PROJECT

MANAGEMENT
FRANI | LEE | MELAD | TAN, V. | TRINIDAD
 TABLE OF CONTENTS

Network-Planning
01 Project Management Models 03
Explain what projects are Analyze projects using
and how projects are network-planning models
organized
Project Management
02 Managing Projects Information Systems 04
Evaluate projects using Exemplify how
earned value management network-planning models and
earned value management
are implemented in
commercial software
packages
 PROJECT
MANAGEMENT
PROJECT
A series of related jobs
usually directed toward
some major output and
requiring a significant
amount of time to
perform.
PROJECT
MANAGEMENT
Project management is
defined as planning,
directing and controlling
resources to meet the
technical, cost and time
constraints of the project.
PROJECT MANAGERS

Technical skills

People Skills

Resolve Conflicts
PROJECT CATEGORIES
 ORGANIZATIONAL STRUCTURE: PURE PROJECT
● Small project-focused team that works full-time for the
project
● Advantages
○ Project manager has full authority
○ One boss only
○ Decisions are made quickly
○ High team pride, motivation and commitment
● Disadvantages
○ Duplication of resources
○ Organizational goals and policies are ignored
○ Falls behind in knowledge of new technology
○ Worries about life after the project; project
termination is delayed
 ORGANIZATIONAL STRUCTURE: FUNCTIONAL PROJECT

● Project is within a functional division

● Advantages
○ Work on several projects
○ Technical expertise is maintained in the functional area
○ Functional area is a home after project is completed
○ Functional area experts create synergistic solutions
● Disadvantages
○ Aspects of the project not directly related to the functional area get
shortchanged
○ Needs of the client are secondary
○ Motivation is often weak
ORGANIZATIONAL STRUCTURE: MATRIX PROJECT
● Specialized organizational form blending properties of
functional and pure project structures

● Advantages
○ Enhanced communication between functional
divisions
○ Project manager ensures successful completion of
project
○ Team members have a functional “home” after project
completion (vs. Pure project organization)
○ Policies of the parent organization is followed,
increasing support for the project
ORGANIZATIONAL STRUCTURE: MATRIX PROJECT
● Disadvantages
○ Two bosses (functional vs. project manager)
○ Doomed to fail unless PM has strong negotiation
skills
○ Danger/risk of suboptimization: PMs hoard resources
for their own projects, thus harming other projects
 ROLE OF PROJECT MANAGER

primary contact ensure successful organizes project

point with completion of task
customer project
WORK BREAKDOWN STRUCTURE
WORK BREAKDOWN STRUCTURE
 TERMS

Task Work package

Further subdivision of a project.
Group of activities combined
Not longer than several months,
and assigned to a single
performed by one
organizational unit
group/organization

Subtasks Project milestones

May be needed to further Specific events to be reached at
subdivide the tasks points in time in a project

Project
Tasks
Subtasks
WP
 ORGANIZING PROJECT TASKS

Work Breakdown Completion of tasks

Structure (WBS) and activities

Statement of Milestone X Completion of

Work (SOW) Project
MANAGING
PROJECTS
Graphic Project Reports

Shows how projects are

managed while they are
being completed
 Gantt Chart Cost Breakdown
Shows both amount of time involved and Shows clarity in identifying sources and
the sequence of activities performed amount of its cost
Divisional Breakdown Tracking Schedule
Shows the relation of labor hours to the
Shows the degree of completion
proportion of the project’s total labor cost
 Milestone Chart
Shows milestones at every completion of a
major activity
 Earned Value Management (EVM)

● Technique that combines measures of scope, schedule, and

cost for evaluating project progress
● Essential features of EVM implementation:
● Project plan
● Planned Value (PV) or Budget Costed of Work
Scheduled (BCWS)
● Earned Value (EV) or Budget Costed of Work Performed
(BCWP)
● Evaluated based on the cost only
● Weeks 1-4 over-budget; weeks 6-8 under-budget
● Missing understanding: how much work has been accomplished

