ELG/SEG2911: Professional Engineering Practice: Winter 2007 (MI)

Project Management Process:Designing the Initial Project Management Plan

Reference Chapters (Textbook):

- Chapter 10: Project Management- Chapter 11: Feasibility & Project Management

Agenda:

- What is Project Management- Context of Project Management- Tradeoffs in Project Management- Project Management Techniques

Gantt Charts, PERT/CPM- Feasibility and Project Management

+ Technical Feasibility+ Economic Feasibility+ Fiscal Feasibility+ Compliance to Standards Feasibility+ Social and Environmental Feasibility

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Project Management:

Project Management is concerned with meeting the one-time goal for a specific activity (project) of an organization. It involves the following tasks:

- Planning- Project Scheduling- Project Execution

Planning involves

- Analysis of the Requirements: Size and Complexity

- Situational Analysis: (What is available)

+ Budget and costs+ Timeline+ Resources + Tools+ Technical Constraints+ Quality and Standard constraints+ Available Skill Set+ Project review and auditing requirements

- Encapsulation of activities into Tasks

- Sequencing relationship between tasks+ Functional sequencing+ Resource related sequencing

- Development of Task activity graph- Development of Resource assignement graph

Scheduling involves

- Timing of tasks - Quanititative analysis of the graphs to determine the optimum schedule.

Using techniques such as PERT/CPM- Resource Balancing

Execution involves- Assignment to tasks to implementation agents- Tracking progress- Reallocating resources to meet the budget, timing, functionality and quality

constraints.

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Context of Project Management:

A Project Management Plan is a living document that needs constant updating according to the current status of the product in its lifecycle.

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REQUIREMENTS ANALYSIS

WORK BREAKDOWNSTRUCTURE

(WBS)

PEOPLE

SOFTWARE TOOLS

HARDWARE

Resources

TIME

QUALITY

OTHERS

Constraints

PROJECT MANAGEMENT

PLAN

Components of Project Management Process:

1. Project Human Resource Management Task assignment

2. Project Life-Cycle ManagementProject Execution using one or more of the following:

Waterfall Model V Model Spiral Model Prototyping Model

3. Project Scope Management Work Breakdown Structure

4. Project Time/Resource Specification and Analysis Methods

Checklist

Is a list of activities/tasks to be completed- Can be arranged into logical categories- Need not be time sorted

Examples:- Shopping List, sorted according to store (sales offerings)- Preparing for the Exams- Car winterization check list- Pilot’s Pre-Flight check list, sorted according to systems and

subsystems, e.g, Structure, Loading, Fuel, Avionics, Hydraulics..- Test cases: Hardware and Software

Time Line

Is a one diemensional time ordered list of milestones:

- Activities that are needed for achieving a milestone are not specified

- Sequencing of activities is also not specified

Examples:- Semester schedule: Assignments, Midterms, Reports, Finals- Milestones and checkpoints in Project development- Time ordered Test case list

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Gantt Chart

Is a two dimesional depiction of activties (tasks) with respect to time.Developed in Germany in 1930s.

Activity 01 02 03 04 05 06 07 08 09 10 11

Requirements Analysis

Info Capture

HLD Design

HW Design & Assembly Software Design

SW Debug & Redesign

HW/SW Integration Test

Documentation Document Review

Release for Beta Test

- The activities are shown vertically while the time line is shown horizontally.

- Time dependency between tasks can be shown.- Functional dependency is not specified.- Activities that can be done in parallel can be shown. This allows

for better project management and earlier completion.- Progress can be shown by marking with a different colour the

completed activities.- After analysis tasks on a Critical Path can be identified. These

tasks are important and the project cannot afford any delay on their completion without paying the penalty of delaying the whole project.

Graph based Methods:

Developed for managing the development of military equipment, e.g. Polaris missile in 1950s.

Features: - Functional Sequencing can be specified- Timing sequencing (schedule) can be derived thtough analysis- Parallellism- Identifying critical and non-critical tasks - Determining time slacks- Allocating resources to tasks- Load Balancing

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+ CPM: Critical Path Method + PERT: Project Evaluation and Review Technique

5. Project Quality Management

For ensuring quality targets are acheived , e.g.

