Project Management

Projects are a unique aspect of business operations that require a special management approach. Unlike
many other aspects of business, which tend to operate more routinely, projects often have uncertainties
and risks that tend to make managing them more challenging, such as the New Zuari Bridge.

Examples of projects are many. Some are huge, such as building the space station, rescue and cleanup
operations after major natural disasters, and hosting the Olympic games. Others are smaller in scope, but
still quite involved, such as producing a major motion picture, putting on a Broadway play, or producing a
music video. They involve a tremendous amount of planning and coordinating set design, set building,
script writing, camera crews, directors, actors or hosts, costumes, advertising, and more to accomplish
project objectives while meeting budget and time constraints.

Consider the Olympic Games. They involve much more than the festivities, the excitement, national pride,
and competition among athletes. They all involve a tremendous amount of planning, preparation, and
coordinating work that needs to get done before and during the games. Athletes’ living quarters and
training facilities must be provided, competition schedules must be developed, arrangements for
televising events must be made, equipment and crews must be coordinated, transportation and hotel
accommodations must be made, and many other activities that go on behind the scenes must be planned
and managed so that everything goes off smoothly.
The Microsoft Corporation periodically releases new or updated software. Each release is the result of
many people working countless hours writing code, testing programs, and revising code. Design,
production, and marketing efforts also have to be coordinated. The reputation and profits of the company
are closely related to successful software development.

Not all projects are successful, and the consequences of project failure can be costly, and even
catastrophic. Projects are expensive and time-consuming, and more than a few companies have
terminated their projects after spending large sums of money. Hurricane Katrina, which devastated the
U.S. gulf coast in 2005, provides many examples of project failure: the rescue, relief, and cleanup
operations all left much to be desired.
Projects

JAN FEB MAR APR MAY JUN

Build A
A Done
Build B
B Done

Build C
C Done
Build D On time!
Ship

Unique, one-time operations designed to

accomplish a specific set of objectives in a limited
time frame.
PROJECT LIFE CYCLE
1. Definition. This has two parts: ( a ) concept, at which point the organization
recognizes the need for a project or responds to a request for a proposal from a
potential customer or client, and ( b ) feasibility analysis, which examines the
expected costs, benefits, and risks of undertaking the project.
2. Planning, which spells out the details of the work and provides estimates of the
necessary human resources, time, and cost.
3. Execution, during which the project itself is done. This phase often accounts for
the majority of time and resources consumed by a project.
4. Termination, during which closure is achieved. Termination can involve
reassigning personnel and dealing with any leftover materials, equipment (e.g.,
selling or transferring equipment), and any other resources associated with the
project.
Key Decisions in Project Management
• Deciding which projects to implement
• Selecting a project manager
• Selecting a project team
• Planning and designing the project
• Managing and controlling project resources
• Deciding if and when a project should be terminated
Project Manager
Responsible for:

Work Quality
Human Resources Time
Communications Costs
Ethical Issues
• Temptation to understate costs
• Withhold information
• Misleading status reports
• Falsifying records
• Comprising workers’ safety
• Approving substandard work
PROJECT CHAMPIONS
• Some companies make use of project champions .
• These are people, usually within the company, who promote and
support the project.
• They can be instrumental in facilitating the work of the project
manager by “talking up” the project to other managers who might be
asked to share resources with the project team as well as employees
who might be asked to work on parts of the project.
• The work that a project champion does can be critical to the success
of a project, so it is important for team members to encourage and
communicate with the project champion.
Project Management
• What are the tools?
• Work breakdown structure
• Network diagram
• Gantt charts
• Risk management
WORK BREAKDOWN STRUCTURE
• Work breakdown structure (WBS) A hierarchical listing of what must
be done during a project.
• This methodology establishes a logical framework for identifying the
required activities for the project.
Work Breakdown Structure
Project
Project XX