Project Tracking without EVM

● Evaluated based on the cost and accomplishment of work
● Project manager identifies BCWP accumulated as progress is
made

Project Tracking with EVM

 Project Tracking with EVM
Foundational principle: a true understanding of cost performance
and schedule performance relies first on measuring technical
performance objectively
NETWORK-PLANNING
MODELS
CPM (Critical Path
Method)
● Critical path
○ Sequence of activities that form
the longest chain in terms of
their time to complete
● Critical path method
○ Procedure for scheduling a
project
○ Determine scheduling
information about each activity
 Critical Path Method

For example you instructor asked that you perform an analysis using
the following steps
1. Select a Company
2. Obtain the company’s annual report and perform a ratio analysis
3. Collect technical stock price data and construct charts
4. Individually review the data and make a team decision on whether
to buy the stock
 Select a company
A(01) ALL MEMBERS
1 week

Ratio analysis
B(02) 2 MEMBERS
2 weeks

Stock Price and Charts

C(03) 2 MEMBERS
1 week

Review the data

D(04) ALL MEMBERS
1 week
 Identify Activity Critical Path Method
01 Identify each activity to be done in the
project and estimate how long it will
take to complete each activity

Sequence of Activities
02 Determine the required sequence of
activities and construct a network
reflecting the precedence relationship
 Critical Path Method

Immediate
Activity Designation Time (Weeks)
Predecessors

Select Company A None 1

Annual Report and

B A 2
Ratio Analysis

Stock Price Data and

C A 1
Technical Analysis

Review Data and

D B an C 1
Make a Decision
Precedence Relationship
 Identify Activity Critical Path Method
01 Identify each activity to be done in the
project and estimate how long it will
take to complete each activity

Sequence of Activities
02 Determine the required sequence of
activities and construct a network
reflecting the precedence relationship

Critical Path
03 Determine the critical path
Precedence Relationship
 Identify Activity Critical Path Method
01 Identify each activity to be done in the
project and estimate how long it will
take to complete each activity

Sequence of Activities
02 Determine the required sequence of
activities and construct a network
reflecting the precedence relationship

Critical Path
03 Determine the critical path

Early/Late
Start/Finish
04 Determine the early
start/finish and late
start/finish schedule
Slack Time

● Slack Time
○ Leeway in when an activity
can start and finish
● Early start and finish
● Late start and finish
Early Start and Late
Start Schedule

● Early start schedule

○ Lists all activities by their early
start times
○ It completes the projects and all its
activities ASAP
● Late start schedule
○ Lists the activities to start as late
as possible without delaying the
completion date
○ I
 CPM with 3 Activity Time Estimates

● Obtain a probability estimate for completion time for the entire

network

1. Calculation of estimated time (min, max, most likely estimate)

2. Compute expected completion time
3. Estimate probability of completing the project by particular times
MINIMUM-COST SCHEDULING
(TIME-COST TRADE-OFF)

● Goal: develop a minimum-cost schedule for

an entire project and control project
expenses
● “Crashing”: shortening of time to complete
the project
● Project costs
○ Direct costs: costs associated with
expediting activities (activity direct
costs)
○ Indirect costs: costs associated with
sustaining the project
 HOW DO WE DO PROJECT CRASHING?
Prepare a CPM diagram with activity
01 costs.

Determine the cost per unit of time to

02 expedite each activity.

03 Compute the critical path.

Shorten the critical path at the least

04 cost.
Plot project direct, indirect, and
05 total-cost curves and find the
minimum-cost schedule.
 CPM
Diagram
 CPM CPM Diagram with
Diagram Activity Costs
 SAMPLE PROBLEM

Given the following information:

● Project with 4 activities
● Indirect costs = $10 total for the first 8 days of the project
● If the project takes longer than 8 days, indirect costs increase at a rate of
$5 per day

What is the minimum-cost schedule for this project?

