Week 8
Impaler_2019
Stevenson_CH17_Accessible.pptxChapter 17
Project Management
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
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Learning Objectives (1 of 2)
You should be able to:
17.1 Describe the project life cycle
17.2 Discuss the behavioral aspects of projects in terms of project personnel and the project manager
17.3 Explain the nature and importance of a work breakdown structure in project management
17.4 Name the six key decisions in project management
17.5 Give a general description of PERT/CPM techniques
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Learning Objective (2 of 2)
17.6 Construct simple network diagrams
17.7 Analyze networks with deterministic times
17.8 Analyze networks with probabilistic times
17.9 Describe activity ‘crashing’ and solve typical problems
17.10 Discuss the advantages of using PERT and potential sources of error
17.11 Discuss the key steps in risk management
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Learning Objective 17.1
Projects
Projects
Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame
Examples:
The Olympic Games
Producing a movie
Software development
Product development
ERP implementation
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Learning Objective 17.1
The Nature of Projects
Projects go through a series of stages – a life cycle
Projects bring together people with a diversity of knowledge and skills, most of whom remain associated with the project for less than its full life
Organizational structure affects how projects are managed
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Learning Objective 17.1
Project Life Cycle
Initiating
Planning
Executing
Monitoring and Controlling
Closing
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Learning Objective 17.2
Project Manager
The project manager is ultimately responsible for the success or failure of the project
The project manager must effectively manage:
The work
The human resources
Communications
Quality
Time
Costs
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Learning Objective 17.2
The Project Management Triangle
Performance Objectives
Quality
Cost
Schedule
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Learning Objective 17.2
Behavioral Issues
Behavioral problems can be created or exacerbated by
Decentralized decision making
Stress of achieving project milestones on time and within budget
Surprises
The team must be able to function as a unit
Interpersonal and coping skills are very important
Conflict resolution and negotiation can be an important part of a project manager’s job
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© McGraw-Hill Education.
Learning Objective 17.2
Avoiding Problems
Many problems can be avoided or mitigated by:
Effective team selection
Leadership
Motivation
Maintaining an environment of
Integrity
Trust
Professionalism
Being supportive of team efforts
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Learning Objective 17.2
Project Champion
Project champion
A person who promotes and supports a project
Usually resides within the organization
Facilitate the work of the project by ‘talking up’ the project to other managers who might be asked to share resources with the project team as well as employees who might be asked to work on parts of the project
The project champion can be critical to the success of a project
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© McGraw-Hill Education.
Learning Objective 17.3
Work Breakdown Structure (WBS)
WBS
A hierarchical listing of what must be done during a project
Establishes a logical framework for identifying the required activities for the project
Identify the major elements of the project
Identify the major supporting activities for each of the major elements
Break down each major supporting activity into a list of the activities that will be needed to accomplish it
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Learning Objective 17.3
WBS
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Learning Objective 17.4
Project Management Decisions
Project success depends upon making key managerial decisions over a sequence of steps:
Deciding which projects to implement
Selecting the project manager
Selecting the project team
Planning and designing the project
Managing and controlling project resources
Deciding if and when a project should be terminated
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Learning Objective 17.5
PERT and CPM
PERT (program evaluation and review technique) and CPM (critical path method) are two techniques used to manage large-scale projects
By using PERT or CPM Managers can obtain:
A graphical display of project activities
An indication of which activities are most critical to timely project completion
An estimate of how long the project will take
An indication of how long any activity can be delayed without delaying the project
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© McGraw-Hill Education.
Learning Objective 17.6
Network Diagram (1 of 2)
Network diagram
Diagram of project activities that shows sequential relationships by use of arrows and nodes
Activity on arrow (AOA)
Network diagram convention in which arrows designate activities
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Learning Objective 17.6
Network Diagram (2 of 2)
Activity on node (AON)
Network convention in which nodes designate activities
Activities
Project steps that consume resources and/or time
Events
The starting and finishing of activities
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Learning Objective 17.6
Network Conventions
TABLE 17.2 Network conversions
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Learning Objective 17.7
Deterministic Time Estimates
Deterministic
Time estimates that are fairly certain
Probabilistic
Time estimates that allow for variation
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Learning Objective 17.7
Early Start, Early Finish (1 of 2)
Finding ES and EF involves a forward pass through the network diagram
Early start (ES)
The earliest time an activity can start
Assumes all preceding activities start as early as possible
For nodes with one entering arrow
ES = EF of the entering arrow
For activities leaving nodes with multiple entering arrows
ES = the largest of the largest entering EF
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© McGraw-Hill Education.
Learning Objective 17.7
Early Start, Early Finish (2 of 2)
Early finish (EF)
The earliest time an activity can finish
EF = ES + t
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Learning Objective 17.7
Late Start, Late Finish (1 of 2)
Finding LS and LF involves a backward pass through the network diagram
Late Start (LS)
The latest time the activity can start and not delay the project
The latest starting time for each activity is equal to its latest finishing time minus its expected duration:
LS = LF - t
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© McGraw-Hill Education.
Learning Objective 17.7
Late Start, Late Finish (2 of 2)
Late Finish (LF)
The latest time the activity can finish and not delay the project
For nodes with one leaving arrow, LF for nodes entering that node equals the LS of the leaving arrow
For nodes with multiple leaving arrows, LF for arrows entering node equals the smallest of the leaving arrows
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© McGraw-Hill Education.