Sigma-1 quality = 68.27% ~ 317 defects / 1000Sigma-2 quality = 95.45% ~ 45 defects / 1000Sigma-4 quality = 99.9937% ~ 6.3 defects / 1000Sigma-6 quality = 99.9999998% ~ 2 defects / Billion

Quality Assurance (Rules, Processes, Job Aids,Tools & Training) Quality Control (Monitoring and Corrective Action) Tools: Pareto Charts ( identifies high runners), Sampling Plan

Defect Cause Analysis:

- Root Cause Documentation: Ishikawa’s Fishbone diagram- Logical Relationship between faults: Fault Tree Diagram.

Fault Prediction:

Fault Tree Analysis. To determine the probability of overall failure given the probability of faults at the leaf nodes.

6. Project Risk Management

Types of Risks: Technical, Quality, Cost, Time, People Risk avoidance Risk acceptance Risk effect mitigation (reduction of impact)

7. Project Cost Management- Budget Control- Burn Rate Control- Trade-Offs: Costs vs Time, Functionality, Quality

8. Project Non-Human Resource Management

Machinery, Infrastructure, HW and SW Tools:Scheduling, Purchasing, Procurement, Rentals, Licensing, Disposal, etc.

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PROJECT MANAGEMENT

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REQUIREMENT ENGINEERING

PLAN

ARCHITECTURAL & HIGH LEVEL DESIGN PLAN

DETAILED DESIGNPLAN

IMPLEMENTATION PLAN

UNIT TESTPLAN

ARCHITECTURAL & HIGH LEVEL DESIGN PLAN

V & V and DEMONSTRATION

PLAN

PRODUCT DEPLOYMENT PLAN

TIME MANAGEMENT

RESOURCE MANAGEMENT

QUALITY MANAGEMENT

SCOPE MANAGEMENT

HUMAN RES MANAGEMENT

LIFE-CYCLE MANAGEMENT

COST MANAGEMENT

RISK MANAGEMENT

PROJECT MANAGEMENT: TRADE-OFF PYRAMID:

This problem can be viewed as an optimization problem between the following variables. The interaction between these variables may be nonlinear.

1. CONTENT Functionality2. PRODUCT QUALITY (Non-functional requirements)

- Performance and Reliability- Standards compliance

3. SCHEDULE Time needed to complete the project4. RESOURCES

- Capital and Recurring budgets- Number of Personnel- Personnel Skill sets

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CONTENTSFunctionality

RESOURCEAvailability

SCHEDULESpecs

QUALITYSpecs

Sub-Pyramid that is actuallyImplemented(Not to Scale)

DesiredPyramid

PROJECT MANAGEMENT: Tracking Progress:

Example: Class Project, Implementation, Test & Documentation

An Activity Graph

Start

Release Beta Testing

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Requirements Analysis (1wk)

HLD Design (1wk)

SW Debug 2wk

HW Design & Assembly 2wk

SW Design 3wk

Integration Testing 2wk

Documenta-tion 2wk

Document Review 1wk

Info Capture (1wk)

TOOLS:

MS Project: Graphing and Analysis Tool: See Example on web notes:VISIO: Graphing Tool

Early Start

Duration Early Finish

Task Name

Late Start

Slack Late Finish

Visio Node Formats

Task Name

ScheduledStart

ScheduledFinish

ActualStart

ActualFinish

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Gantt Chart:

Gant Chart is a bar chart in which the start and ending of each activity is shown on a separate line along a horizontal time axis. The start of the line represents activity start and its length of the line its duration. Dependencies between activities are not specifically shown but these can be deduced.

Activity 01 02 03 04 05 06 07 08 09 10 11

Requirements Analysis

Info Capture Sens, Acts

HLD Design

HW Design & Assembly Software Design

SW Debug & Redesign

HW/SW Integration Test

Documentation Document Review

Release for Beta Test

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Determining Critical Nodes and Paths:

Draw the Activity graph for the project. (You can use MS Project package)

Activity

(1)

Dura-tion

(2)

EarliestStart

(3)

EarliestCompletion

(4)=(3)+(2)

LatestStart

(5) =(6) – (2)

LatestCompletion

(6)

Slack

(7)= (6) – (4)

CriticalNodes

(8)

Start Node 0 0 0 0 0 0 YReq Analys 1 0 1 0 1 0 YInfo Capture 1 1 2 1 2 0 YHL Design 1 2 3 2 3 0 YHW Design 2 3 5 6 8 3 NSW Design 3 3 6 3 6 0 YSW Debug 2 6 8 6 8 0 YHW/SW Int 2 8 10 8 10 0 YDocument 2 1 3 8 10 7 NDoc Review 1 10 11 10 11 0 YEnd Node 0 11 11 11 11 0 Y

Algorithm:

1. For each activity, unless already given, estimate completion time (most likely, optimistic, pessimistic values)Use Simpson’s Rule. Fill in columns 1 and 2 of the following table.

