Project Management

104
© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 1 3 Project Management PowerPoint presentation to PowerPoint presentation to accompany accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Principles of Operations Management, 8e Management, 8e PowerPoint slides by Jeff Heyl

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Project Management

Transcript of Project Management

Page 1: Project Management

© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 1

33 Project ManagementProject Management

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

Page 2: Project Management

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OutlineOutline

Global Company Profile: Bechtel Group

The Importance of Project Management

Project Planning The Project Manager

Work Breakdown Structure

Project Scheduling

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Outline - ContinuedOutline - Continued

Project Controlling

Project Management Techniques: PERT and CPM The Framework of PERT and CPM

Network Diagrams and Approaches

Activity-on-Node Example

Activity-on-Arrow Example

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Outline - ContinuedOutline - Continued

Determining the Project Schedule Forward Pass

Backward Pass

Calculating Slack Time and Identifying the Critical Path(s)

Variability in Activity Times Three Time Estimates in PERT

Probability of Project Completion

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Outline - ContinuedOutline - Continued

Cost-Time Trade-Offs and Project Crashing

A Critique of PERT and CPM

Using Microsoft Project to Manage Projects

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Learning ObjectivesLearning Objectives

1. Use a Gantt chart for scheduling

2. Draw AOA and AON networks

3. Complete forward and backward passes for a project

4. Determine a critical path

When you complete this chapter you When you complete this chapter you should be able to: should be able to:

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Learning ObjectivesLearning Objectives

5. Calculate the variance of activity times

6. Crash a project

When you complete this chapter you When you complete this chapter you should be able to: should be able to:

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Bechtel ProjectsBechtel Projects Building 26 massive distribution centers in just

two years for the internet company Webvan Group ($1 billion)

Constructing 30 high-security data centers worldwide for Equinix, Inc. ($1.2 billion)

Building and running a rail line between London and the Channel Tunnel ($4.6 billion)

Developing an oil pipeline from the Caspian Sea region to Russia ($850 million)

Expanding the Dubai Airport in the UAE ($600 million), and the Miami Airport in Florida ($2 billion)

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Bechtel ProjectsBechtel Projects Building liquid natural gas plants in Yemen $2

billion) and in Trinidad, West Indies ($1 billion)

Building a new subway for Athens, Greece ($2.6 billion)

Constructing a natural gas pipeline in Thailand ($700 million)

Building 30 plants for iMotors.com, a company that sells refurbished autos online ($300 million)

Building a highway to link the north and south of Croatia ($303 million)

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Strategic Importance ofStrategic Importance of Project Management Project Management

Bechtel Project Management: Iraq war aftermath

International workforce, construction professionals, cooks, medical personnel, security

Millions of tons of supplies

Hard Rock Cafe Rockfest Project: 100,000 + fans

planning began 9 months in advance

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Single unit

Many related activities

Difficult production planning and inventory control

General purpose equipment

High labor skills

Project CharacteristicsProject Characteristics

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Examples of ProjectsExamples of Projects

Building Construction

Research Project

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Management of ProjectsManagement of Projects

1. Planning - goal setting, defining the project, team organization

2. Scheduling - relates people, money, and supplies to specific activities and activities to each other

3. Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands

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PlanningObjectives

Resources

Work break-down structure

Organization

SchedulingProject activities

Start & end times

Network

ControllingMonitor, compare, revise, action

Project Management Project Management ActivitiesActivities

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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

Figure 3.1

Before Start of project Duringproject Timeline project

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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

Figure 3.1

Before Start of project Duringproject Timeline project

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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

Figure 3.1

Before Start of project Duringproject Timeline project

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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

Figure 3.1

Before Start of project Duringproject Timeline project

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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

Figure 3.1

Before Start of project Duringproject Timeline project

BudgetsDelayed activities reportSlack activities report

Time/cost estimatesBudgetsEngineering diagramsCash flow chartsMaterial availability details

CPM/PERTGantt chartsMilestone chartsCash flow schedules

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Establishing objectives

Defining project

Creating work breakdown structure

Determining resources

Forming organization

Project PlanningProject Planning

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Often temporary structure

Uses specialists from entire company

Headed by project manager Coordinates activities

Monitors schedule and costs

Permanent structure called ‘matrix organization’

Project OrganizationProject Organization

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Project OrganizationProject OrganizationWorks Best WhenWorks Best When

