Chapter 19 :Chapter 19 Planning and Controlling Projects


Overview :Overview Characteristics of a Project Project Management Project-Planning and Control Techniques Computer Software for Project Management An Evaluation of CPM/PERT Wrap-Up: What World-Class Producers Do


Characteristics of a Project :Characteristics of a Project A unique, one-time effort Requires the completion of a large number of interrelated activities Resources, such as time and/or money, are limited Typically has its own management structure


Project Management :Project Management Project manager is appointed to head the project management team Team members are drawn from various departments and are temporarily assigned to the project Team is responsible for the planning, scheduling and controlling the project to its completion


Project Team :Project Team Project Plan Management Information System Project Schedule Project Manager Project Team Resources: Internal Marketing Engineering Production Materials Quality Assur. HR Accounting External Suppliers Subcontract.


Project-Planning and Control Techniques :Project-Planning and Control Techniques Planning inputs Tools Scheduling and control charts Horizontal bar charts Expenditure charts and graphs Personnel charts Materials milestone charts Critical path method (CPM) Program evaluation and review technique (PERT)


Planning Inputs :Planning Inputs Resource Availability and/or Limits Due date, late penalties, early completion incentives Budget Activity Information Identify all required activities Estimate the resources required (time) to complete each activity Immediate predecessor(s) to each activity needed to create interrelationships


Scheduling and Control Charts :Scheduling and Control Charts Horizontal Bar Charts A version of the Gantt chart Used to plan and schedule activities As the project progresses, the status of activities is plotted on the chart, compared to the plan, and, if necessary, corrective action is taken more


Scheduling and Control Charts :Scheduling and Control Charts Horizontal Bar Charts (continued) Advantages Easy to understand Easy to modify and update Low cost Disadvantages Cumbersome for large project Must be keep up to date Does not indicate the relationships among the activities


Critical Path Method (CPM) :Critical Path Method (CPM) Designed to provide intense micro-control The system is dynamic; it continues to provide periodic reports as the project progresses


Manager’s View of CPM :Manager’s View of CPM List of project activities Precedence relationship among activities Estimate of each activity’s duration Estimated duration of project Identification of critical activities Amount of slack for each activity CPM processing procedures


CPM Terminology :CPM Terminology Activity A task or a certain amount of work required in the project Requires time to complete Represented by an arrow Dummy Activity Indicates only precedence relationships Does not require any time of effort


CPM Terminology :CPM Terminology Event Signals the beginning or ending of an activity Designates a point in time Represented by a circle (node) Network Shows the sequential relationships among activities using nodes and arrows


CPM Terminology :CPM Terminology Path A connected sequence of activities leading from the starting event to the ending event Critical Path The longest path (time); determines the project duration Critical Activities All of the activities that make up the critical path


CPM Terminology :CPM Terminology Earliest Start (ES) The earliest that an activity can begin; assumes all preceding activities have been completed Earliest Finish (EF) ES + activity time Latest Finish (LF) The latest that an activity can finish and not change the project completion time Latest Start (LS) LF - activity time


Steps in CPM Analysis :Steps in CPM Analysis Draw the CPM network A graphic view of the relationships among the required activities Analyze the paths through the network Determine the length of each path (time required to complete each path) Starting at the beginning of the network and working toward the end (from left to right), determine the ES and EF for each activity . . . more


Steps in CPM Analysis :Steps in CPM Analysis Path analysis (continued) Identify the critical path(s) (the longest path[s] through the network) The critical path(s) determines how long the project will take . . . more


Steps in CPM Analysis :Steps in CPM Analysis Determine the slack for each activity Working from the end of the project network (from right to left), find the LF and the LS for each activity Compute the activity’s slack slack = LS - ES = LF - EF Slack is the maximum amount of time that this activity can be delay in its completion before it becomes a critical activity, i.e., delays completion of the project


CPM Example: Problem 6, Page 729 :CPM Example: Problem 6, Page 729 CPM Network


CPM Example :CPM Example ES and EF Times a, 6 f, 15 b, 8 c, 5 e, 9 d, 13 g, 17 h, 9 i, 6 j, 12 0 6 0 8 0 5


CPM Example :CPM Example ES and EF Times a, 6 f, 15 b, 8 c, 5 e, 9 d, 13 g, 17 h, 9 i, 6 j, 12 0 6 0 8 0 5 5 14 8 21 6 23 6 21


CPM Example :CPM Example ES and EF Times a, 6 f, 15 b, 8 c, 5 e, 9 d, 13 g, 17 h, 9 i, 6 j, 12 0 6 0 8 0 5 5 14 8 21 21 33 6 23 21 30 23 29 6 21 Project’s EF = 33


CPM Example :CPM Example LS and LF Times a, 6 f, 15 b, 8 c, 5 e, 9 d, 13 g, 17 h, 9 i, 6 j, 12 0 6 0 8 0 5 5 14 8 21 21 33 6 23 21 30 23 29 6 21 21 33 27 33 24 33


CPM Example :CPM Example LS and LF Times a, 6 f, 15 b, 8 c, 5 e, 9 d, 13 g, 17 h, 9 i, 6 j, 12 0 6 0 8 0 5 5 14 8 21 21 33 6 23 21 30 23 29 6 21 4 10 0 8 7 12 12 21 21 33 27 33 8 21 10 27 24 33 18 24


