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Project Management

Project Management

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Project Management

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  1. Project Management

  2. Managing Projects • Projects are usually infrequent or one-time. • No two projects are the same. • Projects are usually fairly long. • Several months to many years • Involve different people in different phases • Most people are only involved with a part of the project

  3. Projects • The three main goals of project management are… • Complete the project on time or earlier. • Complete the project on budgetor under. • Meet the specifications to the satisfaction of the customer.

  4. Project Scope & Objectives • Defining a project’s scope, time frame, allocated resources and objective, is essential. • A Project Objective Statement provides the objectives and essence of the project. • A Specific time frameshould be designated for starting and ending the project. • Necessary resourcesmust be defined, either in dollar terms or in personnel allocation.

  5. Project Structure • Functional Structure: • The team is housed in a specific functional area. Assistance from other areas must be negotiated. • Pure Project: • Team members work exclusively for the project manager, which is best for large projects. • Matrix Structure: • A compromise between the functional and project structures. Members remain in various functional areas and the project manager coordinates across functional areas. Dual authority can cause problems.

  6. Software Project Management • Aimed to ensure that the software is delivered on time, within budget and schedule constraints, and satisfies the requirements of the client • Management of software projects is different from other types of management because: • Software is not tangible • Software processes are relatively new and still “under trial” • Larger software projects are usually “one-off” projects • Computer technology evolves very rapidly

  7. Project Scheduling…… • Software managers: • Divide the project in activities/tasks • Estimate time and resources needed to finish the project • Allocate resources to tasks • Try to employ efficiently all the project personnel • Minimize dependencies between tasks and teams • Prepare contingency plans • Rely on experience and intuition

  8. PERT • CPM • GERT Three project management techniques • Program Evaluation and Review Technique • CriticalPathMethod • PERT& CPMwere originally distinctive, but today the differences are minor and are often jointly referred to as PERT/CPM • PERT(Program Evaluation and Review Technique) was utilized when activity times involved risk. • CPM(Critical Path Method) was used when activity times were certain. • Graphic Evaluation and Review Technique

  9. Project Management Steps 1.Describe the Project (Defining all the tasks that must be completed, and in what sequence.) 2. Develop the Model (Graphically diagram the network showing task relationships) 3. Developing the Schedule (Insert the time estimates for each task) 4. Analyzing cost-time trade-offs (Insert the cost of each task.) 5. Assess Risks (Probability analysis)

  10. Step 1Describe the project • What is the project? • When does the project start and end? • What activities make up the project? • Activitiesare defined as the smallest units of work that a project manager is expected to schedule and control. “...a manager’s project description should reflect only the level of detail that he or she needs in order to make scheduling and resource allocation decisions.” • Task Ownership: Each activity must have an owner who is responsible for seeing that the work is accomplished.

  11. Relationshipsbetween Activities • A project is a sequence of activities. • Large projects have interrelated sequences. • Except for the first activity, every activity in a project has one or more activities that must be done immediately prior. • These are called Precedent activities • Theymust be definedbefore the project begins. • EG: In order to bury a body you must first dig a hole.

  12. Step 2 Develop a Network Model • A Network Diagram visually displays the interrelated activities using nodes (circles) and arcs (arrows) that depict the relationships between activities. • It is a graphical diagram. • For very large projects it may only be a numerical arrangement of activities rather than graphical. • Two types of Graphical Network Models • Activity On Arc (AOA) • Activity On Node (AON) (We will use AON in the following examples) • In AON, activities and their relationships are depicted by lines and circles (nodes).

  13. Time Time Activity E Activity Activity Link Two Types of Network Models Activity-on-Arc (AOA) Activity-on-Node (AON) We will use this! D E

  14. Slack (S) is the difference, if any, between the earliest start (ES) and latest start times (LS) or the early finish (EF) and late finish (EF) times. S = LS - ES or S = LF - EF The is the earliest you can start an activity. It is determined by the earliest finish time of the precedent activity. If there are two or more precedent activities, this time is the same as precedent activity with the latest “Early Finish” time. Slack The earliest you can complete an activity--determined by adding the activity time (duration) to the early start time. Activity Early Start Early Finish Late Finish Late Start This is the latest you can finish an activity without delaying project completion. It is the same as the Latest Start time of the next activity. If there are two or more subsequent activities, this time is the same as the earliest of those “Latest Start” times. Activity Duration This is the Latest Finish time minus the activity duration. What AON Nodes look like.

