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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 4

Project Management
Defined
 Project is a series of related jobs usually
directed toward some major output and
requiring a significant period of time to
perform
 Project Management are 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 (Henry L. Gantt)

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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Structuring Projects: Pure Project

A pure project (nicknamed skunk works) is

where a self-contained team works full-time on
the 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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Disadvantages
 Duplication of resources. Equipment and
people are not shared across projects.
 Organizational goals and policies are
ignored, coz team members are removed form
headquarters.
 Lack of technology transfer, due to
weakened functional divisions.
 Team members have no functional area
"home“, they worry about life-after-project.

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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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 9

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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 11

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 manager’s

negotiating skills

 Potential for sub-optimization

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 14

Work Breakdown Structure

A work breakdown structure defines the
hierarchy of project tasks, subtasks, and
work packages
Level Program

1 Project 1 Project 2 Statement of Work (SOW)

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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 A work package is a group of activities

combined to be assignable to a single
organizational unit.
– It provides a description of what is to be
done, when it is to be started and completed,
the budget, measures of performance, and
specific events to be reached at points in
time. These specific events are called project
milestones. Typical milestones might be the
completion of the design, the production of a
prototype, the completed testing of the
prototype, and the approval of a pilot run.

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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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 18

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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 20

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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 21

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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 22

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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 23

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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Hint:
Hint:Start
Startwith
withLF=15
LF=15
Determine late or
orthe
thetotal
totaltime
timeofofthe
the
starts and late ES=4 project
project and
andgogo
finish times 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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 25

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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 26

PROBLEM
 A project has been defined to contain the following
list of activities, along with their required times for
completion
Activity Time Immediate
(Days) Pred.
a. Draw the critical path
A 1 -
diagram
B 4 A
b. Show the early start and
C 3 A
Early start finish times
D 7 A
c. Show the critical path
E 6 B
d. What would happen if
F 2 C,D
activity F was revised
to take four days instead
G 7 E,F
of two?
H 9 D
I 4 G,H

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 27

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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 28

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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 29

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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 30

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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 31

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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 32

Example 2. Probability Exercise

What
What isis the
theprobability
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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 33

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
path.) 
  == 4141
 22

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 34

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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 35

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 56
56
weeks?
weeks?

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 36

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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 37

PROBLEM
A project has been defined to contain the following
activities, along with their time estimates for
completion
Activity Time Estimates Immediate a. Calculate the expected
Time and the variance
a m b Predecessor
for each activity
A 1 4 7 - b. Draw the critical path
B 2 6 7 A diagram
C 3 4 6 A,D c. Show the early start,
D 6 12 14 A early finish times and
late start, late finish
E 3 6 12 D
times.
F 6 8 16 B,C d. Show the critical path
G 1 5 6 E,F e. What is the probability
of the project can be
completed in 34 weeks

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 38

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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 39

 TIME COST MODEL EXAMPLE

 PROBLEM

 ANSWER

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 40

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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 41

Question Bowl

Which of the following are examples

of Graphic Project Charts?
a. Gantt
b. Bar
c. Milestone
d. All of the above
e. None of the above

Answer: d. All of the above

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 42

Question Bowl

Which of the following are one of the

three organizational structures of
projects?
a. Pure
b. Functional
c. Matrix
d. All of the above
e. None of the above

Answer: d. All of the above

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 43

Question Bowl
A project starts with a written description of the
objectives to be achieved, with a brief statement
of the work to be done and a proposed schedule
all contained in which of the following?
a. SOW
b. WBS
c. Early Start Schedule
d. Late Start Schedule
e. None of the above

Answer: a. SOW (or Statement of Work)

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 44

Question Bowl
For some activities in a project there may
be some leeway from when an activity can
start and when it must finish. What is this
period of time called when using the Critical
Path Method?
a. Early start time
b. Late start time
c. Slack time
d. All of the above
e. None of the above

Answer: c. Slack time

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 45

Question Bowl
How much “slack time” is permitted in the “critical
path” activity times?
a. Only one unit of time per activity
b. No slack time is permitted
c. As much as the maximum activity time in the
network
d. As much as is necessary to add up to the total
time of the project
e. None of the above
Answer: b. No slack time is permitted (All
critical path activities must have zero slack
time, otherwise they would not be critical to
the project completion time.)

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 46

Question Bowl

When looking at the Time-Cost Trade Offs in the

Minimum-Cost Scheduling time-cost model,
we seek to reduce the total time of a project
by doing what to the least-cost activity
choices? Answer: a. Crashing
a. Crashing them them (We “crash” the
b. Adding slack time least-cost activity
c. Subtracting slack time times to seek a reduced
d. Adding project time total time for the
e. None of the above entire project and we
do it step-wise as
inexpensively as
possible.)
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 47

End of Chapter 3

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