CPM Example :CPM Example Slack a, 6 f, 15 b, 8 c, 5 e, 9 d, 13 g, 17 h, 9 i, 6 j, 12 0 6 0 8 0 5 5 14 8 21 21 33 6 23 21 30 23 29 6 21 3 9 0 8 7 12 12 21 21 33 27 33 8 21 10 27 24 33 9 24 3 4 3 3 4 0 0 7 7 0


CPM Example :CPM Example Critical Path a, 6 f, 15 b, 8 c, 5 e, 9 d, 13 g, 17 h, 9 i, 6 j, 12


Program Evaluation andReview Technique (PERT) :Program Evaluation andReview Technique (PERT) PERT is based on the assumption that an activity’s duration follows a probability distribution instead of being a single value. The probabilistic information about the activities is translated into probabilistic information about the project.


PERT :PERT Three time estimates are required to compute the parameters of an activity’s duration distribution: pessimistic time (tp ) - the time the activity would take if things did not go well most likely time (tm ) - the consensus best estimate of the activity’s duration optimistic time (to ) - the time the activity would take if things did go well . . . more


PERT :PERT From these three time estimates about an activity, two probability distribution parameters are calculated: the mean (te ) and the variance (Vt ). te = ( to + 4tm + tp ) / 6 Vt = [ ( tp - to ) / 6 ] 2


Steps in PERT Analysis :Steps in PERT Analysis Draw the network. Analyze the paths through the network and find the critical path. The length of the critical path is the mean of the project duration probability distribution which is assumed to be normal. . . . more


Steps in PERT Analysis :Steps in PERT Analysis The standard deviation of the project duration probability distribution is computed by adding the variances of the critical activities (all of the activities that make up the critical path) and taking the square root of that sum Probability computations can now be made using the normal distribution table.


PERT Example :PERT Example Immed. Optimistic Most Likely Pessimistic Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.) A -- 4 6 8 B -- 1 4.5 5 C A 3 3 3 D A 4 5 6 E A 0.5 1 1.5 F B,C 3 4 5 G B,C 1 1.5 5 H E,F 5 6 7 I E,F 2 5 8 J D,H 2.5 2.75 4.5 K G,I 3 5 7


PERT Example :PERT Example PERT Network A D C B F E G I H K J


PERT Example :PERT Example Activity Expected Time and Variance Activity Expected Time Variance A 6 4/9 B 4 4/9 C 3 0 D 5 1/9 E 1 1/36 F 4 1/9 G 2 4/9 H 6 1/9 I 5 1 J 3 1/9 K 5 4/9


PERT Example :PERT Example Earliest/Latest Times Activity ES EF LS LF Slack A 0 6 0 6 0 *critical B 0 4 5 9 5 C 6 9 6 9 0 * D 6 11 15 20 9 E 6 7 12 13 6 F 9 13 9 13 0 * G 9 11 16 18 7 H 13 19 14 20 1 I 13 18 13 18 0 * J 19 22 20 23 1 K 18 23 18 23 0 *


PERT Example :PERT Example Probability the project will be completed within 24 hours Vpath = VA + VC + VF + VI + VK = 4/9 + 0 + 1/9 + 1 + 4/9 = 2 path = 1.414 z = (24 - 23)/(24-23)/1.414 = .71 From the Standard Normal Distribution table: P(z < .71) = .5 + .2612 = .7612


Activity Cost-Time Tradeoffs :Activity Cost-Time Tradeoffs Project managers may have the option or requirement to crash the project, or accelerate the completion of the project. This is accomplished by reducing the length of the critical path(s). The length of the critical path is reduced by reducing the duration of the activities on the critical path. . . . more


Cost-Time Tradeoffs :Cost-Time Tradeoffs If each activity requires the expenditure of an amount of money to reduce its duration by one unit of time, then the project manager selects the least cost critical activity, reduces it by one time unit, and traces that change through the remainder of the network. . . . more


Cost-Time Tradeoffs :Cost-Time Tradeoffs As a result of a reduction in an activity’s time, a new critical path may be created. When there is more than one critical path, each of the critical paths must be reduced. If the length of the project needs to be reduced further, the process is repeated.


Computer Software for Project Management :Computer Software for Project Management Microsoft Project (Microsoft Corp.) MacProject (Claris Corp.) PowerProject (ASTA Development Inc.) Primavera Project Planner (Primavera) Project Scheduler (Scitor Corp.) Project Workbench (ABT Corp.) SuperProject (Computer Associates International) TurboProject (IMSI)


Evaluation of CPM/PERT :Evaluation of CPM/PERT Activities are assumed to be independent. A precise breaking point where one activity ends and another begins is also assumed. Initially-critical activities might not receive the attention they deserve until it is too late. Activity time estimates might be biased. The cost of CPM/PERT might not be justified by the value of the information it provides. Employees might not understand the statistical underpinnings of PERT.


Wrap-Up: World-Class Practice :Wrap-Up: World-Class Practice Project organizations are flexible enough to respond aggressively to business opportunities. Personnel are selected and trained to be flexible in moving from department to department and project to project as needed. Scheduling and control charts are frequently used because of their simplicity, flexibility , low cost, and effectiveness as communication devices. CPM, PERT, and PERT/Cost are also used to provide computerized activity-by-activity planning and control.