Chapter 11: Project Management 1

Chapter 11: Project Management

Chapter 11: Project Management 2

Introduction

Chapter 11: Project Management 3

Previous Examples of Projects

Transporting Olympic Flame (Chapter 1) Mercedes-Benz facility location (Chapter 5)

Chapter 11: Project Management 4

Viper Development Project

Project team given 3 years to go from concept to roadster. Needed to develop new 8.0-litter V-10

aluminum engine and new high performance six-speed transmission.

Comparable projects usually require five years at Chrysler.

Chapter 11: Project Management 5

Viper Development Project con’t

Project team members hand-picked. Artemis Prestige selected to help

manage project ability to track several projects concurrently interactive use provide broad picture of entire project help identify the impact of each activity on

the ultimate completion of the project

Chapter 11: Project Management 6

Viper Development Project: An Overwhelming Success

First test engine required less than a year to develop.

Transmission developed in 1.5 years compared to the usual 5 to 6 years.

Many important innovations in the frame, body, and brakes were incorporated .

Chapter 11: Project Management 7

Zeneca Pharmaceuticals

Mission is the development of new drugs for the medical community.

The development of a new drug is a complex project with typical durations of 10 years.

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Zeneca Pharmaceuticals: Major Steps in Drug Development

Preclinical Testing Investigational New Drug Human Clinical Testing

three separate phases New Drug Application Approval

Chapter 11: Project Management 9

Differences Between Pharmaceutical R&D Projects and Other Industries

Final product is information rather than a physical product.

Long duration, extreme costs, and high chances for failure.

Chapter 11: Project Management 10

Background

Project management concerned with managing organizational activities.

Often used to integrate and coordinate diverse activities.

Projects are special types of processes.

Chapter 11: Project Management 11

Defining a Project

Projects are processes that are performed infrequently and ad hoc, with a clear specification of the desired objective.

Chapter 11: Project Management 12

Examples of Projects

Constructing highways, bridges, tunnels and dams

Erecting skyscrapers, steel mills, and homes

Organizing conferences and conventions

Managing R&D projects Running political

campaigns, war operations, and advertising campaigns

Chapter 11: Project Management 13

Reasons for Growth in Project Operations

More Sophisticated Technology

Better-Educated Citizens

More Leisure Time Increased Accountability Higher Productivity Faster Response to

Customers Greater customization

for customers

Chapter 11: Project Management 14

Planning the Project

Chapter 11: Project Management 15

Life Cycle of a Project (Stretched-S) & (Exponential)

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Organizing the Project Team

Ad Hoc Project Form Weak Functional Matrix Strong Project Matrix

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Types of Project Team Members

Those having a long-term relationship with the project.

Those that the PM will need to communicate with closely.

Those with rare skills necessary to project success.

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Project Plans

Chapter 11: Project Management 19

Work Breakdown Structure

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Project Master Schedule

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Complexity of Scheduling Project Activities

Large number of activities Precedence relationships Limited time of the project

Chapter 11: Project Management 22

Planning and Scheduling Projects

Planning. Determining what must be done and which tasks must precede others.

Scheduling. Determining when the tasks must be completed; when they can and when they must be started; which tasks are critical to the timely completion of the project; and which tasks have slack and how much.

Chapter 11: Project Management 23

Scheduling the Project: PERT and CPM

Chapter 11: Project Management 24

Terminology

Activity Event Network Path Critical Path Critical Activities

Chapter 11: Project Management 25

Project Planning When Activity Times are Known

Inputs list of the activities that must be completed activity completion times activity precedence relationships

Chapter 11: Project Management 26

Project Planning When Activity Times are Known continued

Outputs graphical representation of project time to complete project identification of critical path(s) and activities activity and path slack earliest and latest time each activity can be

started earliest and latest time each activity can be

completed

Chapter 11: Project Management 27

Example

Activity Time Preceded ByA 10 --B 7 --C 5 AD 13 AE 4 B,CF 12 DG 14 E

Chapter 11: Project Management 28

Network Diagram

Chapter 11: Project Management 29

Early Start and Finish Times

Chapter 11: Project Management 30

Latest Start and Finish Times

Chapter 11: Project Management 31

Activity Slack Time

TES = earliest start time for activity

TLS = latest start time for activity

TEF = earliest finish time for activity

TLF = latest finish time for activity

Activity Slack = TLS - TES = TLF - TEF

Chapter 11: Project Management 32

Path Slack

Duration of Critical Path - Path Duration Path Slack

Chapter 11: Project Management 33

Activity Slack Times

Activity ES EF LS LF Slack A 0 10 0 10 0 B 0 7 10 17 10 C 10 15 12 17 2 D 10 23 10 23 0 E 15 19 17 21 2 F 23 35 23 35 0 G 19 33 21 35 2

Chapter 11: Project Management 34

Project Planning When Activity Times are Uncertain

Inputs Optimistic (to), most likely (tm), and pessimistic (tp)

time estimate for each activity activity precedence relationships

Outputs graphical representation of project expected activity and path completion times variance of activity and path completion times probability that project completed by specified time