  15. The slack in this case would be one week, expressed in hours, since that is the unit of time used for the activities. It would be how long you could delay doing the assignment. The earliest you can start this assignment it is immediately after this class ends. Slack If it takes one hour, the earliest you can complete this assignment is one hour after class ends. Home-work #2 Early Start Early Finish Late Finish Late Start 1 hour You can wait until one hour before the class in which it is due to start it; in this case one week from now. One hour after your late start time. Example: A homework Assignment

  16. AON Activity On Node approach S T U “S” precedes “T” which precedes “U” Precedence Relationships Precedence relationshipsdetermine a sequence for accomplishing activities. They specify that any given activity cannot start until its preceding activity or activities have been completed. In our AON approach, the nodes (circles) represent activities, and the arcs represent the precedence relationships between them. Nodes are simplified in the following examples.

  17. S & T must be completed before U can be started. S T & U cannot begin until S has been completed. U T T S U Activity Relationships

  18. U cannot begin until S & T have been completed. V cannot begin until T has been completed. U & V can’t begin until S & T have been completed. S U S U T V T V Activity Relationships

  19. T & U cannot begin until S has been completed; V cannot begin until both T & U have been completed. S T V U Activity Relationships

  20. This is a logic error. “S” cannot be an immediate predecessor of both “U” &”V” if “U” is also an immediate predecessor. S V U Logic Errors Logic errors are hard to identify except on the network diagrams. If you see a triangle, then it is a logic error. Eliminate the short cut.

  21. Hospital Upgrade(A sample project) Immediate Activity Description Predecessor(s) Responsibility A Select administrative and medical staff. B Select site and do site survey. C Select equipment. D Prepare final construction plans and layout. E Bring utilities to the site. F Interview applicants and fill positions in nursing, support staff, maintenance, and security. G Purchase and take delivery of equipment. H Construct the hospital. I Develop an information system. J Install the equipment. K Train nurses and support staff.

  22. Hospital Upgrade(A sample project) Immediate Activity Description Predecessor(s) *Responsibility A Select administrative and medical staff. — Johnson B Select site and do site survey. — Taylor C Select equipment. A Adams D Prepare final construction plans & layout. B Taylor E Bring utilities to the site. B Burton F Interview applicants and fill positions in A Johnson nursing, support staff, maintenance, and security. G Purchase and take delivery of equipment. C Adams H Construct the hospital. D Taylor I Develop an information system. A Simmons J Install the equipment. E,G,H Adams K Train nurses and support staff. F,I,J Johnson *We won’t be using the “Responsibility” data, but it is important.

  23. I A F K C G Start Finish D B H J E HospitalUpgrade Diagramming the Network Activity Times (wks) Immediate Predecessors

  24. I Path Time (wks) A-I-K 33A-F-K 28 A-C-G-J-K 67 B-D-H-J-K 69 B-E-J-K 43 A F K C G Start Finish D B H J E Hospital Upgrade Paths are sequences of activities between a project’s start and finish.

  25. I Path Time (wks) A-I-K 33A-F-K 28 A-C-G-J-K 67 B-D-H-J-K 69 B-E-J-K 43 A F K C G Start Finish D B H J E Hospital Upgrade Project Expected Time is 69 wks. The longest path is the critical path

  26. 3. Develop the schedule • Now we insert the time estimates. • This is where we distinguish between PERT & CPM. • CPM is used when activity times are Certain. • Decision making under Certainty • You are certain of the time each activity will require to complete. • PERT is used when activity times are not certain. (Decision making under risk)

  27. PERT • PERT is used when activity times are uncertain. • Decision making under risk (“P” for probabilistic) • Three time estimates are required for each activity. • OPTIMISTIC TIME: Best time if everything goes perfectly • REALISTIC TIME: Most likely time • PESSIMISTIC TIME: A worst-case situation Expected Time = (B + 4M+ P)/6 In this example, the most likely time is given a weight of 4, and the other two times (pessimistic and optimistic) are each given weights of 1. Software allows you to change these as needed, but the denominator must be the total of the weights given.

  28. Hospital UpgradeDeveloping the schedule • If the activity times are risky, the project team must make three time estimates for each activity and use PERT. • Risky activity times enable the use of a probability distribution and risk assessment. • For this example the times will be certain. (CPM) • Activity slackis the maximum length of time that an activity can be delayed without delaying the entire project. (The difference between the earliest we can start an activity and the latest we can start it without delaying the project.) • For the hospital we can’t go beyond 69 weeks since that is the project length.