Learning Objective 17.7
Slack and the Critical Path
Slack can be computed one of two ways:
Slack = LS – ES
Slack = LF – EF
Critical path
The critical path is indicated by the activities with zero slack
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Learning Objective 17.7
Using Slack Times
Knowledge of slack times provides managers with information for planning allocation of scarce resources
Control efforts will be directed toward those activities that might be most susceptible to delaying the project
Activity slack times are based on the assumption that all of the activities on the same path will be started as early as possible and not exceed their expected time
If two activities are on the same path and have the same slack, this will be the total slack available to both
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© McGraw-Hill Education.
Learning Objective 17.8
Probabilistic Time Estimates
The beta distribution is generally used to describe the inherent variability in time estimates
The probabilistic approach involves three time estimates:
Optimistic time, (to)
The length of time required under optimal conditions
Pessimistic time, (tp)
The length of time required under the worst conditions
Most likely time, (tm)
The most probable length of time required
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Learning Objective 17.8
The Beta Distribution
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Learning Objective 17.8
Probabilistic Time Estimates (1 of 2)
The expected time, te ,for an activity is a weighted average of the three time estimates:
The expected duration of a path is equal to the sum of the expected times of the activities on that path:
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© McGraw-Hill Education.
Learning Objective 17.8
Probabilistic Time Estimates (2 of 2)
The standard deviation of each activity’s time is estimated as one-sixth of the difference between the pessimistic and optimistic time estimates. The variance is the square of the standard deviation:
Standard deviation of the expected time for the path
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Learning Objective 17.8
Knowledge of Path Statistics
Knowledge of expected path times and their standard deviations enables managers to compute probabilistic estimates about project completion such as:
The probability that the project will be completed by a certain time
The probability that the project will take longer than its expected completion time
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Learning Objective 17.8
Path Probabilities
Calculating path probabilities involves the use of the normal distribution
Although path activities are represented by the beta distribution, the path distribution can be represented by a normal distribution
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Learning Objective 17.8
Determining Path Probabilities
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Learning Objective 17.8
Project Completion Time
A project is not complete until all project activities are complete
It is risky to only consider the critical path when assessing the probability of completing a project within a specified time
To determine the probability of completing the project within a particular time frame
Calculate the probability that each path in the project will be completed within the specified time
Multiply these probabilities
The result is the probability that the project will be completed within the specified time
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© McGraw-Hill Education.
Learning Objective 17.8
Assumption: Independence
Independence
Assumption that path duration times are independent of each other
Requires that
Activity times are independent
Each activity is on only one path
The assumption of independence is usually considered to be met if only a few activities in a large project are on multiple paths
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© McGraw-Hill Education.
Learning Objective 17.8
Simulation
When activity times cannot be assumed to be independent, simulation is often used
Repeated sampling is used
Many passes are made through the project network
In each pass, a random value for each activity time is selected based on the activity time’s probability distribution
After each pass, the project’s duration is determined
After a large number of passes, there are enough data points to prepare a frequency distribution of the project duration
Probabilistic estimates of completion times are made based on this frequency distribution
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© McGraw-Hill Education.
Learning Objective 17.9
Time-Cost Trade-Offs
Activity time estimates are made for some given level of resources
It may be possible to reduce the duration of a project by injecting additional resources
Motivations:
To avoid late penalties
Monetary incentives
Free resources for use on other projects
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© McGraw-Hill Education.
Learning Objective 17.9
Time-Cost Trade-Offs: Crashing
Crashing
Shortening activity durations
Typically, involves the use of additional funds to support additional personnel or more efficient equipment, and the relaxing of some work specifications
The project duration may be shortened by increasing direct expenses, thereby realizing savings in indirect project costs
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© McGraw-Hill Education.
Learning Objective 17.9
Crashing Decisions
To make decisions concerning crashing requires information about:
Regular time and crash time estimates for each activity
Regular cost and crash cost estimates for each activity
A list of activities that are on the critical path
Critical path activities are potential candidates for crashing
Crashing non-critical path activities would not have an impact on overall project duration
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© McGraw-Hill Education.
Learning Objective 17.9
Crashing: Procedure
General procedure:
Crash the project one period at a time
Crash the least expensive activity that is on the critical path
When there are multiple critical paths, find the sum of crashing the least expensive activity on each critical path
If two or more critical paths share common activities, compare the least expensive cost of crashing a common activity shared by critical paths with the sum for the separate critical paths
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Learning Objective 17.9
Crashing Activities
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Learning Objective 17.10
PERT: Advantages
Among the most useful features of PERT:
It forces the manager to organize and quantify available information and to identify where additional information is needed
It provides the a graphic display of the project and its major activities
It identifies
Activities that should be closely watched
Activities that have slack time
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© McGraw-Hill Education.
Learning Objective 17.10
Sources of Error
Potential sources of error:
The project network may be incomplete
Precedence relationships may not be correctly expressed
Time estimates may be inaccurate
There may be a tendency to focus on critical path activities to the exclusion of other important project activities
Major risk events may not be on the critical path
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© McGraw-Hill Education.
Learning Objective 17.11
Risk Management (1 of 2)
Risks are an inherent part of project management
Risks relate to occurrence of events that have undesirable consequences such as
Delays
Increased costs
Inability to meet technical specifications
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© McGraw-Hill Education.
Learning Objective 17.11
Risk Management (2 of 2)
Good risk management involves
Identifying as many risks as possible
Analyzing and assessing those risks
Working to minimize the probability of their occurrence
Establishing contingency plans and budgets for dealing with any that do occur
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© McGraw-Hill Education.
End of Presentation
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
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