Chapter 17

Project Management

Learning Objectives

You should be able to:1. Discuss the behavioral aspects of projects in terms of

project personnel and the project manager2. Explain the nature and importance of a work breakdown

structure in project management3. Give a general description of PERT/CPM techniques4. Construct simple network diagrams5. List the kinds of information that a PERT or CPM analysis

can provide6. Analyze networks with deterministic times7. Describe activity ‘crashing’ and solve typical problems

Instructor Slides 2

Projects

• Project:– Unique, one-time operations designed to

accomplish a specific set of objectives in a limited time frame

– Examples:• The Olympic Games• Producing a movie• Product development

• Operations:

– work done to sustain the business

17-3

Project Life Cycle

17-4

The Triple Constraint of Project Management

• Project’s Triple Constraints (Key Metrics)– Time– Cost– Scope

(Performance objectives)• Quality

Information Technology Project Management, Sixth Edition

5

Project Success

• There are several ways to define project success:– The project met scope, time, and cost

goals– The project satisfied the customer/sponsor– The results of the project met its main

objective e.g., making or saving a certain amount of money, providing a good return on investment.

Information Technology Project Management, Sixth Edition 6

Project Manager• Project managers work with the project team and

other people involved in a project to meet project goals

• The project manager is ultimately responsible for the success or failure of the project

• The project manager skills and competencies:– People skills– Leadership– Listening– Integrity, ethical behavior, consistent– Strong at building trust– Verbal communication– Strong at building teams– Conflict resolution, conflict management– Critical thinking, problem solving– Understands, balances priorities

17-7

Project Management

• Key tools:–Work Breakdown Structure–Gantt charts–Network diagram

17-8

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 project1. Identify the major elements of the project2. Identify the major supporting activities for each

of the major elements3. Break down each major supporting activity into a

list of the activities that will be needed to accomplish it

17-9

WBS

17-10

Open new department

New facility

Locate facility

Order furniture

Furniture setup

Move in

Staff

interview Hire & train

Furniture Location HiringRelocating

Finance

Remodel

Critical Path Method (CPM)

• CPM can assist in:1. estimating project length2. Identifying which activities are most critical

to timely project completion3. indicating of how long any activity can be

delayed without delaying the project

17-11

Network Diagram

Network diagram(Precedence) Diagram of project activities

that shows sequential relationships by use of arrows and nodesActivity on arrow (AOA)

Network diagram convention in which arrows designate activities

Activity on node (AON)Network convention in which nodes designate activities

17-12

Network Conventions (AON)

17-13

a

b

c a

b

c

a

b

c

d

a

b

c

dummyNode (dummy)

StartNode

Network Conventions (AOA)

17-14

a

b

c ab

c

a

b

c

d

a

b

c

dummyActivity

Precedence Diagram

15

# Task Duration(weeks)

Immediate Predecessor

1 Locate facility

8 -

2 Order furniture

6 1

3 Interview 4 -

4 Hire & Train 9 3

5 Remodel 11 1

6 Furniture setup

3 2

7 Move in 1 4,5,6

Project Network – Activity on Node (AON)

17-16

1

S

3

2

5

6

Locatefacilities

Orderfurniture

Furnituresetup

Interview

RemodelMove in

4

Hire andtrain

7

# Task Immediate Predecessor

1 Locate facility

-

2 Order furniture

1

3 Interview -

4 Hire & Train

3

5 Remodel 1

6 Furniture setup

2

7 Move in 4,5,6

Project Network – Activity on Arrow (AOA)

17-17

Locatefacilities

Orderfurniture

Furnituresetup

InterviewHire andtrain

Remodel

Move in

# Task Immediate Predecessor

1 Locate facility

-

2 Order furniture

1

3 Interview -

4 Hire & Train

3

5 Remodel 1

6 Furniture setup

2

7 Move in 4,5,6

Gantt Chart

17-18

Critical Path Method (CPM)

• An analytical tool that provides a schedule that completes the project in minimum time subject to the precedence constraints.

• In addition, CPM provides:– Starting and ending times for each activity– Identification of the critical activities (i.e., the

ones whose delay necessarily delay the project).

– Identification of the non-critical activities, and the amount of slack time available when scheduling these activities.

9-19

Network Diagram (cont’d)

• Path– Sequence of activities that leads from the

starting node to the finishing node• Critical path

– The longest path; determines expected project duration

• Critical activities– Activities on the critical path

• Slack– Allowable slippage for a path; the difference the

length of path and the length of critical path

17-20

Project Network – Activity on Node (AON)

17-21

1

S

3

2

5

6

Locatefacilities

Orderfurniture

Furnituresetup

Interview

RemodelMove in

4

Hire andtrain

7

# Task Immediate Predecessor

1 Locate facility

-

2 Order furniture

1

3 Interview -

4 Hire & Train

3

5 Remodel 1

6 Furniture setup

2

7 Move in 4,5,6

Critical Path ?

Gantt Chart

17-22

Critical Path ?

