Chapter 17: Assignments

 Reading: Managing Projects the Right Way: Key

Principles for Successful Projects
 Case: Time Please, pp 825
 Problems: 7, pp 819

17-1
 Learning Objectives
 Nature, examples, triple constraints of projects
 Project life cycle
 Matrix organizations
 Work breakdown structures
 Gantt chart
 Critical path method (CPM)
 Project evaluation review method (PERT)
 Crashing analysis
 Project risk management
 Project management software

17-2
 Projects
 Projects:
 Unique
 One-time effort to accomplish a specific set of objectives in
a limited time frame
 Start and end dates
 Reward and penalty
 Examples:
 The Olympic Games
 Producing a movie
 Software development
 Product development
 ERP implementation
 MBA Dissertation
17-3
 The Triple Constraint
of Project Management

Successful project
management means
meeting all three goals
(scope, time, and cost) –
thus satisfying the
project’s sponsor and
customer(s)!
Quality is fourth
constraint!

17-4
 The Nature of Projects
 Projects go through a series of stages– a life
cycle
 Projects bring together people with a
diversity of knowledge and skills, most of
whom remain associated with the project for
less than its full life
 Use their own organizational structure called
Matrix organization

17-5
Project Life Cycle

17-6
Matrix Organization

HR,
Training,
Legal,
Construction …

17-7
 Project Management
Decisions
 Project success depends upon making key
managerial decisions over a sequence of
steps:
 Deciding which projects to implement
 Selecting the project manager
 Selecting the project team
 Planning the project
 Managing and controlling project resources
 Deciding if and when a project should be
terminated
17-8
 Project Management Tools
 Work Breakdown Structures (WBS)
 Gantt Chart
 Critical Path Method (CPM)
 Project/program Evaluation Review
Technique (PERT)
 Crashing Analysis
 Risk Analysis

17-9
 Work Breakdown Structure
(WBS)
 WBS
 A hierarchical listing of what must be done
during a project
 Establishes a logical framework for identifying the
required activities for the project
1. Identify the major elements of the project
2. Identify the major supporting activities for each of the major
elements
3. Break down each major supporting activity into a list of the
activities that will be needed to accomplish it

17-10
Example Work Breakdown
Structure

17-11
Example Work Breakdown
Structure

17-11 a
Gantt Chart

17-12
 CPM and PERT
 CPM (critical path method) and PERT (program evaluation
and review technique) are two techniques used to manage
large-scale projects
 CPM and PERT help Project Managers:
1. A graphical display of project activities
2. An estimate of how long the project will take
3. An indication of which activities are most critical to timely project
completion
4. An indication of how long any activity can be delayed without
delaying the project
 CPM is deterministic and PERT probabilistic

17-13
 Example
Activity Time Preceded By
A 10 --
B 7 --
C 5 A
D 13 A
E 4 B,C
F 12 D
G 14 E

17-14
 Network Diagram

2 4
A(10) D(13) F(12)

1 C(5) 6
B(7)
E(4) G(14)
3 5

Paths Time Slack

A-D-F 35 0 critical path

A-C-E-G 33 2
B-E-G 25 10
17-15
Early Start and Finish Times

17-16
Latest Start and Finish Times

17-17
 Activity Slack Time
 Activity Slack

 Activity Slack Calculation

 TES = earliest start time for activity
 TLS = latest start time for activity
 TEF = earliest finish time for activity
 TLF = latest finish time for activity
Activity Slack = TLS - TES = TLF - TEF

 Activities with zero slack are critical activities

17-18
 Path Slack

Path Slack = Duration of Critical Path -

Path Duration

17-19
 Activity Slack Times
Activity ES EF LS LF Slack
A 0 10 0 10 0
B 0 7 10 17 10
C 10 15 12 17 5
D 10 23 10 23 0
E 15 19 17 21 2
F 23 35 23 35 0
G 19 33 21 35 2

17-20
 PERT: Project Planning When
Activity Times are Uncertain
 Inputs
 optimistic (to), most likely (tm), and pessimistic (tp) time
estimate for each activity
 activity precedence relationships
 Outputs
 graphical representation of project
 expected activity and path completion times
 variance of activity and path completion times
 probability that project completed by specified time