  29. Hospital UpgradeDeveloping the schedule • Earliest Start Time(ES) for an activity is the earliest finish time of the immediately preceding activity. • Earliest Finish Time(EF) for an activity is its earliest start time plus how long it takes to do it (estimated duration). • Latest Start Time(LS) is the latest you can finish the activity minus the activity’s estimated duration. • Latest Finish Time(LF) is the latest start time of the activity that immediately follows it. (Latest start and finish times for each activity are computed starting at the project’s last activity completion time and working forward.) • For simplicity, all projects start at time zero.

  30. I 15 12 27 Earliest finish time Earliest start time A 12 K 6 F 10 12 0 12 22 C 10 G 35 12 22 22 57 Start Finish H 40 J 4 B 9 D 10 E 24 Earliest Start and Earliest Finish Times 63 69 9 19 19 59 59 63 0 9 9 33

  31. I 15 12 27 A 12 K 6 F 10 0 12 63 69 12 22 Path (wks)Time A-I-K 33A-F-K 28 A-C-G-J-K 67 B-D-H-J-K 69 B-E-J-K 43 C 10 G 35 12 22 22 57 Start Finish Critical Path H 40 J 4 B 9 D 10 9 19 19 59 59 63 0 9 E 24 9 33 Earliest Start and Earliest Finish Times The Critical Path takes 69 weeks

  32. Latest Start and Latest Finish Times(Working from the last activity toward the first activity) I 15 12 27 48 63 A 12 K 6 F 10 Latest start time Latest finish time 0 12 63 69 12 22 63 69 53 63 2 14 C 10 G 35 12 22 22 57 Start Finish 24 59 14 24 H 40 J 4 B 9 D 10 9 19 19 59 59 63 0 9 19 59 9 19 59 63 0 9 E 24 9 33 35 59

  33. Earliest start time Earliest finish time I 15 12 27 48 63 Latest finish time Latest start time A 12 K 6 F 10 0 12 63 69 12 22 63 69 53 63 2 14 C 10 G 35 12 22 22 57 Start Finish 24 59 14 24 H 40 J 4 B 9 D 10 9 19 19 59 59 63 0 9 19 59 9 19 59 63 0 9 E 24 9 33 35 59 Slack for activity “I” is 36 weeks (27-63) or (12-48)

  34. A Gantt Chart is a project schedule, usually created by the project manager using computer software, that superimposes project activities, with their precedence relationships and estimated duration times, on a time line. • Activity slack is useful because it highlights activities that need close attention. • Slack is the amount of time an activity can be delayed without delaying the earliest start time of any activity that immediately follows. • All activities on the critical path have zero slack and thus cannot be delayed without delaying the project completion.

  35. Slack is the difference between LS and ES or the EF and LF. I 15 12 27 48 63 A 12 K 6 F 10 0 12 63 69 12 22 63 69 53 63 2 14 C 10 G 35 12 22 22 57 Start Finish 24 59 14 24 H 40 J 4 B 9 D 10 9 19 19 59 59 63 0 9 19 59 9 19 59 63 0 9 E 24 9 33 35 59 Activity Slack Analysis

  36. Analyzing Cost-Time Trade-Offs. • There are always cost-time trade-offs in project management. • You can completing a project early by hiring more workers or running extra shifts. • There are often penalties if projects extends beyond some specific date, and a bonus may be provided for early completion. • Crashing a project means expediting one or more activities to reduce overall project completion time and total project costs. • Not all activities can be shortened.

  37. Project Costs Total Project Costs = direct costs + indirect costs + penalty costs • Direct costs include labor, materials, and any other costs directly related to project activities. • Indirect costs include administration, depreciation, financial, and other variable overhead costs. • These can be reduced by reducing total project time. • The shorter the duration of the project, the lower the indirect costs will be. • Penalty costs are essentially late fees.

  38. Hospital UpgradeMinimizing Costs • The objective of cost analysis is to determine the project schedule that minimizes total project costs. • When crashing an activity or project, extra money is spent on direct costs, but money is saved on indirect costs and possible penalties. • A minimum-cost schedule is determined by starting with the normal time schedule andshortening activities along the critical pathin such a way that the costs of crashing (direct costs) do not exceed the savings in indirect costs and penalty costs.

