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McGraw-Hill/Irwin 2009 The McGraw-Hill Companies, All Rights Reserved 1-1

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Chapter 3

Project Management

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OBJECTIVES

Definition of Project Management

Work Breakdown Structure
Project Control Charts
Structuring Projects
Critical Path Scheduling

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Project Management
Defined

A Project is a series of related jobs

usually directed toward some major
output and requiring a significant
period of time to perform
Project Management is the management
activities of planning, directing, and
controlling resources (people,
equipment, material) to meet the
technical, cost, and time constraints of
a project
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Gantt Chart

Vertical
VerticalAxis:
Axis:
Always Horizontal
Horizontalbars
barsused
usedtotodenote
denotelength
length
AlwaysActivities
Activities
or ofoftime
timefor
foreach
eachactivity
activityor
orjob.
job.
or Jobs
Jobs

Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6

Time Horizontal
HorizontalAxis:
Axis:Always
AlwaysTime
Time
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Pure Project
A pure project is where a self-contained team
works full-time on the project
Structuring Projects
Pure Project: Advantages

The project manager has full authority

over the project
Team members report to one boss
Shortened communication lines
Team pride, motivation, and commitment
are high

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Structuring Projects
Pure Project: Disadvantages

Duplication of resources
Organizational goals and policies
are ignored
Lack of technology transfer
Team members have no functional
area "home"

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Functional Project

A functional project is housed within

a functional division
President

Research and
Engineering Manufacturing
Development

Project Project Project Project Project Project Project Project Project

A B C D E F G H I

Example,
Example, Project
Project B
B is
is in
in the
the functional
functional
area
area of
of Research
Research and
and Development.
Development.
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Structuring Projects
Functional Project: Advantages

A team member can work on

several projects
Technical expertise is maintained
within the functional area
The functional area is a home
after the project is completed
Critical mass of specialized
knowledge

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Structuring Projects
Functional Project: Disadvantages

Aspects of the project that are not

directly related to the functional
area get short-changed
Motivation of team members is
often weak
Needs of the client are secondary
and are responded to slowly

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Matrix Project Organization Structure

President

Research and
Engineering Manufacturing Marketing
Development

Manager
Project A

Manager
Project B

Manager
Project C

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Structuring Projects
Matrix: Advantages

Enhanced communications between functional

areas

Pinpointed responsibility

Duplication of resources is minimized

Functional home for team members

Policies of the parent organization are followed

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Structuring Projects
Matrix: Disadvantages

Too many bosses

Depends on project managers

negotiating skills

Potential for sub-optimization

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Work Breakdown Structure

A work breakdown structure defines the

hierarchy of project tasks, subtasks, and
work packages
Level Program

1 Project 1 Project 2

2 Task 1.1 Task 1.2

3 Subtask 1.1.1 Subtask 1.1.2

4 Work Package 1.1.1.1 Work Package 1.1.1.2

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Network-Planning Models

A project is made up of a sequence of activities

that form a network representing a project
The path taking longest time through this
network of activities is called the critical path
The critical path provides a wide range of
scheduling information useful in managing a
project
Critical Path Method (CPM) helps to identify the
critical path(s) in the project networks

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Prerequisites for Critical Path Methodology

A project must have:

well-defined jobs or tasks whose

completion marks the end of the project;

independent jobs or tasks;

and tasks that follow a given sequence.

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Types of Critical Path Methods

CPM with a Single Time Estimate

Used when activity times are known with certainty
Used to determine timing estimates for the project, each
activity in the project, and slack time for activities
CPM with Three Activity Time Estimates
Used when activity times are uncertain
Used to obtain the same information as the Single Time
Estimate model and probability information
Time-Cost Models
Used when cost trade-off information is a major
consideration in planning
Used to determine the least cost in reducing total project
time

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Steps in the CPM with Single Time Estimate

1. Activity Identification
2. Activity Sequencing and
Network Construction
3. Determine the critical path
From the critical path all of the
project and activity timing
information can be obtained

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CPM with Single Time Estimate

Consider the following consulting project :

Activity Designation Immed. Pred. Time (Weeks)
Assess customer's needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 5
Quality improvement pilot groups F D, E 5
Write assessment report G F 1

Develop a critical path diagram and determine

the duration of the critical path and slack times
for all activities.
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First draw the network

Act. Imed. Pred. Time

A None 2
B A 1
C B 1
D C 2
E C 5
F D,E 5
D(2)
G F 1

A(2) B(1) C(1) F(5) G(1)

E(5)

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Determine early starts and early finish times

ES=4
EF=6

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 EF=14 EF=15

A(2) B(1) C(1) F(5) G(1)

ES=4
EF=9
Hint:
Hint:Start
Startwith
withES=0
ES=0
and
andgo
goforward
forwardininthe
the E(5)
network
networkfrom
fromAAtotoG.
G.

