scheduling and budgeting week 6 ibs 540. scheduling za schedule is the conversion of a project...
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Scheduling and Budgeting
Week 6IBS 540
Scheduling
A schedule is the conversion of a project action plan into an operating timetable
It serves as the basis for monitoring and controlling project activity
Taken together with the plan and budget, it is probably the major tool for the management of projects
Scheduling
In a project environment, the scheduling function is more important than it would be in an ongoing operation
Projects lack the continuity of day-to-day operations and often present much more complex problems of coordination
Scheduling
The basic approach of all scheduling techniques is to form a network of activity and event relationships
This network should graphically portray the sequential relations between the tasks in a project
Tasks that must precede or follow other tasks are then clearly identified, in time as well as function
SchedulingSuch networks are a powerful tool for
planning and controlling a project and have the following benefits: It is a consistent framework for planning,
scheduling, monitoring, and controlling the project
It illustrates the interdependence of all tasks, work packages, and work elements
It denotes the times when specific individuals must be available for work on a given task
SchedulingNetwork benefits (cont.):
It aids in ensuring that the proper communications take place between departments and functions
It determines an expected project completion date
It identifies so-called critical activities that, if delayed, will delay the project completion time
It identifies activities with slack that can be delayed for specific periods without penalty
SchedulingNetwork benefits (cont.):
It determines the dates on which tasks may be started - or must be started if the project is to stay on schedule
It illustrates which tasks must be coordinated to avoid resource timing conflicts
It illustrates which tasks may run, or must be run, in parallel to achieve the predetermined project completion date
It relieves some interpersonal conflict by clearly showing task dependencies
Network Techniques: PERT and CPM
With the exception of Gantt charts, the most common approach to scheduling is the use of network techniques such as CPM a.k.a PERT
The critical path method (CPM) was invented by project managers in the early 1950's.
The US Navy adapted and improved it to manage the Polaris missile project in the late 1950's. Naming the technique PERT (Program Evaluation and Review Technique) the Defense, Aerospace, and other industries adopted the tool as the major project tool to this day.
Network Techniques: PERT and CPM
PERT lists the specific activities that make up a project, their duration and the activities that must be completed before a specific activity can start.
This PERT chart shows the relationship between each activity, no activity can begin before its precedent activities are completed.The precedents are the activities that the arrows come from.The time (in days) for each activity is noted in its box (for example Patient Teaching has an expected time of T=2 days).These relationships create pathways through the process. Summing the times along each pathway gives the pathways length or duration. The longest pathway is the critical pathway, the critical pathway is the longest pathway in the process. The process cannot end before the critical pathway ends.In the diagram the critical pathway consists of the bold faced boxes.
Activity
Terminology
Activity - A specific task or set of tasks that are required by the project, use up resources, and take time to complete
Event - The result of completing one or more activities.
Network - The combination of all activities and events define the project and the activity precedence relationships
Terminology
Path - The series of connected activities (or intermediate events) between any two events in a network
What is Critical Path (CPM)?
Critical Path - the path of longest duration as determined on a project network diagram. The critical path determines the total duration of the project. If a task on the critical path is delayed, the final completion of the project will likely be delayed.
The critical path is "critical" because tasks that follow a critical task cannot be started until all of the previous tasks on the critical path are completed.. The critical tasks will have starting and finishing times that are fixed relative to the start of the project.
Tasks not on the critical path will usually have some flexibility relative to when they can start and finish. This flexibility is called "float", or sometimes "slack". Float is the difference between the time available for performing a task and time required to complete a task.