1. Work can be defined with a specific goal and deadline

2. The job is unique or somewhat unfamiliar to the existing organization

3. The work contains complex interrelated tasks requiring specialized skills

4. The project is temporary but critical to the organization

5. The project cuts across organizational lines

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A Sample Project A Sample Project OrganizationOrganization

TestEngineer

MechanicalEngineer

Project 1 ProjectManager

Technician

Technician

Project 2 ProjectManager

ElectricalEngineer

Computer Engineer

Marketing FinanceHumanResources Design Quality

Mgt Production

President

Figure 3.2

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Matrix OrganizationMatrix OrganizationMarketing Operations Engineering Finance

Project 1

Project 2

Project 3

Project 4

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The Role ofThe Role of the Project Manager the Project Manager

Highly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:

1. All necessary activities are finished in order and on time

2. The project comes in within budget

3. The project meets quality goals

4. The people assigned to the project receive motivation, direction, and information

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The Role ofThe Role of the Project Manager the Project Manager

Highly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:

1. All necessary activities are finished in order and on time

2. The project comes in within budget

3. The project meets quality goals

4. The people assigned to the project receive motivation, direction, and information

Project managers should be:

Good coaches

Good communicators

Able to organize activities from a variety of disciplines

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Ethical IssuesEthical Issues

1. Offers of gifts from contractors

2. Pressure to alter status reports to mask delays

3. False reports for charges of time and expenses

4. Pressure to compromise quality to meet schedules

Project managers face many ethical decisions on a daily basis

The Project Management Institute has established an ethical code to deal with problems such as:

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Work Breakdown StructureWork Breakdown Structure

Level

1. Project

2. Major tasks in the project

3. Subtasks in the major tasks

4. Activities (or work packages)to be completed

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Level 4 Compatible with Windows ME

Compatible with Windows Vista

Compatible with Windows XP 1.1.2.3

1.1.2.2

1.1.2.1

(Work packages)

Level 3 Develop GUIs Planning

Module Testing

Ensure Compatibility with Earlier Versions

Cost/Schedule Management

Defect Testing

1.1.1

1.2.2 1.3.2

1.3.11.2.1

1.1.2

Work Breakdown StructureWork Breakdown Structure

Figure 3.3

Level 2 Software Design

Project Management

System Testing1.1 1.2 1.3

Level 1 Develop Windows 7 Operating System 1.0

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Project SchedulingProject Scheduling Identifying precedence

relationships

Sequencing activities

Determining activity times & costs

Estimating material & worker requirements

Determining critical activities

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Purposes of Project Purposes of Project SchedulingScheduling

1. Shows the relationship of each activity to others and to the whole project

2. Identifies the precedence relationships among activities

3. Encourages the setting of realistic time and cost estimates for each activity

4. Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project

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Scheduling TechniquesScheduling Techniques

1. Ensure that all activities are planned for

2. Their order of performance is accounted for

3. The activity time estimates are recorded

4. The overall project time is developed

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Gantt chart

Critical Path Method (CPM)

Program Evaluation and Review Technique (PERT)

Project Management Project Management TechniquesTechniques

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A Simple Gantt ChartA Simple Gantt Chart

TimeJ F M A M J J A S

Design

Prototype

Test

Revise

Production

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Service For a Delta JetService For a Delta Jet

Figure 3.4

Passengers

Baggage

Fueling

Cargo and mail

Galley servicing

Lavatory servicingDrinking water

Cabin cleaning

Cargo and mail

Flight services

Operating crewBaggagePassengers

DeplaningBaggage claimContainer offloadPumpingEngine injection waterContainer offloadMain cabin doorAft cabin doorAft, center, forwardLoadingFirst-class sectionEconomy sectionContainer/bulk loadingGalley/cabin checkReceive passengersAircraft checkLoadingBoarding

0 10 20 30 40Time, Minutes

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Project Control ReportsProject Control Reports Detailed cost breakdowns for each task

Total program labor curves

Cost distribution tables

Functional cost and hour summaries

Raw materials and expenditure forecasts

Variance reports

Time analysis reports

Work status reports

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Network techniques

Developed in 1950’s CPM by DuPont for chemical plants (1957)

PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)

Consider precedence relationships and interdependencies

Each uses a different estimate of activity times

PERT and CPMPERT and CPM

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Six Steps PERT & CPMSix Steps PERT & CPM

1. Define the project and prepare the work breakdown structure

2. Develop relationships among the activities - decide which activities must precede and which must follow others

3. Draw the network connecting all of the activities

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Six Steps PERT & CPMSix Steps PERT & CPM

4. Assign time and/or cost estimates to each activity

5. Compute the longest time path through the network – this is called the critical path

6. Use the network to help plan, schedule, monitor, and control the project

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1. When will the entire project be completed?

