To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-1 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Quantitative Analysis Quantitative Analysis for Managementfor Management
Chapter 13Chapter 13Project ManagementProject Management
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-2 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Chapter OutlineChapter Outline
13.1 Introduction
13.2 PERT
13.3 PERT/COST
13.4 Critical Path Method
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-3 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Learning ObjectivesLearning Objectives
Students will be able to
Understand how to plan, monitor, and
control projects with the use of PERT.
Determine earliest start, earliest finish, latest
start, latest finish, and slack times for each
activity along with the total project
completion time.
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-4 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Learning Objectives - continuedLearning Objectives - continuedReduce total project time at the least total
cost by crashing the network using manual
or linear programming techniques.
Understand the important role of software in
project management.
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-5 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Project Management ModelsProject Management Models
PERT
PERT/Cost
Critical Path Method
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-6 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Questions That May Be Questions That May Be Addressed by PERT and CPMAddressed by PERT and CPM
1. When will the project be completed?
2. What are the critical activities or tasks in the
project?
3. Which are the noncritical activities?
4. What is the probability that the project will be
completed by a specific date?
5. Is the project on schedule, ahead of schedule, or
behind schedule?
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-7 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Questions - continuedQuestions - continued6. Is the project over or under the budgeted amount?
7. Are there enough resources available to finish the
project on time?
8. If the project must be finished in less than the
scheduled amount of time, what is the best way to
accomplish this at least cost?
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13-8 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling
Project Planning1. Setting goals2. Defining the project3. Tying needs into timed project activities4. Organizing the team
Project Scheduling1. Tying resources to specific activities2. Relating activities to each other3. Updating and revising on regular basis
Project Controlling1. Monitoring resources, costs, quality and budgets2. Revising and changing plans3. Shifting resources to meet demands
Before Project
During Project
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13-9 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Six Steps Common toSix Steps Common toPERT and CPMPERT and CPM
1. Define the project and all significant activities/tasks.
2. Develop relationships among the activities. Identify precedence relationships.
3. Draw the network.
4. Assign time and/or cost estimates to each activity.
5. Compute the longest time path (critical path) through the network.
6. Use the network to help plan, schedule, monitor, and control the project.
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-10 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Advantages of PERT/CPMAdvantages of PERT/CPM Useful at several stages of project management
Straightforward in concept, not mathematically
complex
Uses graphical displays employing networks to help
user perceive relationships among project activities
Critical path and slack time analyses help pinpoint
activities that need to be closely watched
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-11 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Advantages - continuedAdvantages - continued Networks generated provide valuable project
documentation and graphically point out who is
responsible for various project activities Applicable to a wide variety of projects and industries Useful in monitoring not only schedules, but costs as
well
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-12 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Limitations of PERT/CPMLimitations of PERT/CPM Project activities must be clearly defined, independent, and
stable in their relationships Precedence relationships must be specified and networked
together Time activities in PERT are assumed to follow the beta
probability distribution -- must be verified Time estimates tend to be subjective, and are subject to
fudging by managers There is inherent danger in too much emphasis being placed
on the critical path
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-13 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General FoundryGeneral FoundryPERTPERT
Activity Description ImmediatePredecessors
A Build internal componentsB Modify roof and floorC Construct collection stack AD Pour concrete and install
frameB
E Build high-temperatureburner
C
F Install control system CG Install air pollution device D,EH Inspect and test F,G
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-14 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc.General Foundry, Inc.PERT NetworkPERT Network
1
2 4
53
6
(Build Internal Components)
(ConstructCollection Stack)
(Modify Roof and Floor)
(Pour Concrete andInstall Frame)
(Install Control System)
(Install PollutionDevice)
7(Inspect andTest)
(Build Burner)
A
BD
C
E
F
G
H
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-15 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Beta Probability Distribution Beta Probability Distribution with Three Time Estimateswith Three Time Estimates
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13-16 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc.General Foundry, Inc. Time Estimates Time Estimates
A
B
C
D
E
F
G
H
1
2
1
2
1
1
3
1
2
3
2
4
4
2
4
2
3
4
3
6
7
9
11
3
2
3
2
4
4
3
5
2Total: 25 weeks
Activity a m b E(t) 2
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-17 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc.General Foundry, Inc.PERT Network - with E(t)PERT Network - with E(t)
1
2 4
53
6 7
A
BD
C
E
F
G
H
t=2
t=2
t=3
t=4
t=4
t=5
t=3
t=2
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-18 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc.General Foundry, Inc.PERT Network ES/EF, LS/LFPERT Network ES/EF, LS/LF
1
2 4
53
6 7
A
B
D
C
E
F
G
H
t=2
t=2
t=3
t=4
t=4
t=5
t=3
t=2
8 138 13
3 74 8
0 11 4
4 84 8
0 20 2
2 42 4
4 710 13 13 15
13 15
ES EFLS LF
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-19 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc.General Foundry, Inc.PERT Network - Critical PathPERT Network - Critical Path
1
2 4
53
6 7
A
BD
C
E
F
G
H
Total time: 15
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13-20 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General FoundryGeneral FoundrySchedule & SlacksSchedule & Slacks
Activity EarliestStart(ES)
EarliestFinish(EF)
LatestStart(LS)
LatestFinish(LF)
Slack(LS-ES)
OnCriticalPath?
