Why Project Management?

• It is widely accepted that a project is successful when it

is completed on time, within budget, and according to
specifications.
– Only 26% of the projects in the Unites States are completed
on time and within budget.

– In Saudi Arabia, only 30% of construction projects were

completed within the scheduled completion dates.

– Seven out of ten projects surveyed in Nigeria suffered delays

in their execution.
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 Consequences of Project Overruns

• In some situations, cost or schedule overruns lead to

project termination.

• Overrun increases the risk of product obsolescence due

to the increased risk of missing the market window (In
many cases this means a project failure).

• In the auto industry, one study indicates that each day of

delay costs an automobile firm over $1 million in lost
profits.
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 Consequences of Project Overruns

• An initial delay in a project can engender further

delays.
– Once a project is late, one or both of the following
measures are usually taken: extending the working
hours of staff or increasing the number of people on the
project.
– The first measure may increase the stress on the team
and lead to an increase in the error rate.
• “People under time pressure don’t work better, they just work
faster.” As a result, the amount of rework may be increased and
the completion time may be extended.

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 Consequences of Project Overruns
– The second measure requires additional communication,
caused by added personnel, which usually escalates the
situation.
• The natural response to a late project is to add manpower. This
might make matters worse.

• The ability to add manpower is limited.

• Moving experienced people from one project to another just

endangers the ‘robbed’ project. Also, it takes up to six months
to get new hires up to speed on a project; this eliminates the
communication task of team members.

4
Project management: Obstacles to success
• Project complexity
• Customer’s special requirements and scope changes
• Organizational restructuring
• Project risks
• Changes in technology
• Forward planning and pricing

5
 Multiple Boss Reporting

GM
SPONSOR

PM = Project Manager
APM = Assistant Project Manager
LM = Line or Functional Manager

PM LM LM LM

APM

APM

Project sponsor: All projects have sponsors - people who see a need for change and have the
authority to make something happen. Without them, the project would not have been proposed.
The sponsors may be internal (top or middle level executives) or from outside of the organization.

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 Project Manager’s role
1. Negotiating for resources
2. Laying out the project workflow and plan
3. Establishing the project’s policies and procedures
4. Establishing performance target
5. Obtaining funding
6. Executing plan
7. Encouraging the team to focus on deadlines
8. Evaluating performance
9. Briefing the sponsor, team and customer
10. Closing out the project

The project manager’s job is not an easy one. Project manager may have
increasing responsibility, but very little authority. This luck of authority can
force them to “negotiate” with upper-level management. They may often be
treated as outsiders by the formal organization.

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 Project Manager: A planning agent
The major responsibility of the project manager is planning. In most cases, the
project manager provides overall/summary definitions of the work to be
accomplished, but the line managers (the true experts) do the detailed
planning. However, as the architect of the project plan, the project manager
must provide:
1. Complete task definition
2. Resources requirement definitions (possibly skill level)
3. Major timetable milestones
4. Definition of end-item quality and reliability requirements
5. The basis for performance measurement

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 Project Manager: A planning agent
Project managers are responsible for project administration and, therefore,
must have the right to establish their own policies, procedures, rules,
guidelines, and directives. However, project manager cannot make any
promises to a functional employee concerning

1. Promotion
2. Grade
3. Salary/bonus
4. Overtime
5. Responsibility
6. Future work assignments

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 Functional Manager’s role

The roles of a functional manager include

(1) Functional manager has the responsibility to define how the task will be
done and where the task will be done (i.e. the technical criteria)
(2) Functional manager has the responsibility to provide sufficient resources
to accomplish the objective within the project’s constraint (i.e. who will
get the job done)

In other words, once the project manager identifies the requirements for the
project (i.e. what work has to be done and the constraints), it becomes the
line manager’s responsibility to identify the technical criteria.

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 Executive’s role

Executives are expected to interface a project as follows:

• In project planning and objective setting

• In conflict resolution
• In priority setting
• In project sponsorship

Executives are expected to interface with projects very closely at project initiation
and planning, but to remain at a distance during execution unless needed for
priority-setting and conflict resolution.

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 Project sponsor interface
Most projects also have a project sponsor which may or may not reside at
the executive levels of management.

Project Sponsor:
Priority Projects Senior Management

Project Sponsor:
Maintenance Projects Lower/Middle Management

Relationship:
• Objective Setting
Project • Up-Front Planning
Sponsor • Project Organization
Project • Key Staffing
Manager • Master Plan
• Policies
• Monitoring Execution
Project Project • Priority-Setting
Team • Conflict Resolution
Manager • Executive-Client Contact
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Project Life Cycle

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 Project Life Cycle

CONCEPTUAL FEASIBILITY AND TESTING/DETAILED IMPLEMENTATION CONVERSION

PHASE PRELIMINARY PLANNING PHASE PHASE OR TERMINATION
PLANNING PHASE PHASE

PROJECT
INITIATION PROJECT PLANNING PROJECT EXECUTION PROJECT CLOSURE
RESOURCES

Resources
Utilized

TIME

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 Project Life Cycle

(1) Conceptual or Initiation phase

This phase includes the preliminary evaluation of an idea. Most important
in this phase is a preliminary analysis of risk and the resulting impact on
the time, cost, and performance requirements, together with the potential
impact on company resources.