2. What are the critical activities or tasks in the project?

3. Which are the noncritical activities?

4. What is the probability the project will be completed by a specific date?

Questions PERT & CPM Questions PERT & CPM Can AnswerCan Answer

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5. Is the project on schedule, behind schedule, or ahead of schedule?

6. Is the money spent equal to, less than, or greater than the budget?

7. Are there enough resources available to finish the project on time?

8. If the project must be finished in a shorter time, what is the way to accomplish this at least cost?

Questions PERT & CPM Questions PERT & CPM Can AnswerCan Answer

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A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)

A comes before B, which comes before C.

(a) A B CBA C

A and B must both be completed before C can start.

(b)

A

CC

B

A

B

B and C cannot begin until A is completed.

(c)

B

A

CA

B

CFigure 3.5

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A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)

C and D cannot begin until both A and B are completed.

(d)A

B

C

D B

A C

D

C cannot begin until both A and B are completed; D cannot begin until B is completed. A dummy activity is introduced in AOA.

(e)CA

B D

Dummy activityA

B

C

D

Figure 3.5

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A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)

B and C cannot begin until A is completed. D cannot begin until both B and C are completed. A dummy activity is again introduced in AOA.

(f)

A

C

DB A B

C

D

Dummy activity

Figure 3.5

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AON Example AON Example

Activity DescriptionImmediate

Predecessors

A Build internal components —

B Modify roof and floor —

C Construct collection stack A

D Pour concrete and install frame A, B

E Build high-temperature burner C

F Install pollution control system C

G Install air pollution device D, E

H Inspect and test F, G

Milwaukee Paper Manufacturing'sMilwaukee Paper Manufacturing'sActivities and PredecessorsActivities and Predecessors

Table 3.1

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AON Network for AON Network for Milwaukee PaperMilwaukee Paper

A

Start

BStart Activity

Activity A(Build Internal Components)

Activity B(Modify Roof and Floor)

Figure 3.6

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AON Network for AON Network for Milwaukee PaperMilwaukee Paper

Figure 3.7

C

D

A

Start

B

Activity A Precedes Activity C

Activities A and B Precede Activity D

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AON Network for AON Network for Milwaukee PaperMilwaukee Paper

G

E

F

H

CA

Start

DB

Arrows Show Precedence Relationships Figure 3.8

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H

(Inspect/ Test)

7Dummy Activity

AOA Network for AOA Network for Milwaukee PaperMilwaukee Paper

6

F(Install

Controls)E

(Bu

i ld B

urn

er)G

(Insta

ll

Pollutio

n

Device)

5D

(Pour Concrete/

Install Frame)

4C

(Construct Stack)

1

3

2

B(Modify

Roof/Floor)

A(B

uild In

tern

al

Componen

ts)

Figure 3.9

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Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis The critical path is the longest path

through the network

The critical path is the shortest time in which the project can be completed

Any delay in critical path activities delays the project

Critical path activities have no slack time

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Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

Table 3.2

Activity Description Time (weeks)A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25

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Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

Table 3.2

Activity Description Time (weeks)A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25

Earliest start (ES) =earliest time at which an activity can start, assuming all predecessors have been completed

Earliest finish (EF) =earliest time at which an activity can be finished

Latest start (LS) =latest time at which an activity can start so as to not delay the completion time of the entire project

Latest finish (LF) =latest time by which an activity has to be finished so as to not delay the completion time of the entire project

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Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

Figure 3.10

A

Activity Name or Symbol

Earliest Start ES

Earliest FinishEF

Latest Start

LS Latest Finish

LF

Activity Duration

2

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Forward PassForward Pass

Begin at starting event and work forwardBegin at starting event and work forward

Earliest Start Time Rule:

If an activity has only a single immediate predecessor, its ES equals the EF of the predecessor

If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors

ES = Max {EF of all immediate predecessors}

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Forward PassForward Pass

Begin at starting event and work forwardBegin at starting event and work forward

Earliest Finish Time Rule:

The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time

EF = ES + Activity time

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ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

Start

0

0

ES

0

EF = ES + Activity time

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ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

Start0

0

0

A

2

2

EF of A = ES of A + 2

0

ESof A

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B

3

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

Start0

0

0

A

2

20

3

EF of B = ES of B + 3

0

ESof B

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C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