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Determine late starts and late finish times Hint:

Hint:Start
Startwith
withLF=15
LF=15
or
orthe
thetotal
totaltime
timeofofthe
the
ES=4 project
project and
andgogo
EF=6 backward
backwardin inthe
the
network
networkfrom
fromGGto toA.
A.
ES=0 ES=2 ES=3 D(2)
ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4
LF=9

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Critical Path & Slack

ES=4
Slack=(7-4)=(9-6)= 3 Wks
EF=6

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4 Duration=15 weeks

LF=9

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Example 2. CPM with Three Activity Time Estimates

Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
B None 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

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Example 2. Expected Time Calculations

ET(A)=
ET(A)=3+4(6)+15
3+4(6)+15
Immediate Expected 66
Task Predecesors Time
A None 7 ET(A)=42/6=7
ET(A)=42/6=7
B None 5.333
C A 14 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
D A 5 A None 3 6 15
E C 11 B
C
None
A
2
6
4
12
14
30
F D 7 D A 2 5 8
E C 5 11 17
G B 11 F D 3 6 15
H E,F 4 G B 3 9 27
H E,F 1 4 7
I G,H 18 I G,H 4 19 28

Opt.
Opt. Time
Time ++ 4(Most
4(MostLikely
LikelyTime)
Time) ++ Pess.
Pess. Time
Time
Expected
ExpectedTime
Time == 66
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Ex. 2. Expected Time Calculations

Immediate Expected ET(B)=

ET(B)=2+4(4)+14
2+4(4)+14
Task Predecesors Time 66
A None 7
B None 5.333 ET(B)=32/6=5.333
ET(B)=32/6=5.333
C A 14
D A 5 Immediate
E C 11 Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
F D 7 B None 2 4 14
G B 11 C
D
A
A
6
2
12
5
30
8
H E,F 4 E C 5 11 17
F D 3 6 15
I G,H 18 G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

Opt.
Opt. Time
Time ++ 4(Most
4(MostLikely
LikelyTime)
Time) ++ Pess.
Pess. Time
Time
Expected
ExpectedTime
Time == 66
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Ex 2. Expected Time Calculations

Immediate Expected ET(C)=

ET(C)=6+4(12)+30
6+4(12)+30
Task Predecesors Time
A None 7 66
B None 5.333
C A 14 ET(C)=84/6=14
ET(C)=84/6=14
D A 5
E C 11 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
F D 7 A None 3 6 15
G B 11 B
C
None
A
2
6
4
12
14
30
H E,F 4 D A 2 5 8
E C 5 11 17
I G,H 18 F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

Opt.
Opt. Time
Time ++ 4(Most
4(MostLikely
LikelyTime)
Time) ++ Pess.
Pess. Time
Time
Expected
ExpectedTime
Time == 66
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Example 2. Network

Duration = 54 Days
C(14) E(11)

A(7) H(4)
D(5) F(7)

I(18)

B G(11)
(5.333)

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Example 2. Probability Exercise

What
What isis the
the probability
probability of
of finishing
finishing this
this project
project in
in
less
less than
than 53
53 days?
days?

p(t < D)
D=53
t
TE = 54
DD -- TTEE
ZZ ==

cpcp
22

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Pessim.
Pessim. -- Optim.
Optim.)22
Activity variance, = 22
(
Activity variance, = ( )
66

Task Optimistic Most Likely Pessimistic Variance

A 3 6 15 4
B 2 4 14
C 6 12 30 16
D 2 5 8
E 5 11 17 4
F 3 6 15
G 3 9 27
H 1 4 7 1
I 4 19 28 16

(Sum the variance along the critical

== 41
22
41
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p(t < D)

t
D=53 TE = 54
D
D -- TTEE 53- 53-54
54
ZZ == == == -.156
-.156
cpcp

22 41
41

p(Z
p(Z <<-.156)
-.156) ==.438,
.438, or
or 43.8
43.8 %
% (NORMSDIST(-.156)
(NORMSDIST(-.156)

There
There isis aa 43.8%
43.8% probability
probability that
that this
this project
project will
will be
be
completed
completed in in less
less than
than 53
53 weeks.
weeks.
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Ex 2. Additional Probability Exercise

What
What is
is the
the probability
probability that
that
the
the project
project duration
duration will
will
exceed
exceed 5656 weeks?
weeks?

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Example 2. Additional Exercise Solution

p(t < D)

t
TE = 54
D=56
D
D -- TTEE 56 56--54
54
ZZ == =
22 =
== .312
.312
cp
cp
41
41

p(Z
p(Z>>.312)
.312) == .378,
.378, or
or 37.8
37.8 %
%(1-NORMSDIST(.312))
(1-NORMSDIST(.312))
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Time-Cost Models

Basic Assumption: Relationship

between activity completion time
and project cost

Time Cost Models: Determine the

optimum point in time-cost tradeoffs
Activity direct costs
Project indirect costs
Activity completion times

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CPM Assumptions/Limitations

Project activities can be identified as entities

(There is a clear beginning and ending point
for each activity.)
Project activity sequence relationships can be
specified and networked
Project control should focus on the critical
path
The activity times follow the beta distribution,
with the variance of the project assumed to
equal the sum of the variances along the
critical path
Project control should focus on the critical
path
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End of Chapter 3

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