Project Management

1. Project Management

2. Introduction • What – Project Management • Where – Where the success or failure of a project will have major consequences for the company • Why – At some point every company takes on large and complicated projects – opening a new store, building a plant, developing a product

3. Project Management • What is at stake? • Large projects, outside of normal production • Cost overruns • Late completion – penalties • Early completion – bonuses

4.  Project Planning • Project organization • Project manager

5. Project Planning • Planning Task • Work Breakdown Structure • Determines gross requirements for people, supplies and equipment

6. Work Breakdown Structure • Level • 1 Project • 2 Major tasks • 3 Subtasks • 4 Activities

7. Example • Level • 1 Open a new Retail Outlet • 2 Select Location • 2 Refurbish Location • 3 Signage • 4 Install new sign • 3 Displays • 4 Install racks • 4 Install Mannequins

8. Project Scheduling • Sequence project activities • Allotting time

9. Gantt Chart

10. Project Controlling • Monitor resources, costs, quality, and budgets • Use feedback to revise project plan

11. PERT and CPM • Program Evaluation and Review Technique • Critical Path Method • Schedule, monitor and control large projects

12. PERT and CPM Framework • Define project • Develop relationships among activities • Draw network connecting activities • Assign time / cost estimates to each activity • Compute longest time path through network – the critical path • Use network to plan, schedule, monitor, control project

13. Difference Between PERT and CPM • CPM – one estimate of time • PERT three estimates with probabilities

14. Project: Obtain a college degree (B.S.) Receive diploma Register Attend class, study etc. 1 2 4 Years Activity (Arrow) Event (Node) Event (Node) PERT Symbols

15. 2 A 1 3 B A & B can occur concurrently PERT Symbols

16. A must be done before C & D can begin 2 D A C 1 4 3 B PERT Symbols

17. 2 D A C 1 4 3 B E B & C must be done before E can begin PERT Symbols

18. Activity Time Estimates • Optimistic Time (a) • Most Likely Time (m) • Pessimistic Time (b) • Beta distribution • Expected Time t = (a + 4m + b) / 6 • Variance v = [(b – a)/6]2

19. Critical Path Analysis • ES – Earliest Start Time • LS – Latest Start Time • EF – Earliest Finish • LF – Latest Finish • S – Slack Time – LS – ES • Critical Path – Group of activities in the project that have a slack time of zero • T – total project completion time • V – total variance of activities on the critical path

20. Project Crashing • Crashing – shorten activity time by adding resources • Can be expensive – may be less expensive than cost penalties

21. PERT Advantages • Useful at several stages, especially scheduling and control • Not mathematically complex • Graphical display show relationships • Critical path pinpoints activities to closely monitor • Documents who is responsible for each activity • Applicable to a wide range of industries • Monitors schedules and costs

22. PERT Limitations • Project activities clearly defined, independent, stable in their relationships • Precedence relationships must be specified in advance • Time estimates are subjective • Danger of too much emphasis on critical path