B

3

0 3

Start0

0

0

A

2

20

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C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

B

3

0 3

Start0

0

0

A

2

20

D

4

73= Max (2, 3)

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D

4

3 7

C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

B

3

0 3

Start0

0

0

A

2

20

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E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

B

3

0 3

Start0

0

0

A

2

20

Figure 3.11

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Backward PassBackward Pass

Begin with the last event and work backwardsBegin with the last event and work backwards

Latest Finish Time Rule:

If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it

If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it

LF = Min {LS of all immediate following activities}

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Backward PassBackward Pass

Begin with the last event and work backwardsBegin with the last event and work backwards

Latest Start Time Rule:

The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time

LS = LF – Activity time

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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = EF of Project

1513

LS = LF – Activity time

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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = Min(LS of following activity)

10 13

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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = Min(4, 10)

42

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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00

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Computing Slack TimeComputing Slack Time

After computing the ES, EF, LS, and LF times for all activities, compute the slack or free time for each activity

Slack is the length of time an activity can be delayed without delaying the entire project

Slack = LS – ES or Slack = LF – EF

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Computing Slack TimeComputing Slack Time

Table 3.3

Earliest Earliest Latest Latest OnStart Finish Start Finish Slack Critical

Activity ES EF LS LF LS – ES Path

A 0 2 0 2 0 YesB 0 3 1 4 1 NoC 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesF 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes

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Critical Path for Critical Path for Milwaukee PaperMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00

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ES – EF Gantt ChartES – EF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

A Build internal components

B Modify roof and floor

C Construct collection stack

D Pour concrete and install frame

E Build high-temperature burner

F Install pollution control system

G Install air pollution device

H Inspect and test

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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LS – LF Gantt ChartLS – LF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

A Build internal components

B Modify roof and floor

C Construct collection stack

D Pour concrete and install frame

E Build high-temperature burner

F Install pollution control system

G Install air pollution device

H Inspect and test

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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CPM assumes we know a fixed time estimate for each activity and there is no variability in activity times

PERT uses a probability distribution for activity times to allow for variability

Variability in Activity TimesVariability in Activity Times

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Three time estimates are required Optimistic time (a) – if everything

goes according to plan

Pessimistic time (b) – assuming very unfavorable conditions

Most likely time (m) – most realistic estimate

Variability in Activity TimesVariability in Activity Times

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Estimate follows beta distributionEstimate follows beta distribution

Variability in Activity TimesVariability in Activity Times

Expected time:

Variance of times: t = (a + 4m + b)/6

v = [(b – a)/6]2

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Estimate follows beta distributionEstimate follows beta distribution

Variability in Activity TimesVariability in Activity Times

Expected time: Expected time:

Variance of times: Variance of times: t = t = ((a + a + 44mm + + bb)/6)/6

v = v = [([(b b − − aa)/6]2)/6]2Probability of 1 in 100 of > b occurring

Probability of 1 in 100 of < a occurring

Pro

bab

ility

Optimistic Time (a)

Most Likely Time (m)

Pessimistic Time (b)

Activity Time

Figure 3.12

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Computing VarianceComputing Variance

Table 3.4

Most ExpectedOptimistic Likely Pessimistic Time Variance

Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 1 2 3 2 .11B 2 3 4 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11

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Probability of Project Probability of Project CompletionCompletion

Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivities

2 = Project variance

= (variances of activities on critical path)

p

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Probability of Project Probability of Project CompletionCompletion

Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivitiesProject variance

2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

p = Project variance

= 3.11 = 1.76 weeks

p

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Probability of Project Probability of Project CompletionCompletion

PERT makes two more assumptions:PERT makes two more assumptions:

Total project completion times follow a normal probability distribution

Activity times are statistically independent

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Probability of Project Probability of Project CompletionCompletion

Standard deviation = 1.76 weeks

15 Weeks

(Expected Completion Time)Figure 3.13

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Probability of Project Probability of Project CompletionCompletion

What is the probability this project can What is the probability this project can be completed on or before the 16 week be completed on or before the 16 week deadline?deadline?

Z = – /p

= (16 wks – 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Z is the number of standard deviations the due date or target date lies from the mean or expected date

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Probability of Project Probability of Project CompletionCompletion

What is the probability this project can What is the probability this project can be completed on or before the 16 week be completed on or before the 16 week deadline?deadline?