Chapter 11: Project Management 35

Expected Activity Time and Variance of Activity Time

tt t t

t t

eo m p

p o

46

62

2

Chapter 11: Project Management 36

Example

Activity Preceded By to tm tp te 2 A -- 2 6 7 5.50 .694

B -- 5 7 9 7.00 .444

C A 3 5 6 4.83 .250

D A 10 10 10 10.0 0.000

E B,C 3 4 5 4.0 .111

F D 8 12 13 11.5 .694

G E 2 4 8 4.33 1.000

Chapter 11: Project Management 37

Network Diagram with Expected Activity Times and Variances

1

2

3

4

5

6

[5.5, 0.694]

[7.0, 0.444]

[4.83, 0.250]

[10, 0.0]

[4.0, 0.111]

[4.33, 1.0]

[11.5, 0.913]A

BC

D

E

F

G

Chapter 11: Project Management 38

Expected Completion Time and Variance of Path A-D-F

Expected completion time = 5.5 + 10 + 11.5=27

Path Variance = 0.694 + 0 + 0.913 = 1.607

Chapter 11: Project Management 39

Path Expected Times and Variances

PathExpected

Time VarianceStandardDeviation

A-D-F 27 1.607 1.27

A-C-E-G 14.66 2.055 1.43

B-E-G 15.33 1.555 1.25

Chapter 11: Project Management 40

Probabilities of Completion

V timecompletion expected - timecompletion desired

z

Chapter 11: Project Management 41

Probability of Project Being Completed on or Before Time 25

z

25 27

127157

..

Only path A-D-F has reasonable chance of taking 25 or more:

From standard normal table in Appendix A, there is a 5.82% chance of completing project on or before time 25.

Chapter 11: Project Management 42

Probability of Path A-D-F being Completed on or Before Time 25

5.82%

Chapter 11: Project Management 43

Plan E Project Operations Network

Chapter 11: Project Management 44

Proper Use of Dummy Activities

Chapter 11: Project Management 45

Activity Expected Times and Variances

Chapter 11: Project Management 46

Simulating Project Completion Times with Spreadsheets

A

B

C

D

E

F

Chapter 11: Project Management 47

Simulating Project Completion Times

Activity Mean (days)StandardDeviation

A 32.1 1.2

B 24.6 3.1

C 22.2 2.2

D 26.1 5.2

E 34.4 6.2

F 34.5 4.1

Chapter 11: Project Management 48

Activity Activity Activity Activity Activity Activity Path1 Path 2 Path 3 ProjectA B C D E F (A-C-F) (B-D-F) (B-E) Finish Time

0.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.000.00 0.00 0.00 0.00

Minimum 0.00 0.00 0.00 0.00Maximum 0.00 0.00 0.00 0.00

Chapter 11: Project Management 49

Chapter 11: Project Management 50

Project Management Software Capabilities

Chapter 11: Project Management 51

Microsoft Project’s Gantt Chart

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Pert Chart Generated by Microsoft Project

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Calendar of Activities Created by Microsoft Project

Chapter 11: Project Management 54

Controlling the Project: Cost and Performance

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Variance Report

Cost standard determined using engineering estimates or analysis of past performance

Actual cost monitored and compared with cost standard

Project manager can exert control if difference between standard and actual (called a variance) is considered significant.

Chapter 11: Project Management 56

Cost-Schedule Reconciliation Charts

Chapter 11: Project Management 57

Earned Value Chart

Chapter 11: Project Management 58

Goldratt’s Critical Chain

Chapter 11: Project Management 59

Introduction Similar issues that trouble people about working

on projects regardless of type of project unrealistic due dates too many changes resources and data not available unrealistic budget

These issues/problems related to need to make trade-offs

To what extent are these problems caused by human decisions and practices?

Chapter 11: Project Management 60

Three Project Scenarios

Chapter 11: Project Management 61

Project Completion Time Statistics

Chapter 11: Project Management 62

Observations

Average Completion Times Implications of Assuming Known

Activity Times Shape of the Distribution Worker Time Estimates Impact of Inflated Time Estimates Student Syndrome

Chapter 11: Project Management 63

Multitasking

Chapter 11: Project Management 64

Alternative Gantt Charts for Projects A and B

Chapter 11: Project Management 65

Common Chain of Events

Underestimate time needed to complete project assumption of known activity times and

independent paths Project team members inflate time

estimates Work fills available time

student syndrome early completions not reported

Chapter 11: Project Management 66

Common Chain of Events continued

Safety time misused Misused safety time results in missed

deadlines Hidden safety time complicates task of

prioritizing project activities Lack of clear priorities results in poor

multitasking

Chapter 11: Project Management 67

Common Chain of Events concluded

Poor multitasking increases task durations

Uneven demand on resources also results due to poor multitasking

More projects undertaken to ensure all resources fully utilized

More projects further increases poor multitasking

Chapter 11: Project Management 68

Reversing the Cycle

Reduce number of projects assigned to each individual

Schedule start of new projects based on availability of bottleneck resources

Reduce amount of safety time added to individual tasks and then add some fraction back as project buffer activity durations set so that there is a high

probability the task will not be finished on time

Chapter 11: Project Management 69

The Critical Chain

Longest chain of consecutively dependent events considers both precedence relationships

and resource dependencies Project Buffer Feeding Buffer

Chapter 11: Project Management 70

Sample Network Diagram

Chapter 11: Project Management 71

Project and Feeder Buffers

Chapter 11: Project Management 72

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