Project Management

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 Project
What is a project?

◦ A series of related jobs, usually directed

toward some major output
 Project Management

What is project management?

◦ Planning, directing, and controlling
resources (people, equipment,
material) to meet the technical, cost,
and time constraints of the project

Why is project management

important?
Types of Projects

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 Project Structure
Pure Project

• A self-contained team works full-time on the project

Functional Project

• Responsibility for the project lies within one functional area of the firm
• Employees from that area work on the project, usually only part-time

Matrix Project

• A blend of pure and functional project structures – people from

different functional areas work on the project, possibly only part-time

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 Pure Project Structure

Advan •The project manager has full authority

•Team members report to one boss
•Shortened communication lines

tages
•Team pride, motivation, and
commitment are high

•Duplication of resources

Disadva •Organizational goals and policies are

ignored
•Lack of technology transfer
ntages •Team members have no functional area
"home"

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 Functional Project
Structure
Advanta •A team member can work on several projects
•Technical expertise maintained in functional area
•Functional area is “home” after project completed

ges •Critical mass of specialized knowledge

Disadvan •Aspects of the project that are not directly related to

the functional area get short-changed
•Motivation of team members is often weak

tages
•Needs of the client are secondary and are responded to
slowly

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 Matrix Project Structure
• Better communications between functional

Advantag •
areas
Project manager held responsible for success
• Duplication of resources is minimized
es •
•
Functional “home” for team members
Policies of the parent organization are followed

Disadvant •
•
Too many bosses
Depends on project manager’s negotiating skills

ages • Potential for sub-optimization

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Management of Projects
1. Planning - goal setting, defining the
project, team organization
2. Scheduling - relate people, money, and
supplies to specific activities and activities
to each other
3. Controlling - monitor resources, costs,
quality, and budgets; revise plans and shift
resources to meet time and cost demands
Project Planning, Scheduling,
and Controlling
Project Planning, Scheduling, and
Controlling
Project Planning, Scheduling, and
Controlling
 The Role of the Project Manager

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
 Work Breakdown Structure
◦Definesthe hierarchy of project tasks,
subtasks, and work packages

Level

1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or “work packages”) to be
completed
Work Breakdown Structure
 Project Scheduling
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
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
Project Scheduling Techniques
• Gantt chart
• Critical Path Method (CPM)
• Program Evaluation and Review Technique (P
ERT)
A Gantt Chart

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 Service for a Delta Jet
Gantt Chart of Service Activities for a Delta Jet during a 40-
Minute Layover
 PERT and CPM
• Network techniques
• Consider precedence relationships and
interdependencies

Critical Path Method (CPM)

◦ Deterministic task times
◦ Activity-on-node network construction

Project Evaluation and Review

Technique (PERT)
◦ Probabilistic task time estimates
◦ Activity-on-arrow network construction
Six Steps PERT and 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 (project network)
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,
A Comparison of AON and AOA
Network Conventions
A Comparison of AON and AOA
Network Conventions
A Comparison of AON and AOA
Network Conventions
A Comparison of AON and AOA
Network Conventions
 Dummy Activities

◦ two or more activities cannot share same start

and end nodes
◦ add dummy activity to show correct precedence
 AON Example
Milwaukee Paper Manufacturing’s Activities and
Predecessors
Immediate
Activity Description Predecessors
A Build internal components —
B Modify roof and floor —
C Construct collection stack A
D Pour concrete and install A, B
frame
E Build high-temperature C
burner
F Install pollution control C
system
G Install air pollution device D, E
H Inspect and test F, G
AON Network for Milwaukee Paper

Complete AON Network for Milwaukee Paper

AOA Network for Milwaukee Paper
Complete AOA Network (with Dummy Activity) for Milwaukee
Paper
Determining the Project Schedule
Perform a Critical Path Analysis
 The critical path is the longest path through
the network
• The critical path is the shortest time in which
the project can be completed
• Any delay in critical path activities delays
the project
• Critical path activities have no slack time
Determining the Project Schedule
Time Estimates for Milwaukee Paper Manufacturing

