Project Management
Project Management
Applications
What is a project?
Any endeavor with objectives
With multiple activities
With defined precedent relationships
With a specific time period for completion
Examples?
A major event like a wedding
Any construction project
Designing a political campaign
Five Project Life Cycle
Phases
Conception: identify the need
Feasibility analysis or study:
costs benefits, and risks
Planning: who, how long, what to
do?
Execution: doing the project
Termination: ending the project
Network Planning
Techniques
Program Evaluation & Review Technique
(PERT):
Developed to manage the Polaris missile project
Many tasks pushed the boundaries of science &
engineering (tasks’ duration = probabilistic)
Critical Path Method (CPM):
Developed to coordinate maintenance projects in
the chemical industry
A complex undertaking, but individual tasks are
routine (tasks’ duration = deterministic)
Both PERT and CPM
Graphically display the precedence
relationships & sequence of activities
Estimate the project’s duration
Identify critical activities that cannot be
delayed without delaying the project
Estimate the amount of slack associated
with non-critical activities
Network Diagrams
Activity-on-Node (AON):
Uses nodes to represent the activity
Uses arrows to represent precedence relationships
Step 1-Define the Project: Cables By Us is bringing a
new product on line to be manufactured in their current
facility in some existing space. The owners have identified
11 activities and their precedence relationships. Develop
an AON for the project.
Immediate Duration
Activity Description
Predecessor (weeks)
A Develop product specifications None 4
B Design manufacturing process A 6
C Source & purchase materials A 3
D Source & purchase tooling & equipment B 6
E Receive & install tooling & equipment D 14
F Receive materials C 5
G Pilot production run E&F 2
H Evaluate product design G 2
I Evaluate process performance G 3
J Write documentation report H&I 4
K Transition to manufacturing J 2
Step 2- Diagram the Network
for
Cables By Us
Step 3 (a)- Add Deterministic
Time Estimates and Connected
Paths
Step 3 (a) (Continued):
Calculate the Path
Completion Times
Paths Path duration
ABDEGHJK 40
ABDEGIJK 41
ACFGHJK 22
ACFGIJK 23
The longest path (ABDEGIJK) limits the
project’s duration (project cannot finish
in less time than its longest path)
ABDEGIJK is the project’s critical
path
Some Network Definitions
All activities on the critical path have zero slack
Slack defines how long non-critical activities can
be delayed without delaying the project
Slack = the activity’s late finish minus its early
finish (or its late start minus its early start)
Earliest Start (ES) = the earliest finish of the
immediately preceding activity
Earliest Finish (EF) = is the ES plus the activity time
Latest Start (LS) and Latest Finish (LF) depend on
whether or not the activity is on the critical path
ES, EF Network
LS, LF Network
Calculating Slack
Late Early Slack
Activity
Finish Finish (weeks)
A 4 4 0
B 10 10 0
C 25 7 18
D 16 16 0
E 30 30 0
F 30 12 18
G 32 32 0
H 35 34 1
I 35 35 0
J 39 39 0
K 41 41 0
Earliest Start Gantt Chart
A
0 5 10 15 20 25 30 35 40 45
Latest Start Gantt Chart
A
0 5 10 15 20 25 30 35 40 45
Revisiting Cables By Us
Using Probabilistic Time
Estimates
Optimistic Most likely Pessimistic
Activity Description
time time time
A Develop product specifications 2 4 6
B Design manufacturing process 3 7 10
C Source & purchase materials 2 3 5
D Source & purchase tooling & equipment 4 7 9
E Receive & install tooling & equipment 12 16 20
F Receive materials 2 5 8
G Pilot production run 2 2 2
H Evaluate product design 2 3 4