Example

B

A

E

C

F

GS

8

6 3

4 9

1

D

11

Early Start, Early Finish

Early start (ES)The earliest time an activity can startAssumes 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 entering EF

Early finish (EF)The earliest time an activity can finish

• EF = ES + t

Finding ES (Early Start) and EF (Early Finish) involves a forward pass through the network diagram

17-24

Example – Forward pass (ES, EF)

17-25

B

A

E

C

F

GS

0

8 14

0 4

20D

80 0

8

4

6 3

11

9

10

8

14 17

19

4 13

19

Late Start, Late Finish

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

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

• Finding LS and LF involves a backward pass through the network diagram 17-26

Example – Backward pass (LS, LF)

17-27

B

A

E

C

F

GS

0 8 8

8 6 1416

0 4 44 9 13

19

D

8 11 190 0 00

19 1 20

14 3 17

8

10

10

6

0

0

8

10

16

19

19

20

19

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

17-28

Example – Slack (LS-ES,LF-EF)

17-29

B

A

E

C

F

GS

0 80 8 8

10 168 6 14

16 1914 3 17

6 10 0 4 4 10 19

4 9 13

19 20

D

8 198 11 19

0 0 00 0

19 1 200

0

2 2

0

66

0

Example – Critical Path Slack (LS-ES;LF-EF)=0

17-30

B

A

E

C

F

GS

0

2 2

6 6

0

D

00

Example Solution

17-31

Path Length (weeks)

Slack

S-A-B-C-G 18 2

S-A-D-G 20 0

S-E-F-G 14 6

Critical Path

Using Slack TimesKnowledge of slack times provides managers with

information for planning allocation of scarce resourcesControl efforts can 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

17-32

The Critical Path Method (CPM) is not useful for

(Multiple Choices Question):1. Finding the project’s

shortest completion time2. Finding the project’s

minimum cost3. Calculating start and end

times for all activities4. Identifying critical

activities5. Identifying the slack for

non-critical activities

33

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

17-34

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

Crashing Activities

17-36

Crashing DecisionsTo make decisions concerning crashing requires

information about:

1. Time: • Regular time and crash time estimates for each activity

2. Cost: • Regular cost and crash cost estimates for each activity

3. 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

17-37

Crashing: Procedure

• General procedure:

1. Crash the project one period at a time

2. Crash only activities on the critical path/s

3. Crash the least expensive activity (that is on the critical path)

4. 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

17-38

17-39

6a

4d

5c

10b

9 e

2f

Example 7

Activity

Normal time

[days]

Crash (min) time

[days]

Available time

(crash-normal)[days]

Cost to Crash

[$/day]

a 6 6 - -

b 10 8 2 500

c 5 4 1 300

d 4 1 3 700

e 9 7 2 600

f 2 1 1 800

Indirect costs: $1,000 / day

1. Determine Critical Path

Path Lengtha-b-f 18c-d-e-f 20 (critical path)

2. Rank activities on CP in order of lowest crashing cost

Activity Cost per day to crash Available daysc 300 1e 600 2d 700 3f 800 1

6a

4d

5c

10b

9 e

2f

Activity Normal time

[days]

Crash (min) time

[days]

Available time

(crash-normal)[days]

Cost to Crash

[$/day]

a 6 6 - -

b 10 8 2 500

c 5 4 1 300

d 4 1 3 700

e 9 7 2 600

f 2 1 1 800

Crash activity c by 1 day: cost $300 < $1,000 (CP=19 days)(cannot crash c anymore)

6a

4d

5c

10b

9 e

2f

54

2. Rank activities on CP in order of lowest crashing cost

Activity Cost per day to crash Available daysc 300 1e 600 2d 700 3f 800 1

Crash activity e by 1 day: cost $600 < $1,000 (CP=18 days)(may crash activity e by 1 more day)

• Both paths are now critical. • Have to crash both in order to shorten project.

6a

4d

5c

10b

e

2f

49

2. Rank activities on CP in order of lowest crashing cost

Activity Cost per day to crash Available daysc 300 1e 600 2d 700 3f 800 1

8

Both paths are now critical. Have to crash both in order to shorten project.

Remaining activitiesPath Activity Cost per day to crash Available daysa-b-f a - -

b 500 2f 800 1

c-d-e-f c - -e 600 1d 700 3f 800 1

Crash activity f (is on both paths) by 1 day: cost = $800 < $1,000 (CP=17 days)

6a

4d

4c

10b

8 e

2f

Crash activity f (is on both paths) by 1 day: cost $800 < $1,000 (CP=17 days)

6a

4d

4c

10b

8 e1f

2

Remaining activitiesPath Activity Cost per day to crash Available daysa-b-f a - -

b 500 2f 800 1

c-d-e-f c - -e 600 1d 700 3f 800 1

Crash activity b by 1 day: cost $500 ANDCrash activity e by 1 day: cost $600Total cost: $1,100>$1,000 (indirect costs) =>DONE!

Both paths are still critical. Have to crash both in order to shorten project.

Remaining activitiesPath Activity Cost per day to crash Available daysa-b-f a - -

b 500 2f - -

c-d-e-f c - -e 600 1d 700 3f - -

6a

4d

4c

10b

8 e

1f

Length after crashingPath\crash n=0 1 2 3 a-b-f 18 18 18 17c-d-e-f 20 19 18 17

Activity Crashed c e fCost 0 ($300) ($600) ($800)Savings 0 $1,000 $1,000 $1,000Total 0 $700 +$400 +$200 = $1,300

Operations Strategy*Projects present both strategic opportunities and risks

It is critical to devote sufficient resources and attention to projects

Projects are often employed in situations that are characterized by significant uncertainties and risks that may result in: Delays Budget overruns Failure

PM should use:Careful planningWise selection of project manager and teamMonitoring of the project

It is not uncommon for projects to fail it is beneficial to examine the reasons for failure – “lessons

learned”17-48