2. While observing the sequencing constraints specified in the PERT/CPMGraph and using the following formulae

Earliest Start Time of a Node = MAX (Earliest Completion time of its Predecessors)

Latest Completion Time of a Node = MIN (Latest Start time of its Successors)

Compute all the times in the table, columns, 3, 4, 5 and 6.

3. Starting from the begin node and using the formula, calculate the Earliest Start Times of each node and enter this in column 3. Add column 2 to 3 to get column 4. Proceed downwards in the table.

4. The Latest completion of the Ending node will be the same as its Earliest Completion Time. Enter this value in the Ending node’s cell in Column 6.

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Compute Ending node’s Latest Start Time by subtracting column 2 from column 6.

5. Using the formula compute the Latest Completion times of the predecessor(s) of the Ending node. Compute their Latest Start Times. Proceeding upwards in the table complete columns 6 and 5.

6. For each node determine

Slack = Latest Start Time – Earliest Start Time = Latest Completion Time – Earliest Completion Time

7. Identify the tasks that have non-zero slack. This means that these tasks can be DELAYED by the amount of the slack without impacting the total completion time of the project.

8. Identify tasks that have zero slack. These are the CRITICAL tasks. No delay is permissible on these tasks, otherwise the project will be delayed.

9. Identify path(s) that connect the Critical tasks. Such path(s) are termed the Critical Paths. (In an ideal situation all paths of PERT/CPM chart wll be Critical, but this is seldom possible)

Notes: Slack is defined as

(Latest Start - Earliest Start) = (Latest Completion – Earliest Completion)

The tasks with 0 slack are on the critical path (s) There can be more than one critical path in the graph

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Exercise 1:

Determine node slacks and the critical path for the following activity graph,

Notation:

Activity(1)

Duration(2)

EarliestStart (3)

EarliestCompletion(4) =(3)+(2)

LatestStart

(5) =(6) – (2)

LatestCompletion

(6)

Slack(7) = (6) – (4)

CriticalNodes

(8)Start

A

B

C

D

E

F

G

H

J

K

L

M

N

P

Q

Finish

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A, 2

B, 3

D, 2 H, 3

E, 5

F, 3

K, 2

C, 4 G, 5

N, 4J, 6

P, 1

L, 3

M, 2

Q, 2

Activity, AvgTime

Exercise 2: Using the algorithm, tabulate the PERT chart shown in Figures 11, page 235. Determine the slacks for every node and identify the Critical path.

Exercise 3: Repeat the same for Figure 12, page 236.

Exercise 4: Solve question 24, Figure 22, page 255.

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Analysis Methodologies:

The objective of analysing graphs and charts is to identify the critical path that connects activities that must be started and completed at the specified timings. Any delay will result in schedule lengthening or schedule slippage that can impact the overall costs and also the business viability of the project (missing the market window).

The critical path may change as the project progresses. Therefore there is a constant need for re-evaluations. The project manager must ensure that all activities on the critical path are completed on time.

Activities on the non-critical paths can be delayed in accordance with the free period available, called slack. Activities on the critical path have zero slack and on the non-critical path(s) the slack > 0.

Graphs can be analyzed using two techniques including

Project Evaluation and Review Technique (PERT) (used for Polaris project) Critical Path Method (CPM)

In the case of PERT, the project manager has to estimate the average duration of each activity. He may have the data for similar activities that have been completed in the past. It is assumed that these numbers follow normal distribution or a bell curve.

Another simpler averaging algorithm is based on most optimistic, most pessimistic and most likely durations.

Average Duration = (Most_Optimistic + 4* Most_Likely + Most_Pessimistic) / 6

Example: Estimate the average duration of an activity for which

Most_Optimistic = 3 weeksMost_Pessimistic = 10 weeksMost_Likely = 8 weeks

Average Duration = (3 + 4*8 + 10) / 6 = 7.5 weeks

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Feasibility Considerations:

- Technical Feasibility- Engineering Economics- Economic Feasibility- Fiscal Feasibility- Compliance to Standards Feasibility- Social and Environmental Feasibility

Technical Feasibility

It basically tries to answer the question, “ Will it Work”?