Activity Description Time (Weeks)

A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install 4
frame
E Build high-temperature 4
burner
F Install pollution control 3
system
G Install air pollution device 5
H Inspect and test 2
Blank Total time (weeks) 25
Determining the Project Schedule
Determining the Project Schedule
Perform a Critical Path Analysis

Earliest start (ES) = earliest time at which an

activity can start, assuming all predecessors have
been completed
Earliest finish (EF) = earliest time at which an
activity can be finished
Latest start (LS) = latest time at which an
activity can start so as to not delay the completion
time of the entire project
Latest finish (LF) = latest time by which an
activity has to be finished so as to not delay the
completion time of the entire project
 Determining the Project Schedule
Notation Used in Nodes for Forward and Backward Pass

Activity
Format
 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 E
F values of its predecessors
ES = Max {EF of all immediate predecessors}
 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
ES/EF Network for Milwaukee
Paper
ES/EF Network for Milwaukee
Paper
ES/EF Network for Milwaukee
Paper
ES/EF Network for Milwaukee
Paper
Earliest Start and Earliest Finish Times for Milwaukee Paper
 Backward Pass

Begin with the last event and work

backwards
Latest Finish Time Rule:
• If an activity is an immediate predecessor for
just a single activity, its LF equals the LS of the
activity that immediately follows it
• If an activity is an immediate predecessor to
more than one activity, its LF is the minimum of
all LS values of all activities that immediately
follow it
LF = Min {LS of all immediate following
activities}
 Backward Pass

Begin with the last event and work

backwards
Latest Start Time Rule:
• The latest start time (LS) of an activity is the
difference of its latest finish time (LF) and its
activity time
LS = LF – Activity time
LS/LF Times for Milwaukee Paper
LS/LF Times for Milwaukee Paper
LS/LF Times for Milwaukee Paper
LS/LF Times for Milwaukee Paper
Computing Slack Time
After computing the ES, EF, LS, and LF times for
all activities, compute the slack or free time for
each activity
 Slack
is the length of time an activity can be
delayed without delaying the entire project

Slack = LS − ES or Slack = LF −
EF
Computing Slack Time
Milwaukee Paper’s Schedule and Slack Times
Earlies Latest On
Earlies t Start Latest Critic
Activit t Start Finish LS Finish L Slack al
y ES EF F LS – ES path
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes
Computing Slack Time
Milwaukee Paper’s Schedule and Slack Times
Earlies Latest On
Earlies t Start Latest Critic
Activit t Start Finish LS Finish L Slack al
y ES EF F LS – ES path
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes
Computing Slack Time
Computing Slack Time
 Activities with zero slack are on the critical
path. It:
– Starts at the first activity in the project
– Terminates at the last activity in the
project
– Includes only critical activities
Critical Path for Milwaukee Paper
Critical Path for Milwaukee Paper

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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

• Three time estimates are required

– Optimistic time (a) – if everything goes
according to plan
– Pessimistic time (b) – assuming very
unfavorable conditions
– Most likely time (m) – most realistic estimate
 Variability in Activity Times

Estimate follows beta distribution

Expected activity time:

t  ( a  4m  b )
6
Variance of activity completion times:

2
 (b – a ) 
v  
 6 
 Computing Variance
Time Estimates (in weeks) for Milwaukee Paper’s Project

Expected Variance
Time left bracket start
t = start fraction b minus 2
( a +4m a++b )
 ( b – a ) 
Most t fraction
= a over 6 end
 6 right 
Optimistic Likely Pessimistic 4m + b over
6 6 fraction 
Activity a m b end fraction.

bracket squared
A 1 2 3 2 .11

B 2 3 4 3 .11

C 1 2 3 2 .11

D 2 4 6 4 .44

E 1 4 7 4 1.00

F 1 2 9 3 1.78

G 3 4 11 5 1.78

H 1 2 3 2 .11
 Computing Variance
Time Estimates (in weeks) for Milwaukee Paper’s Project

