Projects: Unique, one-time operations with specific objectives  Essential for project planning and scheduling:

and deadlines, distinct from routine activities. Helps in identifying and estimating resource
Project Scope: Encompasses diverse activities, such as requirements (people, supplies, equipment).
construction, mergers, events, and campaigns, often involving  Crucial for project management success:
significant costs and complex planning. Facilitates better control, monitoring, and risk
Project Management Essentials: Successful project management.
completion requires goal setting, task identification, resource Project Scheduling
allocation, budget planning, and adherence to time, cost, and  Involves sequencing and timing of all project
performance targets. activities: Managers determine the duration of each
Key Decisions of Managing Project activity and the resources required at each stage.
The project manager bears the ultimate responsibility for the  Includes resource scheduling: Separate schedules
success or failure of the project. He or she must be capable of can be created for personnel (by skill type) and
working through others to accomplish the objectives of the materials.
project. The project manager is responsible for effectively  Gantt charts are a common tool: These low-cost
managing each of the following: charts help managers ensure:
1. The work, so that all of the necessary activities are  All activities are planned.
accomplished in the desired sequence, and performance goals  The order of performance is documented.
are met.  Activity time estimates are recorded.
2. Human resources, so that those working on the project have  Overall project time is developed.
direction and motivation.  PERT and CPM offer advantages over Gantt
3.Communications, so that everybody has the information charts for complex projects: They can effectively
needed to do the work. handle precedence relationships and
4.Quality, so that performance objectives are realized. 5.Time, interdependencies between activities, which is crucial
so that the project is completed on schedule. 6.Costs, so that for intricate scheduling.
the project is completed within budge  Gantt charts remain valuable tools: Despite the
Phases of Project Management sophistication of PERT and CPM, Gantt charts can
1.Planning: This phase includes goal setting, defining the provide concise project overviews and effectively
project, and team organization. complement network-based scheduling approaches,
2.Scheduling: This phase relates people, money, and supplies even for large-scale projects.
to specific activities and relates activities to each other. To summarize, whatever the approach taken by a project
3.Controlling: This phase the firm monitors resources, costs, manager, project scheduling serves several purposes:
quality, and budgets. It also revises or changes plans and
1.It shows the relationship of each activity to others and to the
shifts resources to meet time and cost demands.
whole project.
PROJECT PLANNING 2. It identifies the precedence relationships among activities.
 Project organizations are temporary structures 3.It encourages the setting of realistic time and cost estimates
created within a company to successfully complete for each activity.
specific projects while maintaining the smooth
4. It helps make better use of people, money, and material
operation of existing programs.
resources by identifying critical bottlenecks in the project.
 They are particularly beneficial for companies
with multiple large projects, like construction firms, Project Controlling
as they facilitate the efficient allocation of personnel - Project control involves close monitoring: Key areas
and resources from various departments. of focus include resources, costs, quality, and budget
The project organization may be most helpful when: adherence.
1. Work tasks can be defined with a specific goal and - Effective control requires a feedback loop: This allows
deadline. for plan revisions and the ability to shift resources as
2.The job is unique or somewhat unfamiliar to the existing needed.
organization. - Well-defined projects are easier to control: These
3.The work contains complex interrelated tasks requiring projects have clear objectives, known constraints, and
specialized skills. detailed specifications, making them less susceptible
4.The project is temporary but critical to the organization. to significant changes and easier to manage within
5.The project cuts across organizational lines. the initial plan.
Project Managers: Project Management Techniques
 Lead project teams: Coordinate activities with other - PERT and CPM are project management techniques:
departments, report directly to top management, and Developed in the 1950s, they aid in scheduling, monitoring,
are responsible for the project's success. and controlling complex projects. CPM originated at DuPont for
 Key responsibilities: Ensure timely completion, chemical plant construction, while PERT was independently
adherence to budget, meeting quality goals, and developed by the U.S. Navy.
providing necessary support and motivation to the a.Program evaluation and review technique (PERT) - A project
project team. management technique that employs three time estimates for
 Essential skills: Strong coaching, communication, each activity.
and organizational abilities, along with the ability to b. Critical path method (CPM) - A project management
manage diverse disciplines. technique that uses only one time factor per activity.
Work Breakdown Structure (WBS): Framework of PERT and CPM
 A hierarchical decomposition of the project:  Define the project and prepare the work breakdown structure.
Breaks down the project into major subcomponents,  Develop the relationships among the activities. Decide which
then further into smaller tasks and activities. activities must precede and which must follow others.
 Draw the network connecting all the activities.
 Assign time and/or cost estimates to each activity.  d) Latest finish (LF) = latest time by which an activity has
Compute the longest time path through the network. This is to finish so as to not delay the completion time of the
called the critical path. entire project
 Use the network to help plan, schedule, monitor, and control Variability in Activity Times
the project.
 Assumption of Fixed Activity Times in CPM: CPM
Importance of PERT and CPM
assumes that activity durations are known and
PERT and CPM are important because they can help answer
constant, neglecting the impact of potential variations.
questions such as the following about projects with thousands
 PERT Addresses Variability: PERT acknowledges
of activities:
the inherent uncertainty in activity completion times by
 When will the entire project be completed?
considering potential delays due to various factors like
 What are the critical activities or tasks in the project—that is,
weather, resource availability, and unforeseen issues.
which activities will delay the entire project if they are late?
 Which are the noncritical activities—the ones that can run In PERT, we employ a probability distribution based on three
late without delaying the whole project’s completion? time estimates for each activity, as follows:
 What is the probability that the project will be completed by a
specific date? a. Optimistic time (a) = time an activity will take if everything
 At any particular date, is the project on schedule, behind goes as planned. In estimating this value, there should be only
schedule, or ahead of schedule? a small probability (say, 1/100) that the activity time will be < a.
 On any given date, is the money spent equal to, less than, or b. Pessimistic time (b) = time an activity will take assuming
greater than the budgeted amount? very unfavorable conditions. In estimating this value, there
 Are there enough resources available to finish the project on should also be only a small probability (also 1/100) that the
time? activity time will be > b.
 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? c. Most likely time (m) = most realistic estimate of the time
 Two primary approaches for drawing project networks: required to complete an activity.
 Activity on Node (AON): Nodes represent activities,
and arrows indicate dependencies between them.
 Activity on Arrow (AOA): Arrows represent
activities, and nodes represent the start and finish
times of activities (events).
 Key difference between AON and AOA:
 AON: Nodes represent activities.
 Project Crashing: This technique involves
 AOA: Nodes represent events (start/finish times),
shortening the duration of project activities to
while arrows represent activities.
meet deadlines or recover from schedule delays.
 Cost-Time Trade-Offs: Crashing activities
typically involves additional costs (e.g., overtime
pay, expedited resource acquisition) to expedite
their completion. Project managers must carefully
evaluate the cost-effectiveness of crashing
different activities.
2. Using the current activity times, find the critical path(s)
b. Activity-on-node (AON) - A network diagram in which in the project network. Identify the critical activities.
nodes designate activities.