- Is it mathematically justifiable?- Are your assumptions justifiable?- Have you selected proper material and technology?- Has modelling and/or simulation been done?- Is it doable with the existing skill set and tool set?- Does the solution comply with relevant technical standards- Can the product stand up to the worst case scenarios?

Economic Feasibility

In order to prove that the project is economically feasible we have to determine the Capital costs, the Running (Operations and Maintenance) costs and the expected Return on investment (ROI).

The basic problem is that value of money, or its buying power decays (depreciates) with time.

$100, ten year down the road, are not the same as $100 here and now. All future dollars must be standardized (amortized) to the present time.

We have use basic mathematics in order to answer this question.

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Engineering Economics

- What are the Capital Costs- What are the Operations and Maintenance Costs- What are the expected returns (Income)?- Is the Income in the form of a lump sum, periodic or a

combination?- When does the income start to come in?- If the Income is periodic, what is the amount and what is

the frequency?- How to standardize these to the present dollars?

+ Operations and Maintenance Costs+ Income (Lump Sum, Periodic or combination)

Basic Formulae:

a. Given the Future dollars n years from now, what is their Present worth, if the annual depreciation rate is r.

P = F [1+ r] – n

This is an approximation of the ideal Compound Interest Law. If you want to to be very precise use the following formula:

P = F e (– r * n)

e (– r * n) = Lt (1+ r/n) (– r *n) as n inf

This means we are charging and compounding interest at miniscule intervals that approach zero, in other works we ask for interest to be paid every ‘picosecond’.

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b. Given that the returns are received in equal amount installments (A) spread over n years. Determine the cumulative present worth.

P = A [ 1 / r – (1 / (r * (1 + r)n ) ) ]

Example: Which is preferable?

1. $ 180 per year for 6 years 2. $ 265 per year for 4 years

Assume r = 2.5%

In the 1st case the nominal value is 180 * 6 = $ 1080In the 2nd case the nominal value is 265 * 4 = $ 1040Prima facae, the first case id better, but this does not take into consideration the depreciation of the buying power.

Using depreciation into account the the present worth is as follows:

1st Case: $ 9912nd Case: $ 997

c. Capital Recovery Factor (CRF) = A/P

1st Case: 180/991 = 0.1816 2nd Case: 265/997 = 0.2658

d. Sinking Fund Factor (SFF) = A/F

SFF = CRF / (1+r)n

This factor is useful when we have come up with a fixed amount after n years (say $1 Million in 10 years) and we decide to put aside A dollars every year. The annual amount is calculated by multiplying $1 Million with the SFF available from the tables. With r of 4% the SFF is 0.08329. This means that $832, 900 must be set aside yearly for 10 years in order to accumulate $1 Million.

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Perform Economic Feasibility:

The basic objective is that the :

Benefit / Cost Ratio (in standardized dollars) > 1

Example: A semiconductor factory is considering to upgrade its production line.

- The capital cost is $1.5 Million, (current dollars).- The line will produce

+ $0.6 Million in year 3 (only once)+ $1.0 Million is year 6 (only once)

(After that the line will be obsolete)

Is the proposal to buy the new production line economically feasible?

Present Value Analysis:

PV of $0.6 Million = $ 557,200PV of $1.0 Million = $ 862,300Total = $ 1,419,500

Comparing it with $1.5 Million.

Loss = $ 80,500

Benefit/Cost Ratio = $1.419 / $1.50 = 0.95 < 1 No way !!

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Fiscal Feasibility

Once we have justified the Technical and Economic Feasibility of the project, the question remains as to how to raise the necessary capital for the project?This is specially true where the capital amount is significant and beyond the reach of an ‘average’ engineer.

There are many ways for raising the capital.

- Venture Capital- Joint Venture- Bank Loans- Bonds

Or a combination thereof.

Details analysis requires the services of qualified accountant(s) and economist(s).

Example: Is setting up a franchise fiscally feasible?

(Subway, McDonalds, Mailboxes etc, Edward Jones, Fibre Cable Network Maintenance, Cable TV, Cellular Phone etc.)

Feasibility of Miscellaneous Issues:

- Legal and Intellectual Property - Environmental- Social (Public Hearings)- Political (Lobby groups)

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