A 0 2 0 2 0 YesB 0 3 1 4 1 NoC 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesG 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-21 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General FoundryGeneral Foundry Meeting a Deadline Meeting a Deadline
Project StandardDeviation, T
= Project Variance
Z = Due Date - Expected Completion DateT
= 16 - 151.76
= 0.570.57 Standard Deviations
1615 Time - weeks
Probability(T 16 Weeks)is 71.6%
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-22 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
PERT ProvidedPERT Provided Project expected completion date: 15 weeks Probability of finishing in 16 or fewer days:
71.6% Identity of activities on critical path: A, C, E,
G, and H Identity of activities with slack: B, D, and F Detailed schedule of start/finish dates
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-23 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General FoundryGeneral FoundryPERT - Use of DummyPERT - Use of Dummy
Activity Description ImmediatePredecessors
A Build internal componentsB Modify roof and floorC Construct collection stack AD Pour concrete and install
frameA,B
E Build high-temperatureburner
C
F Install control system CG Install air pollution device D,EH Inspect and test F,G
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-24 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc.General Foundry, Inc.PERT Network - with DummyPERT Network - with Dummy
1
2 4
53
6
(Build Internal Components)
(ConstructCollection Stack)
(Modify Roof and Floor)
(Pour Concrete andInstall Frame)
(Install Control System)
(Install PollutionDevice)
7(Inspect andTest)
(Build Burner)
A
BD
C
E
F
G
H
Du
mm
y
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-25 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc.General Foundry, Inc.PERT Network - with DummyPERT Network - with Dummy
1
2 4
53
6 7
A
BD
C
E
F
G
H
t=2
t=2
t=3
t=4
t=4
t=5
t=3
t=2
Du
mm
yt=
0
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-26 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
PERT - Sensitivity AnalysisPERT - Sensitivity AnalysisImpact of Increase (Decrease) in Critical
Path Activity timeActivity
TimeSuccessorActivity
ParallelActivity
PredecessorActivity
Earlieststart
Increase(decrease)
Nochange
No change
Earliestfinish
Increase(decrease)
Nochange
No change
Lateststart
Increase(decrease)
Increase(decrease)
No change
Latestfinish
Increase(decrease)
Increase(decrease)
No change
Slack Nochange
Increase(decrease)
No change
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-27 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General Foundry, Inc. General Foundry, Inc. PERT & BudgetingPERT & Budgeting
ABCDEFGH
0023448
13
01244
108
13
$11,000 $10,000 $13,000 $12,000 $14,000 $10,000 $16,000 $ 8,000
23244352
ActivityEarliest
Start (ES)Latest
Start (LS)
BudgetedCost per
Week
ExpectedTime, t
TotalBudgeted
Cost
$22,000 $30,000 $26,000 $48,000 $56,000 $30,000 $80,000 $16,000
Total $308,000
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-28 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General FoundryGeneral FoundryBudget RangesBudget Ranges
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13-29 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General FoundryGeneral FoundryMonitoring & ControllingMonitoring & Controlling
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-30 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Critical Path MethodCritical Path MethodSteps in Project CrashingSteps in Project Crashing
1. Find normal critical path and identify critical activities.
2. Compute crash cost per week for all activities.
3. Select critical activity with smallest crash cost per week. Crash this activity
4. Check to make sure critical path is still critical. If not, find the new one. Return to step 3.
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-31 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
General FoundryGeneral FoundryNormal/Crash Costs & TimesNormal/Crash Costs & Times
Activity NormalTime
CrashTime
NormalCost
CrashCost
CrashCost Per
Week
OnCriticalPath?
A 2 1 22,000 23,000 1,000 YesB 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 3 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesG 3 2 30,000 30,500 500 NoG 5 2 80,000 86,000 2,000 YesH 2 1 16,000 19,000 3,000 Yes
To accompany Quantitative Analysis for Management, 7e by Render/Stair
13-32 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458
Crash & NormalCrash & NormalTimes and CostsTimes and Costs
$34,000
$33,000
$32,000
$31,000
$30,000
ActivityCost
CrashCost
NormalCost
Crash Time Normal Time
Time (Weeks)1 2 3
Normal
Crashweekper
time Crashtime Normal
Cost Normal -Cost Crash
per Week
Cost Crash