Project management

Part 2
Dr. Eng. Shady Aly
Associate Professor – Industrial Engineering
Faculty of Engineering at Helwan – Helwan University
 Project Management - Syllabus
• Part 1: Introduction to Project Management (PM):
• Importance of PM
• Phases of PM
• Project planning
• Project scheduling
• Gantt chart
• Project controlling
• PM software

• Part 2: Project Management techniques: PERT & CPM

• Part 3: Variability in activities times, Cost-time trade-offs and Project crashing

• Part 4: Introduction to Project risk assessment

• Risk assessment matrix
 Project Management – Learning outcomes
• LO 1: Use a Gantt chart for scheduling

• LO 2: Draw AOA and AON networks

• LO 3: Use PERT & CPM techniques for project management

• LO 4: Calculate the variance of activity times

• LO 5: Crash a project

• LO 6: Use the probability impact matrix to assess project risks

 Project Management Techniques: PERT and CPM
• Program evaluation and review technique (PERT) and the critical path method (CPM) were
both developed in the 1950s to help managers schedule, monitor, and control large and
complex projects.

• CPM arrived first, as a tool developed to assist in the building and maintenance of chemical
plants at duPont. Independently, PERT was developed in 1958 for the U.S. Navy.

• PERT is a project management technique that employs three time estimates for each
activity. These time estimates are used to compute expected values and standard deviations
for the activity.

• CPM is project management technique that uses only one time factor per activity.

• Critical path is the computed longest time path(s) through a network.

 Project Management Techniques: PERT and CPM
• PERT and CPM both follow six basic steps:

1. Define the project and prepare the work breakdown structure.

2. Develop the relationships among the activities. Decide which activities must precede
and which must follow others.
3. Draw the network connecting all the activities.
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.

• Finding the critical path, is a major part of controlling a project. The activities on the critical
path represent tasks that will delay the entire project if they are not completed on time.
 Project Management Techniques: PERT and CPM
• PERT and CPM are important because they can help answer questions such as the following
about projects with thousands of activities:

1. When will the entire project be completed?

2. What are the critical activities or tasks in the project—that is, which activities will delay the
entire project if they are late?
3. Which are the noncritical activities—the ones that can run late without delaying the whole
project’s completion?
4. What is the probability that the project will be completed by a specific date?
5. At any particular date, is the project on schedule, behind schedule, or ahead of schedule?
6. On any given date, is the money spent equal to, less than, or greater than the budgeted
amount?
7. Are there enough resources available to finish the project on time?
8. If the project is to be finished in a shorter amount of time, what is the best way to accomplish
this goal at the least cost?
 Project Management Techniques: PERT and CPM
• Network Diagrams and Approaches:
• The first step in a PERT or CPM network is to divide the entire project into significant activities in
accordance with the work breakdown structure.
• There are two approaches for drawing a project network: activity on node (AON) and activity on
arrow (AOA) :.
• Activity-on-node (AON) A network diagram in which nodes designate activities.
• Activity-on-arrow (AOA) A network diagram in which arrows designate activities.

• Activities consume time and resources.

• In an AOA network, the nodes represent the starting and finishing times of an activity and are
also called events . So nodes in AOA consume neither time nor resources.

• Although both AON and AOA are popular in practice, many of the project management software
packages, including Microsoft Project, use AON networks.
 Project Management Techniques: PERT and CPM
Example: Pollution control at Milwaukee Paper Manufacturing Co.

• Milwaukee Paper Manufacturing has a need to install advanced computerized air pollution control equipment in its
facility. The plant manager was directed to complete the installation in time, exactly 16 weeks away.

• Milwaukee Paper has identified the eight activities that need to be performed in order for the project to be completed:
 Project Management Techniques: PERT and CPM
Example: Pollution control at Milwaukee Paper Manufacturing Co
• Activity On Node (AON):
• The tabular information is difficult for an individual to manipulate. A visual representation of the
project, is more convenient than the tabular form.

• Using a project network , is convenient and useful. A project network is a diagram of all the
activities and the precedence relationships that exist between these activities in a project.

• It is convenient to have the project network start and finish with a unique node. In the
Milwaukee Paper example, it turns out that a unique activity, H, is the last activity in the project.
We therefore automatically have a unique ending node.