TerminologyAn activity can be in any of these
conditions: It may have a successor(s) but no
predecessor(s) - starts a network It may have a predecessor(s) but no
successor(s) - ends a network It may have both predecessor(s) and
successor(s) - in the middle of a network
Scheduling
Scheduling
Scheduling
Drawing Networks
Scheduling
Scheduling
Student Exercise: Tasks for Preparing Dinner
A, Wash and cut salad vegetables (15 minutes)
B, Toss the salad (2 minutes)
C, Set the table (8 minutes)
D, Start the rice cooking (2 minutes)
E, Cook rice (25 minutes)
F, Place the rice in a serving dish (1 minute)
G, Mix casserole ingredients (10 minutes)
H, Bake the casserole (25 minutes)
I, Bring the food to the table (2 minutes)
J, Call the family for dinner (1 minute)
Gantt Charts
Shows timing of tasks Shows sequence of tasks The Gantt chart shows planned and actual
progress for a number of tasks displayed against a horizontal time scale
It can be helpful in expediting, sequencing, and reallocating resources among tasks
GANTT Example
0 1 2 3 4 5 6 7 8 9 12 14 16A - Prelim Market Analysis
B - Dev of Prelim Product Design
C - Prelim Manuf Study
D - Evaluate & Select Best Product Design
E - Dev Detailed Marketing Plans
F - Design Manuf process
G - Dev Detailed Product Design
H - Build and test prototype
I - Finalize product Design
J - Order Components
K - Order Product Equipment
L - Install Production Equipment
0 1 2 3 4 5 6 7 8 9 12 14 16
15
15
Time in Months
10
10
11
11
13
13
Gantt Charts
There are several advantages to the use of Gantt charts: Even though they may contain a great
deal of information, they are easily understood
While they may require frequent updating, they are easy to maintain
Gantt charts provide a clear picture of the current state of a project
They are easy to construct
Summary
Scheduling is particularly important to projects because of the complex coordination problems
The network approach to scheduling offers a number of specific advantages of special value for projects
Critical project tasks typically constitute fewer than 10 percent of all the project tasks
Summary
Networks are usually constructed from left to right, indicating activity precedence and event times as the network is constructed
Gantt charts are closely related to network diagrams, but are more easily understood and provide a clearer picture of the current state of the project
Budgeting and Cost Estimation
The budget serves as a standard for comparison
It is a baseline from which to measure the difference between the actual and planned use of resources
Budgeting procedures must associate resource use with the achievement of organizational goals or the planning/control process becomes useless
The budget is simply the project plan in another form
Estimating Project Budgets
In order to develop a budget, we must: Forecast what resources the project will require Determine the required quantity of each Decide when they will be needed Understand how much they will cost - including the
effects of potential price inflation
There are two fundamentally different strategies for data gathering: Top-down Bottom-up
Top-Down Budgeting
This strategy is based on collecting the judgment and experiences of top and middle managers
These cost estimates are then given to lower level managers, who are expected to continue the breakdown into budget estimates
This process continues to the lowest level
Top-Down BudgetingAdvantages:
Aggregate budgets can often be developed quite accurately
Budgets are stable as a percent of total allocation The statistical distribution is also stable, making for
high predictability Small yet costly tasks do not need to be individually
identified The experience and judgment of the executive
accounts for small but important tasks to be factored into the overall estimate
Bottom-Up Budgeting
In this method, elemental tasks, their schedules, and their individual budgets are constructed following the WBS or project action plan
The people doing the work are consulted regarding times and budgets for the tasks to ensure the best level of accuracy
Initially, estimates are made in terms of resources, such as labor hours and materials
Bottom-up budgets should be and usually are, more accurate in the detailed tasks, but it is critical that all elements be included
Bottom-Up BudgetingAdvantages:
Individuals closer to the work are apt to have a more accurate idea of resource requirements
The direct involvement of low-level managers in budget preparation increases the likelihood that they will accept the result with a minimum of aversion
Involvement is a good managerial training technique, giving junior managers valuable experience
BudgetingTop-down budgeting is very commonTrue bottom-up budgets are rare
Senior managers see the bottom-up process as risky
They tend not to be particularly trusting of ambitious subordinates who they fear may overstate resource requirements
They are reluctant to hand over control to subordinates whose experience and motives are questionable
Work Element Costing
The actual process of building a budget - either top-down or bottom-up - tends to be a straightforward but tedious process
Each work element in the action plan or WBS is evaluated for its resource requirements, and then the cost
Direct costs for resources and machinery are charged directly to the project. Labor is usually subject to overhead charges. Material resources and machinery may or may not be subject to overhead.
Budgeting Process
Usually the initial step toward reducing the difference between the superior’s and the subordinate’s estimates is made by the superior
The superior agrees to be “educated” by the subordinate in the realities of the job
This is a time consuming process, especially when the project manager is negotiating with several subordinates
Project Budget by Task and Month
Task I J Estimate 1 2 3 4 5 6 7 8
Monthly Budget (£)
A 1 2 7000 5600 1400
B 2 3 9000 3857 5143
C 2 4 10000 3750 5000 1250
D 2 5 6000 3600 2400
E 3 7 12000 4800 4800 2400
F 4 7 3000 3000
G 5 6 9000 2571 5143 1286
H 6 7 5000 3750 1250
I 7 8 8000 2667 5333
J 8 9 6000 6000
75000 5600 12607 15114 14192 9836 6317 5333 6000
Improving the Process of Cost Estimation
There are two fundamentally different ways to manage the risks associated with the chance events that occur on every project: The most common is to make an
allowance for contingencies - usually 5 or 10 percent
Learning Curves
Studies have shown that human performance usually improves when a task is repeated
In general, performance improves by a fixed percent each time production doubles
More specifically, each time the output doubles, the worker hours per unit decrease to a fixed percentage of their previous value
That percentage is called the learning rate The project manager should take the learning curve
into account for any task where labor is significant
Budgeting and Cost Estimation
Other FactorsAnywhere from about three-fifths to five-sixths
of projects fail to meet their time, cost, and/or specification objectives
There are several common causes:Arbitrary and impossible goalsScope creepWildly optimistic estimates in order to influence
the project selection processChanges in resource pricesFailure to include an allowance for waste and
spoilageBad luck
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