Introduction to Project

Management
 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 Characteristics

• Single unit

• Limited time and budget framework

• Many unique set of activities involved

• Difficult production planning and inventory

control
 An Example
• Building construction

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
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© 1995 Corel Corp.

 An Example
• Research project

© 1995
Corel Corp.
Project Management
Techniques
• Program Evaluation &
Review Technique (PERT)
Makes use of Critical Path
Method (CPM)
A project is a large complex undertaking
made up of many tasks, jobs, or activities.
Activities are related by precedence, an ordering
forced by technological or other constraints.
To begin, we assume:
• Unlimited resources or processors.
That is, all necessary workers,
materials, and equipment are available, as needed.
Thus, a task can begin processing as soon
as all precedence constraints are satisfied.
• Fixed processing times.
The duration of each activity is assumed known in
advance.
 Issues in Project Scheduling
Timing Analysis
1. What is the earliest time that the entire project can be finished
(the project completion time) ?
2. What is the anticipated start time and completion time for
each
activity?
3. Which are the critical activities?
An activity is critical if it cannot be delayed without delaying the entire
project.

4. How much slack or float does each noncritical activity have?

The float of an activity is the time it can be delayed without delaying the
project.

Cost Analysis
5. What is the time/cost tradeoff?
That is, how much overhead must be spent if project is to finish earlier
than its normal completion time?
 Methodology
• Construct the Project Network
• For Timing Analysis, two methods are
available:
- Critical Path Method (CPM)
- Linear Programming (LP)
CPM is a special solution technique for project
management, and has intuitive appeal. LP is less
intuitive but more flexible.
• For Cost Analysis, we use Linear
Programming.
 CPM
• Activities : Projects steps that consume resources and/or time.
• Path: A sequence of activities that leads from the starting node to the
finishing node.
• Critical path : The longest path; determined 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.

 Activity-on-arrow (A-O-A) :  Activity-on-node (A-O-N) :

Network diagram convention in Network diagram convention in
which arrows designate activities which nodes designate activities.

b b
a a
c c
Activity “a”: clean dishes, “b” prepare coffee, “c” prepare bread
 Cost Table for Project

Normal
Activity Weeks $
A 3 5,000
B 6 14,000
C 2 2,500
D 5 10,000
E 2 8,000
F 7 11,500
G 4 10,000
 Crash: Shortening activity
durations

• In many situations, it is possible to reduce the length of a

project by injecting additional resources.

• Activities on the critical path are potential candidates for

crashing, because shortening noncritical activities would not
have an impact on total project duration.

• From an economic standpoint, activities should be crashed

according to crashing costs: Crash those with the lowest
crash cost first, moreover, crashing should continue as long
as the cost to crash is less than the benefits derived from
crashing.
 Cost Table for Project

Normal Crash 
Cost Slope,
Activity Weeks $ Weeks $
$/week
A 3 5,000 2 10,000 5000
B 6 14,000 4 26,000 6000
C 2 2,500 1 5,000 2500
D 5 10,000 3 18,000 4000
E 2 8,000 2 8,000 - 
F 7 11,500 5 17,500 3000
G 4 10,000 2 24,000 7000
 Activity List
  Normal  
Activity Weeks Predecessors
A 3
B 6  
C 2  
D 5 A
E 2 C
F 7 A
G 4 B,D,E
 F
A (7)
(3)
D
(5)

Start B G End
(6) (4)

E
(2)
C
(2)

Do Forward and Backward Pass ES EF

LS LF

Critical Path TS
 3 10
0 3 5 12
0 3 F
0 2
A (7)
(3)
D
0 0 3 8 (5) 12 12
0 0 3 8 12 12
0
Start B G End
(6) 0 6 (4)
2 8
8 12
2
8 12
E 0
(2)
C 2 4
(2) 6 8

0 2 4
4 6
ES EF
4
LS LF

Critical Path TS
 Gantt Chart

E
Activity

D
Series1 Duration Slack

0 1 2 3 4 5 6 7 8 9 10 11 12 13

Duration
To reduce the project duration
• Activities on the critical path are to be
crashed.
• In addition to this, those activities should be
crashed first whose cost slope is minimum.
• Care should be taken that no other path
becomes critical.
 In this example :
• Critical path is : A-D-G
• Among these three, D has the minimum
cost slope, so it should be crashed first.
Total Project Cost = 61,000 + 4,000 = 65,000
F
A (7)
(3)
D
(4)

Start B G End
(6) (4)

E
(2)
C
(2)

Total project time = 3 + 4 + 4 = 11

Critical Path
(2) Revised schedule in order to complete the job
within ten (10) weeks,
F
A (7)
(3)

D
(3)

Start B G
End
(6) (4)

E Total project time = 3 + 3 + 4 = 10

(2)
C
(2)
Total Project Cost = 65,000 + 4,000 = 69,000
Critical Path 3 Critical paths A-D-G, A-F and B-G
 (4) Project is planned to be completed in six
weeks and penalty cost of $10,000 per week for
every week that project is late
• We would get the following critical paths with the
project duration of 9 weeks
• A-D-G which would additionally cost :
A ($5000) , D (cannot crash) and G (7000) . Minimum =
$5000 (Activity A)
• B-G which would additionally cost: $6000 (Activity B) or
$7000 (Activity G), Minimum = $6000 (Activity B)
• A-F which would additionally cost: $5000 (Activity A) or
$3000 (Activity F), Minimum = $3000 (Activity F)
• Better to crash Activity G alone or better to crash both A and
B together?
(2) Project is planned to be completed in six weeks and
penalty cost of $10,000 per week for every week that
project is late
F
A (6)
(3)

D
(3)

Start B G
End
(6) (3)

E Total project time = 3 + 3 + 3 = 9

(2)
C
(2) Total Project Cost = 69,000 + 7000 + 3000
+ 30000 = 109,000
Critical Path 3 Critical paths A-D-G, B-G and A-F
Alternatives Weeks Normal Penalty Total
+Crash Cost

1 12 61000 60000 121000

2 11 65000 50000 115000

3 10 69000 40000 109000

4 9 79000 30000 109000

5 8 89000 20000 109000

6 7 100000 10000 110000

 Trade-offs between Time and Cost
We now assume:
• Unlimited resources
• Predictable task times - not uncertain, but not
fixed either. Durations may be adjusted as planned
outcomes of resource allocations. A typical time-cost
trade-off for a task might look like this:

Project Cost/Time Tradeoff curve

Project Completion Time

 Procedures for crashing a project:
Shortening activity durations
Step 1. Find the critical path and identify the critical
activities.

Step 2 If there is only one critical path, select and crash

the activity by one unit on the critical path with
the smallest crash cost per unit.
If there are more than one critical path (e.g. two
or three), select and crash one activity by one
unit with the smallest crash cost per unit on
each critical path.

Step 3. Return to step 1. Crashing should continue as

long as the cost to crash is less than the
benefit derived from crashing.