• In situations in which a project has multiple ending activities, we include a “dummy” ending
activity. The same concept applies for the situation of multiple starting nodes.
 Project Management Techniques: PERT and CPM
Example: Pollution control at Milwaukee Paper Manufacturing Co
• Activity On Node (AON)
 Project Management Techniques: PERT and CPM
Example: Pollution control at Milwaukee Paper Manufacturing Co
• Activity On Arrow (AOA):
• In an AOA project network we can represent activities by arrows. A node represents an event , which
marks the start or completion time of an activity.

• We usually identify an event (node) by a number.

 Project Management Techniques: PERT and CPM
Example: Pollution control at Milwaukee Paper Manufacturing Co.
• Activity On Arrow (AOA):
• In an AOA project network we can represent activities by arrows. A node represents an
event , which marks the start or completion time of an activity.

• The dummy activity consumes no time, but note how it changes precedence.

• Now activity D cannot begin until both B and the dummy are complete.

• We cannot have multiple activities with common starting and ending nodes in an AOA
network.
Project Management Techniques: PERT and CPM
AON and equivalent AOA
 Determining the Project Schedule
• To find out just how long the project will take, we perform the critical path analysis for the network.

• Critical path analysis process that helps determine a project schedule.

• We need to identify the planned starting and ending time for each activity.

• The critical path is the longest time path through the network. To find the critical path, we calculate two
distinct starting and ending times for each activity. These are defined as follows:

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 finish so as to not delay the completion time of the
entire project
Determining the Project Schedule
• We use a two-pass process, consisting of a forward pass and a backward pass, to
determine these time schedules for each activity.

• The early start and finish times (ES and EF) are determined during the forward pass .

• The late start and finish times (LS and LF) are determined during the backward pass.

• Forward pass is a process that identifies all the early times.

• Backward pass is an activity that finds all the late start and late finish times.
 Determining the Project Schedule
• Forward pass:
Notation Used in Nodes for
Forward and Backward Pass

Earliest Start Time Rule: Before an activity can start, all its immediate predecessors must be
finished:
• 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 EF values of its
predecessors:
ES = Max {EF of all immediate predecessors}

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
 Determining the Project Schedule
• Backward pass:
Notation Used in Nodes for
Forward and Backward Pass

Latest Finish Time Rule: This rule is again based on the fact that before an activity can
start, all its immediate predecessors must be finished:
• 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} (3-3)

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. That is:
LS = LF − Activity time
Determining the Project Schedule
Example: Pollution control at Milwaukee Paper Manufacturing Co.
Time Estimates for Milwaukee Paper Manufacturing
Determining the Project Schedule
Example: Pollution control at Milwaukee Paper Manufacturing Co.
Forward pass:
Determining the Project Schedule
Example: Pollution control at Milwaukee Paper Manufacturing Co.
Backward pass:
 Determining the Project Schedule
Example: Pollution control at Milwaukee Paper Manufacturing Co.
• Calculating Slack Time and Identifying the Critical Path(s)
• After we have computed the earliest and latest times for all activities, it is a simple matter to find the
amount of slack time that each activity has.
• Slack is the length of time an activity can be delayed without delaying the entire project.
Mathematically:
Slack = LS − ES or Slack = LF − EF

Milwaukee Paper’s
Schedule and Slack
Times
 Determining the Project Schedule
Example: Pollution control at Milwaukee Paper Manufacturing Co.
• Total Slack:
• Consider activities B and D, which have slack of 1 week each. Does it mean that we can delay each
activity by 1 week, and still complete the project in 15 weeks? The answer is no.

• Let’s assume that activity B is delayed by 1 week. It has used up its slack of 1 week and now has an EF of
4. This implies that activity D now has an ES of 4 and an EF of 8.

• Note that these are also its LS and LF values, respectively. That is, activity D also has no slack time now.

• Essentially, the slack of 1 week that activities B and D had is, for that path, shared between them.
Delaying either activity by 1 week causes not only that activity, but also the other activity, to lose its
slack.

• This type of a slack time is referred to as total slack .

• Typically, when two or more noncritical activities appear successively in a path, they share total slack.