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Week 3 - Project Management
Week 3 - Project Management
Week 3 - Project Management
OPERATIONS MANAGEMENT
Project Management
Fall 2015
Geoff Pond
Project Management
Agenda
Activities (time)
Employees
Subcontractors
Equipment
Money (budgets)
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Level
2
Level
3
Mathematical
Proof
Theoretical
Coded
Algorithm
Research
Program Optimization
Applied
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Location
Planning
Problem
Survey
Crew
Drill Crew
Lab Techs
Geologist
s
Vertical Axis is
assigned
resource
(People /
Equipment /
Contractor)
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Activity A
Activity B
Activity C
Activity D
Activity
E
Hours or
Days
Horizontal Axis is a unit of TIME
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Is
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$125K
$145K
$112.5
K
$6K
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$388.
5
BCWS
100% of $125K
$125K
75% of $145K
$108.75
K
$75K
50% of $150K
BCWP
60% of $60K
$36K
$344.75
EVM - KPIs
Schedule Variance:
BCWP BCWS = $344.75K $388.5K = -$43.75K
Interpretation
A negative schedule variance suggests that the
project hasnt progressed as far as expected by the
assessment date. Of course this assumes that funds
are expended uniformly across the duration of the
activity (which is seldom the case).
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EVM - KPIs
Schedule Performance Index:
BCWP/BCWS = 344.75/388.5 = 0.89
Interpretation
This ratio is ideally greater than 1, which would
indicate that the project is progressing at or faster
than the expected pace. A ratio less than 1 suggests
that the project is behind schedule. This makes the
same assumption noted earlier.
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EVM - KPIs
Cost Variance
(for this example, lets suppose the actual cost is
$380K)
BCWP AC = $344.75K $380K = -$35.25K
Interpretation.
Naturally, a negative cost variance suggests that the
funds spent are less than the amount of funds
allocated. Or in other words, the project is progressing
under budget.
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EVM - KPIs
Cost Performance Index
BCWP/AC = 344.75/380 = 0.91
Interpretation
An index value less than 1 suggests that budgeted
cost is less than the actual cost. Or in other words,
that the project is spending more money than what
was anticipated. If the index value is greater than 1,
the opposite is true.
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EVM - KPIs
Overall
This project is behind schedule and experiencing cost
over-runs clearly it isnt being managed by a QSB
graduate.
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where:
EFT stands for the Earliest Start
Time;
EFT stands for the Earliest Finish
Time;
LST stands for the Latest Start
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0+1=
1
0+3=
3
EST + Activity Time =
EFT
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Slack is the amount of time between the EST and LST (or between
the EFT and LFT)
For Activity H, slack is 4 0 = 4 days. In other words, if Activity H
is delayed by as much as 4 days, there is no impact on the project
completion time.
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No Pressure,
Right?
John F. Kennedy
State of the Union Address
30 January 1961
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where:
is the
is the
is the
is the
Example
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where:
is the variance;
is the most pessimistic activity time;
and
is the most optimistic activity time
Example
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Expected
1.08
()
1.08
1.17
1.17
1.42
1.42
1.83
1.83
5.17
5.17
2.17
2.17
2
2
3.33
3.33
1
1
1.08
1.08
Variance ()
0.06
0.06
0.11
0.11
0.34
0.34
0.11
0.11
2.25
2.25
0.25
0.25
0.11
0.11
0.25
0.25
0.03
0.03
0.03
0.03
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where:
is a test value;
is the expected value;
is the standard deviation; and
is a z-value used to find a
corresponding probability from a z-table
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