I Evaluate process performance 2 3 5
J Write documentation report 2 4 6
K Transition to manufacturing 2 2 2
Using Beta Probability
Distribution to Calculate
Expected Time Durations
A typical beta distribution is shown below, note
that it has definite end points
The expected time for finishing each activity is
a weighted average
optimistic 4most likely pessimistic
Exp. time
6
Calculating Expected Task
Times
optimistic 4most likely pessimistic
Expected time
6
Optimistic Most likely Pessimistic Expected
Activity
time time time time
A 2 4 6 4
B 3 7 10 6.83
C 2 3 5 3.17
D 4 7 9 6.83
E 12 16 20 16
F 2 5 8 5
G 2 2 2 2
H 2 3 4 3
I 2 3 5 3.17
J 2 4 6 4
K 2 2 2 2
Network Diagram with
Expected Activity Times
Estimated Path Durations
through the Network
Activities on paths Expected duration
ABDEGHJK 44.66
ABDEGIJK 44.83
ACFGHJK 23.17
ACFGIJK 23.34
ABDEGIJK is the expected critical
path & the project has an expected
duration of 44.83 weeks
Estimating the Probability
of Completion Dates
Using probabilistic time estimates offers the advantage of
predicting the probability of project completion dates
We have already calculated the expected time for each
activity by making three time estimates
Now we need to calculate the variance for each activity
The variance of the beta probability distribution is:
2
2 p o
σ
6
where p=pessimistic activity time estimate
o=optimistic activity time estimate
Project Activity Variance
Activity Optimistic Most Pessimisti Variance
Likely c
A 2 4 6 0.44
B 3 7 10 1.36
C 2 3 5 0.25
D 4 7 9 0.69
E 12 16 20 1.78
F 2 5 8 1.00
G 2 2 2 0.00
H 2 3 4 0.11
I 2 3 5 0.25
J 2 4 6 0.44
Variances of Each Path
through the Network
Path Activities on Path Variance
Number Path (weeks)
1 A,B,D,E,G,H,J, 4.82
k
2 A,B,D,E,G,I,J,K 4.96
3 A,C,F,G,H,J,K 2.24
4 A,C,F,G,I,J,K 2.38
Calculating the Probability of
Completing the Project in Less Than
a Specified Time
When you know:
The expected completion time
Its variance
You can calculate the probability of completing the
project in “X” weeks with the following formula:
specified time path expected time DT EFP
z
path standard time σP 2
Where DT = the specified completion date
EFP = the expected completion time of the path
σP 2 variance of path
Example: Calculating the
probability of finishing the project in
48 weeks
Use the z values in Appendix B to determine probabilities
E.G. for path 1 48 weeks 44.66 weeks
z 1.52
4.82
Path Activities on Path z-value Probability
Number Path Variance of
(weeks)
Completion
1 A,B,D,E,G,H,J,k 4.82 1.5216 0.9357
2 A,B,D,E,G,I,J,K 4.96 1.4215 0.9222
3 A,C,F,G,H,J,K 2.24 16.5898 1.000
4 A,C,F,G,I,J,K 2.38 15.9847 1.000
Reducing the Time of a Project
(crashing)
Activit Normal Normal Crash Crash Max. Reduce
y Time Cost ($) Time Cost weeks of cost per
(wk) ($) reduction week
A 4 8,000 3 11,000 1 3,000
B 6 30,000 5 35,000 1 5,000
C 3 6,000 3 6,000 0 0
D 6 24,000 4 28,000 2 2,000
E 14 60,000 12 72,000 2 6,000
F 5 5,000 4 6,500 1 1500
G 2 6,000 2 6,000 0 0
H 2 4,000 2 4,000 0 0
I 3 4,000 2 5,000 1 1,000
J 4 4,000 2 6,400 2 1,200
Crashing Example: Suppose the Cables
By Us project manager wants to reduce
the new product project from 41 to 36
weeks.
Crashing Costs are considered to be linear
Look to crash activities on the critical path
Crash the least expensive activities on the
critical path first (based on cost per week)
Crash activity I from 3 weeks to 2 weeks $1000
Crash activity J from 4 weeks to 2 weeks $2400
Crash activity D from 6 weeks to 4 weeks $4000
Recommend Crash Cost $7400
Will crashing 5 weeks return more than it
costs?
Crashed Network Diagram
Chapter 16 HW
Assignment
Problems
1 – 8, 13 - 16