 3. Identify Crashable Activities:

- If only one critical path exists: Select the activity
on this path with the lowest crash cost per period.
- If multiple critical paths exist: Select one activity
from each path, prioritizing those with the lowest
Determining Project Schedule overall crash cost per period across all critical
To find out just how long the project will take, we perform the paths.
critical path analysis for the network. The critical path is the  Consider Crash Limits: Ensure the selected
longest time path through the network. To find the critical path, activities can still be crashed within their
we calculate two distinct starting and ending times for each respective crash limits.
activity. These are defined as follows:  Crash by One Period: Reduce the duration of each
a) Earliest start (ES) = earliest time at which an activity selected activity by one period and update the
can start, assuming all predecessors have been project schedule accordingly.
completed
b) Earliest finish (EF) = earliest time at which an activity Essential Elements of Performance Measurement
can be finished  Objectives: Performance measures should align with
c) Latest start (LS) = latest time at which an activity can specific goals.
start so as to not delay the completion time of the  Typical Measurements:
entire project  Human Resources: Absenteeism, turnover,
employee satisfaction, training, grievances.
  Customers: Complaints, on-time deliveries, warranty  Calculate meaningful metrics
claims, customer satisfaction, response times. Cost of Quality
 Production: Inventory turns, defect rates, downtime, Relating Quality Cost to Business Measures:
yield, cost per unit.  Percentage of Sales: Assess the impact of quality
 R&D: Time to market, design changes, R&D costs on overall revenue.
spending, proposal processing time.  Comparison to Profit: Identify the potential profit lost
 Suppliers: On-time delivery, quality performance, due to poor quality.
lead time, error rates.  Production Cost: Evaluate the cost of quality relative
 Marketing/Sales: Sales expenses, order accuracy, to production expenses.
new product sales, customer acquisition.  Unit of Production: Compare quality costs across
 Administration: Revenue per employee, expense different products or services.
ratios, accounts receivable/payable, equipment Quality Cost Analysis:
uptime.  Trend Analysis: Monitor the progress of
Criteria for Effective Performance Measures improvement efforts over time.
 Simple and understandable  Pareto Analysis: Identify the most significant quality
 Few in number, focused on critical areas issues.
 Developed by users to ensure ownership Improvement Action Strategy:
 Relevant to customer needs and expectations  Focus on Root Causes: Address the underlying
 Focused on improvement and prevention problems rather than just symptoms.
 Cost-effective  Implement Improvement Projects: Develop and
 Visible and accessible to all execute targeted improvement initiatives.
 Timely for decision-making Limitations of Quality Cost Analysis:
Why Measure Performance?  High-Level Overview: Provides a broad perspective
 Control Variation: Reduce variability in processes. but may not offer specific solutions.
 Self-Assessment: Evaluate process performance  Requires Detailed Analysis: Further investigation is
and improvements. needed to identify and address root causes.
 Continuous Improvement: Identify defects, trends,
and opportunities.
 Management Assessment: Ensure meeting
objectives and efficiency.
Benefits of Measurement
 Understand customer requirements
 Gain insights into processes
 Make data-driven decisions
 Identify improvement opportunities
 Verify the impact of improvements
 Uncover hidden problems
Six Basic Techniques for Presenting Performance
Measures
1. Time Series Graph: Visualizes trends over time. Benchmarking: A systematic process of comparing an
2. Control Chart: Monitors process stability and organization's performance to industry best practices to identify
identifies anomalies. improvement opportunities.
3. Capability Index: Assesses process capability to
meet specifications.  Benefits of Benchmarking:
