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Chapter 3. Project Management

Chapter 3. Project Management. A project is series of related jobs usually directed toward some major output and requiring a significant period of time to perform Building a bridge Project Management

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Chapter 3. Project Management

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  1. Chapter 3. Project Management • A project is series of related jobs usually directed toward some major output and requiring a significant period of time to perform • Building a bridge • Project Management • The management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project. • A systematic approach to plan and control projects that are somewhat unique. • Structuring Projects • Work Breakdown Structure • Project Control Charts • Critical Path Scheduling • CPM with a Single Time • CPM with Three Activity Time Estimates (a.k.a. PERT)

  2. Pure Project The project manager has full authority over the project Team members report to one boss Shortened communication lines, etc… A BUT…there are some disadvantages Duplication of resources Organizational goals and policies are ignored. Team members have no functional area "home” Functional Project Team member can work on several projects.Technical expertise is maintained within the functional area. The functional area is a “home” after the project is completed. Critical mass of specialized knowledge BUT … motivation of team members is often weak. Needs of the client are secondary and are responded to slowly. Different organizational approaches Matrix • Enhanced inter-functional communications. • Pinpointed responsibility. • Duplication of resources is minimized. • Functional “home” for team members. • Policies of the parent organization are followed • BUT…Too many bosses. • Depends on project manager’s negotiating skills. • Potential for suboptimization.

  3. Level Program 1 Project 1 Project 2 2 Task 1.1 Task 1.2 3 Subtask 1.1.1 Subtask 1.1.2 Work Package 1.1.1.1 Work Package 1.1.1.2 4 Work Breakdown Structure • WBS is a hierarchical structure to organize activities (tasks). • The simple goal is to identify what must be done to complete the project. • Breakdown the complex project into smaller and manageable tasks. • Establish resource requirements, time estimates, and precedence for all tasks at the lowest level.

  4. Network-Planning Models • A project is made up of a sequence of activities that form a network representing a project. • The path taking longest time through this network of activities is called the “critical path.” • The critical path provides a wide range of scheduling information useful in managing a project. • Critical Path Method (CPM) helps to identify the critical path(s) in the project networks. • CPM with a Single Time Estimate • Used when activity times are known with certainty. • Used to determine timing estimates for the project, each activity in the project, and slack time for activities. • CPM with Three Activity Time Estimates (a.k.a. PERT) • Used when activity times are uncertain. • Used to obtain the same information as the Single Time Estimate model andprobability information. • Time-Cost Models • Used when cost trade-off information is a major consideration in planning. • Used to determine the least cost in reducing total project time.

  5. Activity Designation Immed. Pred. Time (Weeks) Assess customer's needs A None 2 Write and submit proposal B A 1 Obtain approval C B 1 Develop service vision and goals D C 2 Train employees E C 5 Quality improvement pilot groups F D, E 5 Write assessment report G F 1 Example 1. CPM with Single Time Estimate Consider the following consulting project: • Develop a critical path diagram (network) and determine the duration of the critical path and • slack times for all activities • Draw the network • Compute early starts and early finish times (forward pass) • Compute late starts and late finish times (backward pass) • Compute Slack (LS-ES) per activity and Critical Path(s)

  6. Example 2. CPM with Three Activity Time Estimates Compute the expected time and variance for each activity • Develop a critical path diagram (network) and determine the duration of the critical path and • slack times for all activities • Draw the network • Compute early starts and early finish times (forward pass) • Compute late starts and late finish times (backward pass) • Compute Slack (LS-ES) per activity and Critical Path(s) • What is the probability of finishing this project in less than 53 days? • What is the probability that the project duration will exceed 56 days? More about the bridge  Gantt Charts

  7. Duration = 54 Days C(14) E(11) H(4) A(7) D(5) F(7) D=53 I(18) p(t < D) TE = 54 B (5.333) G(11) What is the probability of finishing this project in less than 53 days? t

  8. Time-Cost Models • Sometimes it is possible to "crash" (expedite) some activities thus reducing the overall completion time for the entire project. • Crashing an activity implies spending additional funds (e.g., overtime costs, hiring more workers, and so on) to get the task done earlier. • On many occasions reducing the project completion time that in turn reduces the fixed cost outlays can generate substantial savings. • Draw the CPM network, identify the CP • Identify the least cost activity(ies) on the critical path(s) • Shorten the project completion time (CP) at the least cost • Repeat until no more crashing is possible (or cost exceeds the benefits) • In class work out the small example on p. 89

  9. Another Example • Assume fixed costs = $1,000 day. • Find the optimum time-cost schedule.

  10. CPM Assumptions/Limitations • Project activities can be identified as entities. (There is a clear beginning and ending point for each activity.) • Project activity sequence relationships can be specified and networked. • Project control should focus on the critical path. • The activity times follow the beta distribution, with the variance of the project assumed to equal the sum of the variances along the critical path. Project control should focus on the critical path. • Practice problems: 1, 3, 5, 6, 7

  11. MS Project • MS Project is a very popular and inexpensive project management software. • It is constantly improved (upgraded). • Many independent software firms have developed “add-ons” to further improve or help users (managers) take full advantage of its capabilities. • For example, probabilistic analysis (PERT approach) is not directly available in MS Project. • CAUTION: “PERT” in MS Project refers to the AON network representation, and simplistic project duration calculations done by using either optimistic or most likely or pessimistic time estimates for all activities. • Risk+ developed by C/S Solutions “is a comprehensive risk analysis tool that integrates seamlessly with Microsoft® Project to quantify the cost and schedule uncertainty associated with your project plans.” • http://www.cs-solutions.com/products/?Product=Risk%20Plus • Screen capture

  12. Reliable Construction Company Project • This is a mini case/group exercise. • The Reliable Construction Company has just made the winning bid of $5.4 million to construct a new plant for a major manufacturer. • The contract includes the following provisions: • A penalty of $300,000 if Reliable has not completed construction within 47 weeks. • A bonus of $150,000 if Reliable has completed the plant within 40 weeks. Questions: • How can the project be displayed graphically to better visualize the activities? • What is the total time required to complete the project if no delays occur? • When do the individual activities need to start and finish? • What are the critical bottleneck activities? • For other activities, how much delay can be tolerated? • What is the probability the project can be completed in 47 weeks? • Is it worth to expedite the activities to finish the project in 40 weeks? • Assume activities with 7 or more weeks can be shortened by two weeks and the rest can be reduced by only one week. • For simplicity assume that cost per week to expedite any activity is $30,000. • In answering part 7, show your steps, and defend your final conclusion.

  13. Activity List for Reliable Construction

  14. Three Time Estimates for the Project

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