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Project Management
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Chapter Outline
13.1 Introduction
13.2 Project Scheduling: PERT/CPM
Work Breakdown Structure (WBS)
Gantt Chart
PERT/CPM Terminology
PERT/CPM Procedure
Drawing PERT/CPM Network
Example (General Foundry)
Activity Times
How to Find Critical Path
Probability of Project Completion
13.3 Project Monitoring and Controlling: PERT/Cost
Budgeting
Controlling
Appendix: Normal Distribution Table
Introduction
• Project: a combination of
• Resources
• Money
• Manpower etc.
to finish a set of pre-determined tasks in a specified
time.
• Project Management: set of principles and tools for
• Defining
• Planning
• Executing
• Controlling
• Completing a PROJECT
Introduction
Why Project Management?
• Organize your approach
• Generate a credible schedule
• Track progress and control your project
• Identify where to focus your efforts
• Identify problems early – before they are crises
• Saves your TIME….MONEY
Introduction
The first step in planning and scheduling a project is to
develop the work breakdown structure
Time, cost, resource requirements, predecessors, and people required
are identified for each activity
Then a schedule for the project can be developed:
the program evaluation and review technique (PERT
PERT) and
the critical path method (CPM
CPM)
to help plan, schedule, monitor, and control projects
PERT used three time estimates to develop a probabilistic
estimate of completion time
CPM was a more deterministic technique
They have become so similar they are commonly
considered one technique, PERT/CPM
Historical Evolution
Gantt Chart
Henry Laurence Gantt, (1861 - 1919): a mechanical engineer
and management consultant, developed the Gantt chart in the
1910s.
Gantt charts were employed on major infrastructure projects
including the Hoover Dam and Interstate highway system
Historical Evolution
CPM and PERT
Critical Path Method (CPM,1957) was developed jointly by
representatives of Du Pont and Remington-Rand.
Program Evaluation and Review Technique (PERT,1958) was
developed jointly by representatives of the United States Navy
and the management consulting firm of Booze, Allen, and
Hamilton.
The USS George Washington.
Ballistic Missile Project included more than:
250 prime contractors
9,000 subcontractors.
70,000 different activities
PERT bringing the Polaris missile submarine to combat readiness approximately
two years ahead of the originally scheduled completion date
Work Breakdown Structure
1. Project
Dummy Activity
Indicates only precedence relationships
Does not require any time of effort
Event
Signals the beginning or ending of an activity
Designates a point in time
Network
Shows the sequential relationships among activities using nodes and arrows
Path
A connected sequence of activities leading from the starting event to the
ending event
Critical Path
The longest path (time); determines the project duration
Critical Activities
All of the activities that make up the critical path
Terminology
For an activity, there are 4 types of quantities must be considered
Begin at starting event and work forward
Earliest Start Time (ES)
The earliest that an activity can begin; assumes all preceding
activities have been completed
ES = 0 for starting activities
ES = Maximum EF of all predecessors for non-starting activities
Earliest Finish Time (EF)
EF = ES + activity time
Begin at ending event and work backward
Latest Finish Time (LF)
The latest that an activity can finish and not change the project
completion time
LF = Maximum EF for ending activities
LF = Minimum LS of all successors for non-ending activities
Latest Start Time (LS)
LS = LF - activity time
PERT/CPM Procedure
Six Steps
1. Define the project and all of its significant activities or tasks
2. Develop the relationships among the activities and decide
which activities must precede others
3. Draw the network connecting all of the activities
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
Activity
Activity--on
on--node (AON
AON) where the nodes represent
activities
One node represents the start of the project,
one node for the end of the project, and nodes
for each of the activities
The arcs are used to show the predecessors for
each activity
Activity
Activity--on
on--arc (AOA
AOA) where the arcs are used to
represent the activities
Drawing the PERT/CPM Network
S S and T must be
U completed before U
can be started.
T
Drawing the PERT/CPM Network
T
T and U cannot
S begin until S has
U been completed.