4. Taguchi's Loss Function: Quantifies loss due to o Provides a framework for learning and
deviation from target. innovation.
5. Cost of Poor Quality (COPQ): Measures financial o Drives continuous improvement by
impact of quality issues. identifying gaps and setting targets.
6. National/International Quality Award Criteria:
Evaluates overall performance and quality KEY ELEMENTS:
management.
Performance Management Tools
 Metric-Based Comparison: Quantify performance
 Performance Appraisals: Align individual goals with
and compare it to industry best practices.
organizational strategy.
 Process Analysis: Understand performance gaps
 360-Degree Feedback: Provides a comprehensive
and implement targeted improvements.
performance assessment from multiple perspectives.
 Management by Objectives (MBO): Sets specific REASONS:
objectives and tracks progress.
 Balanced Scorecard (BSC): Aligns strategy,  Identify Best Practices: Learn from top performers
communication, measurement, and action planning. to improve your own operations.
 Reward and Recognition Programs: Boost  Assess Strengths and Weaknesses: Gain a clear
employee motivation and engagement. understanding of your business's performance.
 Personal Development Plans (PDPs): Foster  Obtain Objective Perspective: Avoid bias and make
individual growth and development. informed decisions.
Designing Effective Performance Measurement Systems  Optimize Staff Productivity: Set realistic
 Establish clear goals
expectations and identify productivity gaps.
 Identify critical success factors
 Improve Financial Performance: Make data-driven
 Define relevant KPIs
decisions on costs and expenditures.
 Collect comprehensive measures BENCHMARKING PROCESS
1. Select the process and build support
2. Determine current performance
3. Determine where performance should be
4. Determine the performance gap
5. Design an action plan
TYPES:
1. Process Benchmarking: Analyze and improve
business processes by learning from best practices.
2. Financial Benchmarking: Compare financial
performance to assess competitiveness and
productivity.
3. Performance Benchmarking: Evaluate product and
service performance relative to competitors.
4. Product Benchmarking: Assess product offerings
against competitor products.
5. Strategic Benchmarking: Examine long-term
strategies of successful companies.
6. Functional Benchmarking: Compare performance
with organizations performing similar tasks.
7. Internal Benchmarking: Compare performance
within the same organization.
8. Competitive Benchmarking: Compare performance
with direct competitors.
9. External Benchmarking: Learn from industry best
practices outside the organization.
10. International Benchmarking: Compare performance
with international counterparts.
11. Energy Benchmarking: Evaluate and compare
energy performance.

5 COMMON PITFALLS IN BENCHMARKING

1. Skipping the definition of clear objectives
2. Choosing the wrong benchmarks
3. Benchmarking too many KPls
4. Ending the benchmark analysis with a variance report
5. Assuming that numbers and performance stay stable for
long periods
Variability in Activity Times
 Assumption of Fixed Activity Times in CPM: CPM
assumes that activity durations are known and
constant, neglecting the impact of potential variations.
 PERT Addresses Variability: PERT acknowledges
the inherent uncertainty in activity completion times by
considering potential delays due to various factors like
weather, resource availability, and unforeseen issues.
In PERT, we employ a probability distribution based on three
time estimates for each activity, as follows:
a. Optimistic time (a) = time an activity will take if everything
goes as planned. In estimating this value, there should be only
a small probability (say, 1/100) that the activity time will be < a.
b. Pessimistic time (b) = time an activity will take assuming
very unfavorable conditions. In estimating this value, there
should also be only a small probability (also 1/100) that the
activity time will be > b.
c. Most likely time (m) = most realistic estimate of the time
required to complete an activity.