17-21
Expected Activity Time and
Variance of Activity Time

t o  4t m  t p
te 
6

2
 t p  to 
 
2

 6 

17-22
 Example
Activity Preceded By to tm tp te 2
A -- 2 6 7 5.50 .694
B -- 5 7 9 7.00 .444
C A 3 5 6 4.83 .250
D A 10 10 10 10.0 0.000
E B,C 3 4 5 4.0 .111
F D 8 12 13 11.5 .913
G E 2 4 8 4.33 1.000

17-23
Network Diagram with Expected
Activity Times and Variances

[5.5, [10, 0.0]

0.694]
2 4
D [11.5, 0.913]
A F
1 C [4.83, 6
0.250]
B
[7.0, G
0.444] E [4.33, 1.0]
3 5
[4.0,
0.111]

17-24
 Expected Completion Time
and Variance of Path A-D-F

Expected completion time = 5.5 + 10 + 11.5

= 27

Path variance = 0.694 + 0 + 0.913 = 1.607

17-25
Path Expected Times and
Variances
Expected Standard
Path Time Variance Deviation
A-D-F 27 1.607 1.27

A-C-E-G 14.66 2.055 1.43

B-E-G 15.33 1.555 1.25

17-26
 Probabilities of Completion

desired completion time - expected completion time

z
Stddev

17-27
 Probability of Project Being
Completed on or Before Time 25

Only path A-D-F has reasonable

chance of taking 25 or more:
25  27
z  157
.
1.27

From standard normal table B in

Appendix B, there is a 5.82% chance of
completing project on or before time
25.
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 Probability of Path A-D-F being
Completed on or Before Time 25

5.82%

17-29
 Project Completion Time
 A project is not complete until all project activities are complete
 It is risky to only consider the critical path when assessing the
probability of completing a project within a specified time.
 To determine the probability of completing the project within a particular time
frame
 Calculate the probability that each path in the project will be completed
within the specified time
 Multiply these probabilities
 The result is the probability that the project will be completed within
the specified time

17-30
 Problem 7, Page 819
 a. Draw precedence diagram

 b. Find the critical path

 c. Find the probability that the project can be

completed in 21 days

17-31
 Assumption: Independence
 Independence
 Assumption that path duration times are
independent of each other
 Requires that
1. Activity times are independent
2. Each activity is on only one path
 The assumption of independence can be considered
to be met if only a few activities in a large project are
on multiple paths

17-32
 Time-Cost Trade-Offs
 Activity time estimates are made for some given level of
resources
 It may be possible to reduce the duration of a project by
injecting additional resources
 Motivations:
 To avoid late penalties
 Monetary incentives
 Free resources for use on other projects

17-33
 Time-Cost Trade-Offs:
Crashing
 Crashing
 Shortening activity durations
 Typically, involves the use of additional funds to support additional
personnel or more efficient equipment, and the relaxing of some work
specifications
 The project duration may be shortened by increasing direct
expenses, thereby realizing savings in indirect project costs

17-34
 Crashing Decisions
 To make decisions concerning crashing
requires information about:
 Regular time and crash time estimates for each
activity
 Regular cost and crash cost estimates for each
activity
 A list of activities that are on the critical path
 Critical path activities are potential candidates for crashing
 Crashing non-critical path activities would not have an impact on
overall project duration

17-35
 Crashing: Procedure
 General procedure:
1. Crash the project one period at a time
2. Crash the least expensive activity that is on the critical path
3. When there are multiple critical paths, find the sum of crashing the
least expensive activity on each critical path
 If two or more critical paths share common activities, compare
the least expensive cost of crashing a common activity shared by
critical paths with the sum for the separate critical paths

17-36
Crashing Activities

17-37
 Project Risk Management
 Risks are an inherent part of project management
 Risks relate to occurrence of events that have undesirable
consequences such as
 Delays
 Increased costs
 Inability to meet technical specifications
 Good risk management involves
 Identifying as many risks as possible
 Analyzing and assessing those risks
 Working to minimize the probability of their occurrence
 Establishing contingency plans and budgets for dealing with any
that do occur

17-40
 Project Management Software
such as MSP 2007
 Specialized software used to manage projects
 Assign resources
 Compare project plan versions
 Evaluate changes
 Track performance
 Imposes a methodology and common project management
terminology
 Provides a logical planning structure
 May enhance communication among team members
 Can flag the occurrence of constraint violations
 Automatically formats reports
 Can generate multiple levels of summary and detail reports
 Enables “what if” scenarios
 Can generate a variety of chart types
17-38
Reading: Managing Projects the Right
Way: Key Principles for Successful
Projects

17-41
Case: Time Please, pp 825

17-42