STEP 1: PREPARE CPM DIAGRAM WITH ACTIVITY COSTS

● Normal cost (NC): lowest expected

direct activity costs
● Normal time (NT): time associated
with normal cost
● Crash time (CT): shortest possible
activity time
● Crash cost (CC): direct cost
associated with crash time
STEP 1: PREPARE CPM DIAGRAM WITH ACTIVITY COSTS

How do we draw the diagram for

Activity A given the following
values? (please help)

○ NT: 2 days
○ CT: 1 day
○ NC: $6
○ CC: $10
STEP 1: PREPARE CPM DIAGRAM WITH ACTIVITY COSTS

How do we draw the diagram for

Activity A given the following
values? (please help)

○ NT: 2 days
○ CT: 1 day
○ NC: $6
○ CC: $10
STEP 1: PREPARE CPM DIAGRAM WITH ACTIVITY COSTS
How do we draw the entire diagram
given all of these values?

● Activity B ● Activity D
○ NT: 5 days ○ NT: 3 days
○ CT: 2 days ○ CT: 1 day
○ NC: $9 ○ NC: $5
○ CC: $18 ○ CC: $9
● Activity C
○ NT: 4 days
○ CT: 3 days
○ NC: $6
○ CC: $8
STEP 1: PREPARE CPM DIAGRAM WITH ACTIVITY COSTS
How do we draw the entire diagram
given all of these values?

● Activity B ● Activity D
○ NT: 5 days ○ NT: 3 days
○ CT: 2 days ○ CT: 1 day
○ NC: $9 ○ NC: $5
○ CC: $18 ○ CC: $9
● Activity C
○ NT: 4 days
○ CT: 3 days
○ NC: $6
○ CC: $8
 STEP 2: DETERMINE THE COST PER UNIT OF TIME TO
EXPEDITE EACH ACTIVITY
● Assume that activity time and cost has a linear relationship
● Get the slope of the line

(CC - NC)
Slope =
(NT - CT)

● Derive the cost per day to expedite

STEP 2: DETERMINE THE COST PER UNIT OF TIME TO
EXPEDITE EACH ACTIVITY
STEP 2: DETERMINE THE COST PER UNIT OF TIME TO
EXPEDITE EACH ACTIVITY
STEP 3: COMPUTE THE CRITICAL PATH
STEP 3: COMPUTE THE CRITICAL PATH
STEP 3: COMPUTE THE CRITICAL PATH
 STEP 3: COMPUTE THE CRITICAL PATH

Indirect costs Direct cost

$10 + $5 x 2 + $6 + $9 + $6 + $5 = $46
$20 $26
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST

● Start with reducing the critical path time by one day using the
lowest-cost activity
● Recompute and find the new critical path and reduce it by one also
● Repeat until there can be no further reduction in the project
completion time
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST
STEP 4: SHORTEN THE CRITICAL PATH AT THE LEAST COST
STEP 5a: PLOT PROJECT DIRECT, INDIRECT, AND
TOTAL-COST CURVES

($20)
($15)
($10) ($10) ($10) ($10)
STEP 5a: PLOT PROJECT DIRECT, INDIRECT, AND
TOTAL-COST CURVES

($45)
($42) ($37)
($33)
($30)
($28)
($26)

($20)
($15)
($10) ($10) ($10) ($10)
STEP 5a: PLOT PROJECT DIRECT, INDIRECT, AND
TOTAL-COST CURVES
STEP 5b: FIND THE MINIMUM-COST SCHEDULE
 PROJECT
MANAGEMENT
INFORMATION
SYSTEMS
 The Microsoft Project

● Comes with an excellent online tutorial

● Compatible with Microsoft Office Suite
● Features for scheduling, allocating, and
leveling resources + controlling costs and
producing presentation-quality report
 The Microsoft Project

Tracking Gantt Chart superimposes the current schedule onto a

baseline plan so deviations are easily noticed
 CRITICAL PATH
METHOD
DEMO/EXERCISE
THANK
YOU!
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