF LS – ES PathA 0 2 0 2 0 YesB 0 3 1 4 1 NoC 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesF 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes
  71. 71. © 2011 Pearson3 - 71Critical Path forCritical Path forMilwaukee PaperMilwaukee PaperE4F3G5H24 8 13 1548 13713 1510 138 134 8D43 7C22 4B30 3Start000A2204284204100
  72. 72. © 2011 Pearson3 - 72ES – EF Gantt ChartES – EF Gantt Chartfor Milwaukee Paperfor Milwaukee PaperA Build internalcomponentsB Modify roof and floorC Construct collectionstackD Pour concrete andinstall frameE Build high-temperature burnerF Install pollutioncontrol systemG Install air pollutiondeviceH Inspect and test1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
  73. 73. © 2011 Pearson3 - 73LS – LF Gantt ChartLS – LF Gantt Chartfor Milwaukee Paperfor Milwaukee PaperA Build internalcomponentsB Modify roof and floorC Construct collectionstackD Pour concrete andinstall frameE Build high-temperature burnerF Install pollutioncontrol systemG Install air pollutiondeviceH Inspect and test1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
  74. 74. © 2011 Pearson3 - 74 CPM assumes we know a fixed timeestimate for each activity and thereis no variability in activity times PERT uses a probability distributionfor activity times to allow forvariabilityVariability in Activity TimesVariability in Activity Times
  75. 75. © 2011 Pearson3 - 75 Three time estimates are required Optimistic time (a) – if everythinggoes according to plan Pessimistic time (b) – assuming veryunfavorable conditions Most likely time (m) – most realisticestimateVariability in Activity TimesVariability in Activity Times
  76. 76. © 2011 Pearson3 - 76Estimate follows beta distributionEstimate follows beta distributionVariability in Activity TimesVariability in Activity TimesExpected time:Variance of times:t = (a + 4m + b)/6v = [(b – a)/6]2
  77. 77. © 2011 Pearson3 - 77Estimate follows beta distributionEstimate follows beta distributionVariability in Activity TimesVariability in Activity TimesExpected time:Expected time:Variance of times:Variance of times:t =t = ((a +a + 44mm ++ bb)/6)/6v =v = [([(bb −− aa)/6]2)/6]2Probabilityof 1 in 100 of> b occurringProbability of1 in 100 of< a occurringProbabilityOptimisticTime (a)Most LikelyTime (m)PessimisticTime (b)ActivityTimeFigure 3.12
  78. 78. © 2011 Pearson3 - 78Computing VarianceComputing VarianceTable 3.4Most ExpectedOptimistic Likely Pessimistic Time VarianceActivity a m b t = (a + 4m + b)/6 [(b – a)/6]2A 1 2 3 2 .11B 2 3 4 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11
  79. 79. © 2011 Pearson3 - 79Probability of ProjectProbability of ProjectCompletionCompletionProject variance is computed byProject variance is computed bysumming the variances of criticalsumming the variances of criticalactivitiesactivitiesσ2= Project variance= ∑(variances of activitieson critical path)p
  80. 80. © 2011 Pearson3 - 80Probability of ProjectProbability of ProjectCompletionCompletionProject variance is computed byProject variance is computed bysumming the variances of criticalsumming the variances of criticalactivitiesactivitiesProject varianceσ2= .11 + .11 + 1.00 + 1.78 + .11 = 3.11Project standard deviationσp = Project variance= 3.11 = 1.76 weeksp
  81. 81. © 2011 Pearson3 - 81Probability of ProjectProbability of ProjectCompletionCompletionPERT makes two more assumptions:PERT makes two more assumptions: Total project completion times follow anormal probability distribution Activity times are statisticallyindependent
  82. 82. © 2011 Pearson3 - 82Probability of ProjectProbability of ProjectCompletionCompletionStandard deviation = 1.76 weeks15 Weeks(Expected Completion Time)Figure 3.13
  83. 83. © 2011 Pearson3 - 83Probability of ProjectProbability of ProjectCompletionCompletionWhat is the probability this project canWhat is the probability this project canbe completed on or before the 16 weekbe completed on or before the 16 weekdeadline?deadline?Z= – /σp= (16 wks – 15 wks)/1.76= 0.57due expected datedate of completionWhere Z is the number ofstandard deviations the duedate or target date lies fromthe mean or expected date
  84. 84. © 2011 Pearson3 - 84Probability of ProjectProbability of ProjectCompletionCompletionWhat is the probability this project canWhat is the probability this project canbe completed on or before the 16 weekbe completed on or before the 16 weekdeadline?deadline?Z= − /σp= (16 wks − 15 wks)/1.76= 0.57due expected datedate of completionWhere Z is the number ofstandard deviations the duedate or target date lies fromthe mean or expected date.00 .01 .07 .08.1 .50000 .50399 .52790 .53188.2 .53983 .54380 .56749 .57142.5 .69146 .69497 .71566 .71904.6 .72575 .72907 .74857 .75175From Appendix I
  85. 85. © 2011 Pearson3 - 85Probability of ProjectProbability of ProjectCompletionCompletionTimeProbability(T ≤ 16 weeks)is 71.57%Figure 3.140.57 Standard deviations15 16Weeks Weeks
  86. 86. © 2011 Pearson3 - 86Determining ProjectDetermining ProjectCompletion TimeCompletion TimeProbabilityof 0.01ZFigure 3.15From Appendix IProbabilityof 0.992.33 Standarddeviations0 2.33