(2) Planning phase

Preliminary planning. It is mainly a refinement of the elements in the

conceptual phase and requires a firm identification of the resources
required and the establishment realistic time, cost and performance
parameters. This phase also includes the initial preparation of
documentation necessary to support the system. For a project based on
competitive bidding, the conceptual phase would include the decision of
whether to bid, and the planning phase would include the development of
the total bid package (i.e. time, schedule, cost and performance).
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 Project Life Cycle

(3) Implementation/Execution phase

This phase integrates the project’s product or services into the existing
organization. If the project was developed for establishment of a
marketable product, then this phase could include the product life-cycle
phases of market introduction, growth, maturity, and a portion of
deterioration.
(4) Termination/Closure phase
The final phase is closure and includes reallocation of resources. Consider
a company that sells products to consumers. As one product begins the
deterioration and death phase of its life-cycle, new products or projects
must be established. The closure phase evaluates the efforts of the total
system and services as input to the conceptual phases for new projects and
systems.

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 The Assignment Model

• An assignment problem seeks to minimize the total cost

assignment of m workers to m jobs, given that the cost of worker
i performing job j is cij.

• It assumes all workers are assigned and each job is performed.

• The network representation of an assignment problem with three

workers and three jobs is shown on the next slide.

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 Network Representation

c11
1 1
c12
c13

c21
2
c22 2
c23

c32
c31
3 c33 3

WORKERS JOBS
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 Linear Programming Formulation

• What are the decision variables?

– Decision variables are binary variables

1 if i is assinged to j
X ij = 
0 Otherwise

• The objective function is to minimize the total assignment

costs

Min Z =  X ij Cij
i j
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 Linear Programming Formulation

• Two type of constraints for the assignment problem?

– Each job is handled by one worker and all jobs must be done
– Each worker must handle one job
n n
Min Z =  c
i =1 j =1
ij x ij

S .T .
n

x
j =1
ij = 1, i = 1, 2,..., n across columns

x
i =1
ij = 1, j = 1, 2,..., n across rows

x ij = 0 or 1 20
 The Assignment Model
Example Problem Definition and Data
Problem: Assign four officials to four games sites in a way that will
minimize total distance traveled by the officials. Supply is always one
official, demand is for only one official at each game site.

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 The Assignment Model
Example Problem Model Formulation
Minimize Z = 210xAR + 90xAA + 180xAD + 160xAC + 100xBR + 70xBA + 130xBD +
200xBC + 175xCR + 105xCA + 140xCD + 170xCC + 80xDR + 65xDA + 105xDD +120xDC
subject to
xAR + xAA + xAD+ xAC = 1
xBR + xBA + xBD + xBC = 1
xCR + xCA+ xCD + xCC = 1
xDR + xDA + xDD + xDC = 1
xAR + xBR + xCR + xDR = 1
xAA + xBA + xCA + xDA = 1
xAD+ xBD + xCD + xDD = 1
xAC + xBC + xCC + xDC = 1
xij  0

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 Solution of the Assignment Model (Hungarian Method)
(1 of 6)

- Example: assigning four officials to four games sites in a way that will
minimize distance traveled by the officials.

The Travel Distances to Each Game for Each Official 23

 Solution of the Assignment Model
(2 of 6)

- An opportunity cost table is developed by first subtracting the minimum value in

each row from all other row values (row reductions) and then repeating this
process for each column.

The Assignment Tableau with Row Reductions

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 Solution of the Assignment Model
(3 of 6)
- The minimum value in each column is subtracted from all column values (column
reductions).
- Assignments can be made in the table wherever a zero is present.
- An optimal solution results when each of the four officials can be assigned to a
different game sites.
- The table below does not contain an optimal solution

The Tableau with Column Reductions

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 Solution of the Assignment Model
(4 of 6)
- An optimal solution occurs when the number of independent unique assignments
equals the number of rows and columns.
- If the number of unique assignments is less than the number of rows (or columns) a
line test must be used.

The Opportunity Cost Table with the Line Test

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 Solution of the Assignment Model
(5 of 6)

- In a line test all zeros are crossed out by horizontal and vertical lines; the minimum
uncrossed value is subtracted from all other uncrossed values and added to values
where two lines intersect.

The Second Iteration

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 Solution of the Assignment Model
(6 of 6)
- At least four lines are required to cross out all zeros in table 38.
- This indicates an optimal solution has been reached.
- Assignments and distances:
Assignment Distance Assignment Distance
A → Atlanta 90 A → Clemson 160
B → Raleigh 100 B → Atlanta 70
C → Durham 140 C → Durham 140
D → Clemson 120 D → Raleigh 80
Total 450 miles Total 450 miles

- If in initial assignment A went to Clemson, result is the same; resulting assignments

represent multiple optimal solutions.

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 Solution of the Assignment Model
Summary of Solution Steps

1. Perform row reductions.

2. Perform column reductions.
3. In the completed opportunity cost table, cross out all zeros using
the minimum number of horizontal and/or vertical lines.
4. If fewer than m lines are required, subtract the minimum
uncrossed value from all other uncrossed values, and add the
same value to all cells where two lines intersect.
5. Leave all other values unchanged and repeat step 3.
6. If m lines are required, the tableau contains the optimal solution.
If fewer than m lines are required, repeat step 4.

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