Level 1

Level 2

Level 3

Level 4
PLANNING AND SCHEDULING WITH
GANTT CHARTS
• The Gantt chart is a popular visual tool for planning and scheduling
simple projects.
• It enables a manager to initially schedule project activities and then to
monitor progress over time by comparing planned progress to actual
progress.
GANTT CHART FOR BANK
PERT AND CPM
• PERT (program evaluation and review technique) and CPM (critical
path method) are two of the most widely used techniques for
planning and coordinating large-scale projects.
• By using PERT or CPM, managers are able to obtain:
• A graphical display of project activities.
• An estimate of how long the project will take.
• An indication of which activities are the most critical to timely project
completion.
• An indication of how long any activity can be delayed without delaying the
project.
The Network Diagram
• Network (precedence) diagram: Diagram of project activities that
shows sequential relationships by use of arrows and nodes.
• Activity-on-arrow (AOA): Network diagram convention in which
arrows designate activities.
• Activity-on-node (AON): Network diagram convention in which nodes
designate activities.
• Activities: Project steps that consume resources and/or time.
• Events: The starting and finishing of activities, designated by nodes in
the AOA convention.
• Path: A sequence of activities that leads from the starting node to the
finishing node.
• Critical path: The longest path; determines expected project duration.
• Critical activities: Activities on the critical path.
• Slack: Allowable slippage for a path; the difference between the
length of a path and the length of the critical path.
Project Network – Activity on Arrow

Order
AOA furniture 4
Furniture
Locate 2 setup
facilities
Remodel
1 5 6
Move in

Interview
Hire and
train
3
Project Network – Activity on Node
Order
furniture
Locate Furniture
2 setup
facilities
AON
1 6
Move in
Remodel

S 5 7

Hire and
Interview
train

3 4
Example 1

6 weeks
Deterministic 4
time estimates rder e
O itur

Furn p
3 weeks
furn

setu
8 weeks 2

itur
Rem
ate s o del

e
c
Lo ilitie 11 weeks Move in
fac
1 5 6
1 week
In
te n
r vie trai
4 weeks w and
e
Hir 9 weeks

3
Example 1 Solution

Critical Path

Path Length Slack

(weeks)
1-2-3-4-5-6 18 2
1-2-5-6 20 0
1-3-5-6 14 6
Network Conventions
Time-cost Trade-offs: Crashing
• Crash – shortening activity duration
• Procedure for crashing
• Crash the project one period at a time
• Only an activity on the critical path
• Crash the least expensive activity
• Multiple critical paths: find the sum of crashing the least expensive activity on
each critical path
Project Crashing
• Crashing a project involves paying more money to complete a project
more quickly.
• Since the critical path determines the length of a project, it makes
sense to reduce the length of activities on the critical path.
• CP activities should be reduced until the project is reduced to the
desired length or you are paying more per day than you save.
• If you have multiple CPs, they should be shortened simultaneously.
Time-Cost Trade-Offs: Crashing

Total
cost

Expected indirect costs

Shorten

Cumulative CRASH
cost of crashing
Shorten

Optimum
Advantages of PERT
• Forces managers to organize
• Provides graphic display of activities
• Identifies
• 4
Critical activities
2
• Slack activities
1 5 6

3
Limitations of PERT
• Important activities may be omitted
• Precedence relationships may not be correct
4
• Estimates may include
a fudge factor 2

• May focus solely

on critical path 1 5 6

142 weeks

3
Technology for Managing Projects
• Computer aided design (CAD)
• Groupware (Lotus Notes)
• Project management software
• CA Super Project
• Harvard Total Manager
• MS Project
• Sure Track Project Manager
• Time Line
Advantages of PM Software
• Imposes a methodology
• Provides logical planning structure
• Enhances team communication
• Flag constraint violations
• Automatic report formats
• Multiple levels of reports
• Enables what-if scenarios
• Generates various chart types
Project Risk Management
• Risk: occurrence of events that have undesirable consequences
• Delays
• Increased costs
• Inability to meet specifications
• Project termination
Risk Management
• Identify potential risks
• Analyze and assess risks
• Work to minimize occurrence of risk
• Establish contingency plans