Optimistic time (a
a) = time an activity will take if everything
goes as well as possible (a small
probability (say, 1/100) of this occurring)
Pessimistic time (b
b) = time an activity would take assuming
very unfavorable conditions. (a small
probability of this occurring)
Most likely time (m
m) = most realistic time estimate to complete
the activity
Activity Times
PERT often assumes time estimates follow a beta prob. distribution
2
To compute the dispersion or ba
variance of activity completion Variance
time:
time 6
Activity Times
Time estimates (weeks) for General Foundry
MOST EXPECTED
OPTIMISTIC, PROBABLE, PESSIMISTIC, TIME, VARIANCE,
ACTIVITY a m b t = [(a + 4m + b)/6] [(b – a)/6]2
A 1 2 3 2 4/36
B 2 3 4 3 4/36
C 1 2 3 2 4/36
D 2 4 6 4 16/36
E 1 4 7 4 36/36
F 1 2 9 3 64/36
G 3 4 11 5 64/36
H 1 2 3 2 4/36
25
Gantt Chart
Find the Critical Path
General Foundry’s network with expected activity times
ACTIVITY t
ACTIVITY IMMEDIATE
PREDECESSOR
EXPECT
ED TIME
ES EF
A — 2
LS LF
B — 3 A 2 C 2 F 3
C A 2
D B 4
E 4 H 2
E C 4 Start Finish
F C 3
G D, E 5 B 3 D 4 G 5
H F, G 2
ES and EF Times ACTIVITY t
ES EF
Early Finish Time = Early Start Time + Activity Time LS LF
A 2 C 2
0 2 4
E 4
Starting 4 8
Activity
3 7 13
ACTIVITY t LS and LF Times
ES EF
LS LF Late Start Time = Late Finish Time - Activity Time
C 2 F 3
2 4 4 7
2 4 10 13
LF(C)=Min[LS(E), LS(F)]
E 4 H 2
4 8 13 15 Finish
4 8 13
G 5
8 13
8 13
How to Find the Critical Path
(General Foundry’s example)
Early Finish Time = Early Start Time + Activity Time ACTIVITY t
At the start of the project we set the time to zero ES EF
Thus ES = 0 for both A and B LS LF
A 2 C 2 F 3
0 2 2 4 4 7
E 4 H 2
Start 4 8 13 15 Finish
B 3 D 4 G 5
0 3 3 7 8 13
Project’s EF = 15
=> LF = 15
How to Find the Critical Path
(General Foundry’s example)
ACTIVITY t LS and LF Times
ES EF
Late Start Time = Late Finish Time - Activity Time
LS LF
A 2 C 2 F 3
0 2 2 4 4 7
0 2 2 4 10 13
E 4 H 2
Start 4 8 13 15 Finish
4 8 13 15
B 3 D 4 G 5
0 3 3 7 8 13
1 4 4 8 8 13
How to Find the Critical Path
Slack time that each activity:
Slack = LS – ES, or Slack = LF – EF
Activities with no slack time are called critical activities and they are said to
be on the critical path
A 2 C 2 F 3
0 2 2 4 4 7
0 2 2 4 10 13
E 4 H 2
Start 4 8 13 15 Finish
4 8 13 15
B 3 D 4 G 5
0 3 3 7 8 13
1 4 4 8 8 13
Probability of Project Completion
The critical path analysis determine the expected project
completion time of 15 weeks
x-
Z =
where
= tp = project mean time (or expected date of completion)
= project standard deviation
x = proposed project time (or due date)
Z = number of standard deviations x is from mean
What’s probability that project will finish before 16 weeks?
P(T<16) = P(z < (16 -15)/1.76) = P(z < 0.57) = 0.716
B 10 10 10 30
C 13 13 26
D 12 12 12 12 48
E 14 14 14 14 56
F 10 10 10 30
G 16 16 16 16 16 80
H 8 8 16
308
Total to date 21 42 65 90 126 162 198 212 228 244 260 276 292 300 308
Budgeting for General Foundry
B 10 10 10 30
C 13 13 26
D 12 12 12 12 48
E 14 14 14 14 56
F 10 10 10 30
G 16 16 16 16 16 80
H 8 8 16
308
Total to date 11 32 55 78 104 130 156 182 198 214 240 266 292 300 308
Using PERT/COST approach, we are easily to control
project implementation in terms of time and cost.
VALUE OF
TOTAL WORK
BUDGETED PERCENT OF COMPLETED
ACTIVITY COST ($) COMPLETION ($) Questions:
A 22,000 100 22,000 1. Project is on schedule?
B 30,000 100 30,000 2. What is value of work
C 26,000 100 26,000 completed?
D 48,000 10 4,800 3. Are there any cost
E 56,000 20 11,200 overrun?
F 30,000 20 6,000
G 80,000 0 0
H 16,000 0 0
Using these formula:
• Value of Work Completed = % of Work completed x activity budget
• Difference = Actual Cost – Value of Work completed
• If Difference > 0 Activity/Project is overrun
• If Difference < 0 Activity/Project is under control
VALUE OF
TOTAL WORK ACTIVITY
BUDGETED PERCENT OF COMPLETED ACTUAL DIFFERENCE
ACTIVITY COST ($) COMPLETION ($) COST ($) ($)
A 22,000 100 22,000 20,000 –2,000
B 30,000 100 30,000 36,000 6,000
C 26,000 100 26,000 26,000 0
D 48,000 10 4,800 6,000 1,200
E 56,000 20 11,200 20,000 8,800
F 30,000 20 6,000 4,000 –2,000
G 80,000 0 0 0 0
H 16,000 0 0 0 0
Total 100,000 112,000 12,000
Overrun
Project Crashing
Table 13.9
General Foundry Example
Crash and normal times and costs for activity B
Activity
Cost
Crash
Crash Cost – Normal Cost
$34,000 – Crash Cost/Week =
Normal Time – Crash Time
Crash
Cost $33,000 – $34,000 – $30,000
=
3–1
$32,000 – $4,000
= = $2,000/Week
2 Weeks
$31,000 –
Normal
$30,000 –
Normal
Cost –
| | | |
0 1 2 3 Time (Weeks)
Figure 13.11 Crash Time Normal Time
Project Crashing with
Linear Programming
A 2 C 2 F 3
Start E 4 H 2 Finish
B 3 D 4 G 5
Figure 13.12
Project Crashing with
Linear Programming
The decision variables for the problem are
XA = EF for activity A
XB = EF for activity B
XC = EF for activity C
XD = EF for activity D
XE = EF for activity E
XF = EF for activity F
XG = EF for activity G
XH = EF for activity H
Xstart = start time for project (usually 0)
Xfinish = earliest finish time for the project
Project Crashing with
Linear Programming
The decision variables for the problem are