Z = − /p

= (16 wks − 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Z is the number of standard deviations the due date or target date lies from the mean or expected date

.00 .01 .07 .08

.1 .50000 .50399 .52790 .53188

.2 .53983 .54380 .56749 .57142

.5 .69146 .69497 .71566 .71904

.6 .72575 .72907 .74857 .75175

From Appendix I

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Probability of Project Probability of Project CompletionCompletion

Time

Probability(T ≤ 16 weeks)is 71.57%

Figure 3.14

0.57 Standard deviations

15 16Weeks Weeks

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Determining Project Determining Project Completion TimeCompletion Time

Probability of 0.01

Z

Figure 3.15

From Appendix I

Probability of 0.99

2.33 Standard deviations

0 2.33

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Variability of Completion Variability of Completion Time for Noncritical PathsTime for Noncritical Paths

Variability of times for activities on noncritical paths must be considered when finding the probability of finishing in a specified time

Variation in noncritical activity may cause change in critical path

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What Project Management What Project Management Has Provided So FarHas Provided So Far

1. The project’s expected completion time is 15 weeks

2. There is a 71.57% chance the equipment will be in place by the 16 week deadline

3. Five activities (A, C, E, G, and H) are on the critical path

4. Three activities (B, D, F) are not on the critical path and have slack time

5. A detailed schedule is available

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Trade-Offs and Project Trade-Offs and Project CrashingCrashing

The project is behind schedule

The completion time has been moved forward

It is not uncommon to face the It is not uncommon to face the following situations:following situations:

Shortening the duration of the project is called project crashing

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Factors to Consider When Factors to Consider When Crashing a ProjectCrashing a Project

The amount by which an activity is crashed is, in fact, permissible

Taken together, the shortened activity durations will enable us to finish the project by the due date

The total cost of crashing is as small as possible

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Steps in Project CrashingSteps in Project Crashing

1. Compute the crash cost per time period. If crash costs are linear over time:

Crash costper period =

(Crash cost – Normal cost)

(Normal time – Crash time)

2. Using current activity times, find the critical path and identify the critical activities

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Steps in Project CrashingSteps in Project Crashing3. If there is only one critical path, then

select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period. If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest. Note that the same activity may be common to more than one critical path.

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Steps in Project CrashingSteps in Project Crashing

4. Update all activity times. If the desired due date has been reached, stop. If not, return to Step 2.

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Crashing The ProjectCrashing The Project

Table 3.5

Time (Wks) Cost ($)Crash Cost Critical

Activity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 YesB 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes

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Crash and Normal Times Crash and Normal Times and Costs for Activity Band Costs for Activity B

| | |1 2 3 Time (Weeks)

$34,000 —

$33,000 —

$32,000 —

$31,000 —

$30,000 —

Activity Cost

Crash

Normal

Crash Time Normal Time

Crash Cost

Normal Cost

Crash Cost/Wk = Crash Cost – Normal CostNormal Time – Crash Time

=$34,000 – $30,000

3 – 1

= = $2,000/Wk$4,0002 Wks

Figure 3.16

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Critical Path and Slack Times Critical Path and Slack Times for Milwaukee Paperfor Milwaukee Paper

Figure 3.17

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00

Slack = 1 Slack = 1

Slack = 0 Slack = 6

Slack = 0

Slack = 0

Slack = 0

Slack = 0

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Advantages of PERT/CPMAdvantages of PERT/CPM

1. Especially useful when scheduling and controlling large projects

2. Straightforward concept and not mathematically complex

3. Graphical networks help highlight relationships among project activities

4. Critical path and slack time analyses help pinpoint activities that need to be closely watched

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Advantages of PERT/CPMAdvantages of PERT/CPM

5. Project documentation and graphics point out who is responsible for various activities

6. Applicable to a wide variety of projects

7. Useful in monitoring not only schedules but costs as well

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1. Project activities have to be clearly defined, independent, and stable in their relationships

2. Precedence relationships must be specified and networked together

3. Time estimates tend to be subjective and are subject to fudging by managers

4. There is an inherent danger of too much emphasis being placed on the longest, or critical, path

Limitations of PERT/CPMLimitations of PERT/CPM

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Project Management SoftwareProject Management Software

There are several popular packages for managing projects Primavera

MacProject

Pertmaster

VisiSchedule

Time Line

Microsoft Project

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Using Microsoft ProjectUsing Microsoft Project

Program 3.1

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Using Microsoft ProjectUsing Microsoft Project

Program 3.2

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Using Microsoft ProjectUsing Microsoft Project

Program 3.3

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