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project definition - set of interrelated activities that are carried out to achieve a specific purpose
(objective translated by goals and precise specifications)

→ a temporary effort undertaken to create an exclusive product, service or result. its temporary
nature indicates a beginning and an end well defined (pmbok guide - 6th edition)

project characteristics
→ single units
→ many related activities
→ difficult production planning and inventory control
→ general purpose equipment
→ high labor skills

project examples
→ construction project (specific duration, specific start and end date)
→ investigation project

management of projects

1. planning - goal setting, defining the project, team organization

2. scheduling - relates people, money, and supplies to specific activities and activities to each
other

3. controlling - monitors resources, costs, quality, and budgets. revises plans and shifts
resources to meet time and cost demands

project management activities

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 → planning
→ objectives

→ resources
→ work breakdown structure
→ organization
→ scheduling
→ project activities
→ start & end times
→ network
→ controlling
→ monitor, compare, revise, action

project planning
→ establishing objectives
→ defining project
→ creating work breakdown structure
→ determining resources
→ forming organization

→ often temporary structure

→ uses specialists from entire company

→ coordinates activities

→ monitores schedule and costs

→ permanent structure called “matrix organization”

project planning works best when…

1. work can be defined with a specific goal and deadline

2. the job is unique or somewhat unfamiliar to the existing organization

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 3. the work contains complex interrelated tasks requiring specialized skills

4. the project is temporary but critical to the organization

5. the project cuts across organizational lines

a sample project organization

project organization matrix

project managers receive high visibility in a firm and are responsible for making sure that:

1. all necessary activities are finished in proper sequence and on time

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 2. the project comes in within budget

3. the project meets its quality goals

4. the people assigned to the project receive the motivation, direction, and information needed
to their jobs

the role of project manager

→ this means that project managers should be:

→ good coaches

→ good communicators

→ be able to organize activities from a variety of disciplines

ethical issues

→ project management also face ethical decisions on a daily basis. how they act establishes the
code of conduct for the project

→ project managers often deal with:

→ offers of gifts from contractors

→ pressure to alter status reports to mask the reality of delays

→ false reports for changes of time and expenses

→ pressures to compromise quality to meet bonuses or avoid penalties related to schedules

work breakdown structure (wbs)

→ divides the project into various subcomponents and defines hierarchical levels of detail

→ level:

1. project

2. major tasks in project

3. subtasks in major tasks

4. activities to be completed

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 project scheduling serves several purposes
→ it shows the relationship of each activity to others and to the whole project

→ it identifies the precedence relationships among activities

→ it encourages the setting of realistic time and cost estimates for each activity

→ it helps make better use of people, money, and material resources by identifying critical
bottlenecks in the project

project management techniques

→ cpm (critical path method)

→ pert (program evaluation & review technique)

→ gantt chart

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 example: service for delta jet

project controlling

→ involves close monitoring of resources, costs, quality, and budgets

→ control also means using a feedback loop to revise the project plan and having the ability to
shift resources to where they are needed most

→ computerized pert/cpm reports and charts are widely available today from scores of
competing software firms

control: the importance of revise and action

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 program evaluation and review technique (pert) and the critical path method (cpm), both
developed in the 1950s

→ cpm by dupont for the chemical industry (1957)

→ pert by booz, allen, and hamilton with the us navy, for the polaris missile (1958)

→ they consider precedence relationships and interdependencies

→ the major differnece is that pert employs three time estimates for each activity. these time
estimates are used to compute expected values and standard deviations for the activity

→ cpm makes the assumption that activity times are known with certainty and hence
requires only one time factor for each activity

six steps of 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 activities

4. assign time and/or cost estimates to each activity

5. compute the longest time path through the network - this is the called critical path

6. use the network to help plan, schedule, monitor, and control the project

note: this is going to be one of the exam’s exercises

a comparison of aon and aoa network conventions

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 example: milwaukee paper manufacturing’s

aon network for milwaukee paper

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 aoa network for milwaukee paper

determining the project schedule

→ perform a critical path analysis
→ the critical path is the longest path through the network

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 → 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

critical path analysis

→ 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 ef
values of its 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

→ 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

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 → 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

→ slack is the length of time of an activity can be delayed without delaying the project

→ activities with 0 slack are critical activities

→ the critical path is a continuous path through the network from start to finish that include
only critical activities

example 1: perform a critical path analysis

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 example 2: perform a critical path analysis

→ aon

→ determine es+ef and lf+ls

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 → critical path

→ gant chart based on es times → gant chart based on ls times

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 variability in activity times
→ cpm assumes we know a fixed time 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 pan
→ pessimistic time (b) - assuming very unfavorable conditions

→ most likely time (m) - most realistic estimate

→ estimate follows beta distribution:

computing variance

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 project variance
→ project variance is computed by summing the variances of critical activities

project completion time

→ pert makes two more assumptions:
→ total project completion time follow a normal probability distribution
→ activity times are statistically independent

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 probability of project completion
→ what is the probability this project can be completed on or befopre the 16 week deadline?

99% probability of project completion

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 → based on 2.33 standard deviation above the mean project completion time, what is the due
date with a 99% probability of on-time completion?

variability of completion time for noncritical paths

→ variability of times for activities on noncritical paths must be considered when finding the
probability of finishing in a specified time

→ variation in noncritical activity may cause change in critical path

trade-offs and project crashing

→ it is not uncommon to face the following situations
→ the project is behind schedule

→ the completion time has been moved forward

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 note: shortening the duration of the project is called project crashing

factors to consider when crashing a project

→ the amount by which an activity is crashed is, in fact, permissible
→ taken together, the shortened activity durations will enable us to finish the project by the due
date
→ the total cost of crashing is as small as possible

steps in project crashing

1. compute the crash cost per time period. if crash costs are linear overtime:

2. using current activity times, find the critical path and identify the critical activities

3. if there is only one critical path, then select the activity on this critical path that (a) can still
be crashed, and (b) has the smallest crash cost per period. if there is more than one critical
path, then select one activity from each critical path such that (a) each selected activity can
still be crashed, and (b) the total crash cost of all selected activities is the smallest. note that
the same activity may be common to more than one critical path

4. update all activity times. if the desired due date has been reached, stop. if not, return to step
2

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 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

5. project documentation and graphics point out who is responsible for various activities

6. applicable to a wide variety of projects

7. 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 relationship must be specified and networked together

3. time estimates tend to be subjective and are subject to fudging by manager who fear the
dangers of being overly optimistic ot not pessimistic enough

4. there is an inherent danger of too much emphasis being placed on the longest, or critical
path

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