  39. Hospital UpgradeMinimum Cost Schedule • Determine the project’s critical path(s). • Find the activity or activities on the critical path(s) with the lowest cost of crashing (shortening) per week. • Reduce the time for this activity until… • it cannot be further reduced, or • another path becomes critical, or • the increase in direct costs exceed the savings that result from shortening the project. (shortening lowers indirect costs) • Repeat this procedure until the total project costs are no longer decreased. • Sophisticated project management software will do this.

  40. I 15 12 27 48 63 A 12 K 6 F 10 0 12 63 69 12 22 63 69 53 63 2 14 C 10 G 35 12 22 22 57 Start Finish 24 59 14 24 H 40 J 4 B 9 D 10 9 19 19 59 59 63 0 9 19 59 9 19 59 63 0 9 E 24 9 33 35 59 Of the five critical-path activities, the contractor says D and H cannot be shortened. J is the least costly to shorten at $1000 a week. Contractor says it can be shortened to 1 week.

  41. 5. Assessing Risks • Riskis a measure of the probability (and consequences) of not reaching completing a project on time. • A major responsibility of the project manager at the start of a project is to develop a risk-management plan. • A Risk-Management Planidentifies the key risks to a project’s success and prescribes ways to circumvent them.

  42. Types of Project Risk • Service/Product Risks: If the project involves new service or product, several risks can arise. • Market riskcomes from competitors. • Technological riskcan arise from advances made once the project has started, rendering obsolete the technology chosen for service or product. • Legal riskfrom liability suits or other legal action. • Project Team Problems: Poor member selections and inexperience, lack of cooperation, etc. • Operations Risk: Information inaccuracy, miss-communications, bad project timing, weather…

  43. ANALYZING PROBABILITIES • What is the probability that our sample project will finish in 69 weeks as scheduled? If the answer is “100%” the only answer for “Why” is: • Because we used CPM! • (This means we were certain of all of our activity times.) • If we weren’t certain, we should have used PERT • You can’t do risk analysis if you use CPM

  44. PERT and PROBABILITIES • With PERT’s three time-estimates, we get a mean (average) time and a variance for each activity and each path. • We also get a project mean time and variance. • In order to compute probabilities (assuming a normal distribution) all we need are the activity means and variances. • most computer packages calculate this for you.

  45. Probability of Project Completion • The probability of a project being completed by a given date is a function of the mean activity times and variances along the critical path(s). • The probability of any specific activity being completed by a given date is a function of the mean activity times and variances along the longest path leading up to that activity. • If you have more than one critical path, focus on the path with the greatest variance. • A near-critical path may also be a problem, depending on the mean and variance of it’s activities.

  46. Distributions & Probability • A Beta distribution is often used for the three estimates of each activity • This allows skewed distributions. Optimistic------Most likely -----------------------Pessimistic (3 ------------- 5 ---------------------------------- 11) • Normal distributions are needed for probabilities. • A distribution of activity-means is a normal distribution, even though each activity time may be a beta distribution.

  47. Probability Time a m b Mean Beta Distribution Each activity may have its three time estimates skewed (Beta Distribution), but the path along which this activities lie has a normal distribution and thus a mean and variance. Pessimistic Optimistic

  48. Figuring Probabilities • Assume a PERT project critical path takes 40 days, and that the variance of this path is 2.147 • You wish to know the probability of the project going over 42 days. • Compute the standard deviation of the critical path. (Take the square root of the variance of 2.147.) Std. Dev. = 1.465 • POM/QM software gives you the variance of the critical path. • Compute the Z value: Z = (absolute time difference) / Std. Dev. In this example, Z = (42 days - 40 days) / 1.465 = 1.365 • Look up the Z value of 1.365in a Normal Distribution table to get the probability of the project taking 42 days. • Subtract it from 100% to get the probability of going over 42.

  49. Look up the Z value (1.365) in the table of normal distribution. (In this case you need to interpolate between the Z values of .9313 and .9147) .9139 or 91.39% is the probability of the project taking up to 42 days. Going over 42 days is thus 100 - 91.39 = 8.61%

  50. Normal distribution: Sum of Variances along critical path = 2.147 Std. Dev. = 1.465 weeks Length of critical path is 40 weeks Probability of meeting the schedule in 42 weeks is 91.39% Probability of exceeding 42 weeks is 8.61% 40 42 Project duration (weeks)