Expected Variance
Time left bracket start
t = start fraction b minus 2
( a +4m a++b )
 ( b – a ) 
Most t fraction
= a over 6 end
 6 right 
Optimistic Likely Pessimistic 4m + b over
6 6 fraction 
Activity a m b end fraction.

bracket squared
A 1 2 3 2 .11

B 2 3 4 3 .11

C 1 2 3 2 .11

D 2 4 6 4 .44

E 1 4 7 4 1.00

F 1 2 9 3 1.78

G 3 4 11 5 1.78

H 1 2 3 2 .11
Probability of Project Completion
Project variance is computed by summing
the variances of critical activities

 p 2 Project variance
 variances of activities on critical path 
Probability of Project Completion

Project
variance
 P 2  .11  .11  1.00  1.78  .11  3.11

Project standard
deviation

 p  Project variance
 3.11 1.76 W eeks
Probability of Project Completion
PERT makes two more assumptions:

• Total project completion times follow a normal

probability distribution
• Activity times are statistically independent
Probability of Project Completion
Probability Distribution for Project Completion Times at
Milwaukee Paper
Probability of Project Completion
What is the probability this project can
be completed on or before the 16 week
deadline?
Z
 Due date – Expected date of completion
p


16 weeks – 15 weeks 
1.76
0.57

Where Z is the number of standard deviations the

due date or target date lies from the mean or
expected date
Probability of Project Completion
 Probability of Project Completion
Probability That Milwaukee Paper Will Meet the 16-Week
Deadline
Determining Project Completion
Time
Z -Value for 99% Probability of Project Completion at
Milwaukee Paper
 What Project Management Has
Provided So Far
1. The project’s 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
 PRACTICE EXAMPLE
Consider the network described in the table below
a) Draw the network diagram and calculate the expected duration of each
activity.
b) Determine ES, EF, LS, LF, and slack for each activity and Identify the
critical path
c) Determine the expected project completion time and variance of the
critical path.
d) Calculate the probability that the project will be completed in less than
30 time units.
Immediate
Activity Predecessor(s) Pessimistic Probable Optimistic
J -- 15 10 8
K -- 9 8 7
L J 10 6 5
M J 3 3 3
N K,M 9 5 1
O K,M 10 7 4
P L,N 10 8 3
PRACTICE EXAMPLE
 PRACTICE EXAMPLE
Early Early Late
Task Start Finish Late Start Finish Slack Mean Variance
J 0 10.5 0 10.5 0 10.5 1.361111
K 0 8 5.5 13.5 5.5 8
L 10.5 17 19.5 26 9 6.5
M 10.5 13.5 10.5 13.5 0 3 0
N 13.5 18.5 13.5 18.5 0 5 1.777778
O 13.5 20.5 19 26 5.5 7
P 18.5 26 18.5 26 0 7.5 1.361111
Project 26 Project 4.5
[Link] 2.12132

The probability that Duration < 30 is the probability that z <

(30 - 26.00)/2.12 = 1.89. The associated normal curve area
is 0.97062.
 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
 Advantages of PERT/CPM
5. Applicable to a wide variety of projects
6. Useful in monitoring not only schedules but
costs as well
 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
4. There is an inherent danger of too much
emphasis being placed on the longest, or
critical, path
 Project Controlling

• Close monitoring of
resources, costs, quality,
budgets
• Feedback enables revising
the project plan and shift
resources
• Computerized tools
produce extensive reports
Project Control Reports
1) Detailed cost breakdowns for each task
2) Labor requirements
3) Cost and hour summaries
4) Raw materials and expenditure forecasts
5) Variance reports
6) Time analysis reports
7) Work status reports
Project Report Samples

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Project Management Software
• There are several popular packages for
managing projects
– Oracle Primavera
– MindView
– HP Project
– Fast Track
– Microsoft Project
Example
Example