  87. 87. © 2011 Pearson3 - 87Variability of CompletionVariability of CompletionTime for Noncritical PathsTime for Noncritical Paths Variability of times for activitieson noncritical paths must beconsidered when finding theprobability of finishing in aspecified time Variation in noncritical activitymay cause change in critical path
  88. 88. © 2011 Pearson3 - 88What Project ManagementWhat Project ManagementHas Provided So FarHas Provided So Far1. The project’s expected completion timeis 15 weeks2. There is a 71.57% chance the equipmentwill be in place by the 16 week deadline3. Five activities (A, C, E, G, and H) are onthe critical path4. Three activities (B, D, F) are not on thecritical path and have slack time5. A detailed schedule is available
  89. 89. © 2011 Pearson3 - 89Trade-Offs and ProjectTrade-Offs and ProjectCrashingCrashing The project is behind schedule The completion time has beenmoved forwardIt is not uncommon to face theIt is not uncommon to face thefollowing situations:following situations:Shortening the duration of theproject is called project crashing
  90. 90. © 2011 Pearson3 - 90Factors to Consider WhenFactors to Consider WhenCrashing a ProjectCrashing a Project The amount by which an activity iscrashed is, in fact, permissible Taken together, the shortenedactivity durations will enable us tofinish the project by the due date The total cost of crashing is assmall as possible
  91. 91. © 2011 Pearson3 - 91Steps in Project CrashingSteps in Project Crashing1. Compute the crash cost per time period.If crash costs are linear over time:Crash costper period =(Crash cost – Normal cost)(Normal time – Crash time)2. Using current activity times, find thecritical path and identify the criticalactivities
  92. 92. © 2011 Pearson3 - 92Steps in Project CrashingSteps in Project Crashing3. If there is only one critical path, thenselect the activity on this critical paththat (a) can still be crashed, and (b) hasthe smallest crash cost per period. Ifthere is more than one critical path, thenselect one activity from each critical pathsuch that (a) each selected activity canstill be crashed, and (b) the total crashcost of all selected activities is thesmallest. Note that the same activity maybe common to more than one criticalpath.
  93. 93. © 2011 Pearson3 - 93Steps in Project CrashingSteps in Project Crashing4. Update all activity times. If the desireddue date has been reached, stop. If not,return to Step 2.
  94. 94. © 2011 Pearson3 - 94Crashing The ProjectCrashing The ProjectTable 3.5Time (Wks) Cost ($)Crash Cost CriticalActivity Normal Crash Normal Crash Per Wk ($) Path?A 2 1 22,000 22,750 750 YesB 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes
  95. 95. © 2011 Pearson3 - 95Crash and Normal TimesCrash and Normal Timesand Costs for Activity Band Costs for Activity B| | |1 2 3 Time (Weeks)$34,000 —$33,000 —$32,000 —$31,000 —$30,000 ——ActivityCostCrashNormalCrash Time Normal TimeCrashCostNormalCostCrash Cost/Wk =Crash Cost – Normal CostNormal Time – Crash Time=$34,000 – $30,0003 – 1= = $2,000/Wk$4,0002 WksFigure 3.16
  96. 96. © 2011 Pearson3 - 96Critical Path and Slack TimesCritical Path and Slack Timesfor Milwaukee Paperfor Milwaukee PaperFigure 3.17E4F3G5H24 8 13 1548 13713 1510 138 134 8D43 7C22 4B30 3Start000A2204284204100Slack = 1 Slack = 1Slack = 0 Slack = 6Slack = 0Slack = 0Slack = 0Slack = 0
  97. 97. © 2011 Pearson3 - 97Advantages of PERT/CPMAdvantages of PERT/CPM1. Especially useful when scheduling andcontrolling large projects2. Straightforward concept and notmathematically complex3. Graphical networks help highlightrelationships among project activities4. Critical path and slack time analyses helppinpoint activities that need to be closelywatched
  98. 98. © 2011 Pearson3 - 98Advantages of PERT/CPMAdvantages of PERT/CPM5. Project documentation and graphicspoint out who is responsible for variousactivities6. Applicable to a wide variety of projects7. Useful in monitoring not only schedulesbut costs as well
  99. 99. © 2011 Pearson3 - 991. Project activities have to be clearlydefined, independent, and stable in theirrelationships2. Precedence relationships must bespecified and networked together3. Time estimates tend to be subjective andare subject to fudging by managers4. There is an inherent danger of too muchemphasis being placed on the longest, orcritical, pathLimitations of PERT/CPMLimitations of PERT/CPM
  100. 100. © 2011 Pearson3 - 100Project Management SoftwareProject Management Software There are several popular packagesfor managing projects Primavera MacProject Pertmaster VisiSchedule Time Line Microsoft Project
  101. 101. © 2011 Pearson3 - 101Using Microsoft ProjectUsing Microsoft ProjectProgram 3.1
  102. 102. © 2011 Pearson3 - 102Using Microsoft ProjectUsing Microsoft ProjectProgram 3.2
  103. 103. © 2011 Pearson3 - 103Using Microsoft ProjectUsing Microsoft ProjectProgram 3.3
  104. 104. © 2011 Pearson3 - 104All rights reserved. No part of this publication may be reproduced, stored in a retrievalsystem, or transmitted, in any form or by any means, electronic, mechanical, photocopying,recording, or otherwise, without the prior written permission of the publisher.Printed in the United States of America.

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