chapter 13 project management
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Chapter 13 Project Management. Learning Objectives. Students will be able to Understand how to plan, monitor, and control projects with the use of PERT. - PowerPoint PPT PresentationTRANSCRIPT
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-1 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Chapter 13Chapter 13
Project ManagementProject Management
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-2 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 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.
• Reduce 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, 8e by Render/Stair/Hanna
13-3 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Chapter OutlineChapter Outline
13.1 Introduction
13.2 PERT
13.3 PERT/COST
13.4 Critical Path Method
13.5 Other Topics in Project
Management
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-4 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Project Management Project Management ModelsModels
• PERT
• PERT/Cost
• Critical Path Method
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-5 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Questions Addressed by Questions Addressed by PERT and CPMPERT 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?
6. Is the project over or under the budgeted
amount?
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-6 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Questions - continuedQuestions - continued
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?
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-7 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Project Planning, Project Planning, Scheduling, and Scheduling, and
ControllingControllingProject 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
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-8 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 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, 8e by Render/Stair/Hanna
13-9 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Advantages of Advantages of PERT/CPMPERT/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, 8e by Render/Stair/Hanna
13-10 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 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, 8e by Render/Stair/Hanna
13-11 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Limitations of Limitations of PERT/CPMPERT/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, 8e by Render/Stair/Hanna
13-12 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General FoundryGeneral FoundryPERTPERT
Activity Description Immediate
Predecessors
A Build internal components
B Modify roof and floor
C Construct collection stack A
D Pour concrete and install
frame
B
E Build high-temperature
burner
C
F Install control system C
G Install air pollution device D,E
H Inspect and test F,G
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-13 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General Foundry, Inc.General Foundry, Inc.PERT NetworkPERT Network
Start Finish
A 2 C 2 F 3
B 3 D 4 G 5
E 4 H 2
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-14 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Beta Probability Beta Probability Distribution with Three Distribution with Three
Time EstimatesTime Estimates
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-15 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 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
2
Total: 25 weeks
Activity a m b E(t) 2
9
1
6
132
9
25
6
1112
9
16
6
1 92
9
9
6
1 72
9
4
6
2 62
9
1
6
1 32
4
1
6
1 42
9
1
6
1 32
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-16 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General Foundry, Inc.General Foundry, Inc.PERT Network - with E(t)PERT Network - with E(t)
Start Finish
A 2 C 2 F 3
E 4 H 2
B 3 D 4 G 5
ES EF
LS LF
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13-17 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General Foundry, Inc.General Foundry, Inc.PERT Network ES/EF, PERT Network ES/EF,
LS/LFLS/LF
B 3
0 3
D 3
3 7
G 5
8 13
Start Finish
A 2
0 2
C 2
2 4
F 3
4 7
E 4
4 8
H 2
13 15
ES EF
LS LF
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-18 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General Foundry, Inc.General Foundry, Inc.PERT Network ES/EF, PERT Network ES/EF,
LS/LFLS/LF
B 3
0 3
1 4
D 4
3 7
4 8
G 5
8 13
8 13
Start Finish
A 2
0 2
0 2
C 2
2 4
2 4
F 3
4 7
10 13
E 4
4 8
4 8
H 2
13 15
13 15
ES EF
LS LF
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-19 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General Foundry, Inc.General Foundry, Inc.Critical PathCritical Path
B 3
0 3
1 4
D 4
3 7
4 8
G 5
8 13
8 13
Start Finish
A 2
0 2
0 2
C 2
2 4
2 4
F 3
4 7
10 13
E 4
4 8
4 8
H 2
13 15
13 15
ES LF
LS LF
Total Time = 15
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-20 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General FoundryGeneral FoundrySchedule & SlacksSchedule & Slacks
Act
ivit
y ES EF LS LF LS-ES OnCriticalPath?
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
G 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-21 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General FoundryGeneral Foundry Meeting a Deadline Meeting a Deadline
0.57 Standard Deviations
1615 Time - weeks
0.57 1.76
15-16
date completion Expected - date Due z
rianceproject va deviation, Standard
71.6%
weeks)16P(t
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-22 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 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, 8e by Render/Stair/Hanna
13-23 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
PERT - Sensitivity PERT - Sensitivity AnalysisAnalysis
Impact of Increase (Decrease) in Critical
Path Activity time
Activity
Time
Successor
Activity
Parallel
Activity
Predecessor Activity
ESIncrease
(decrease)No change No change
EFIncrease
(decrease)No change No change
LSIncrease
(decrease)
Increase(Decrease) No change
LFIncrease
(decrease)
Increase(Decrease) No change
SlackNo
change
Increase(Decrease) No change
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-24 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Gantt Chart for Gantt Chart for General FoundryGeneral Foundry
Activity 1 2 3 4 5 6 7 8 9 10
11
12
13
14
15
A
B
C
D
E
F
G
H
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-25 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General Foundry, Inc. General Foundry, Inc. PERT & BudgetingPERT & Budgeting
A
B
C
D
E
F
G
H
0
0
2
3
4
4
8
13
0
1
2
4
4
10
8
13
$11,000
$10,000
$13,000
$12,000
$14,000
$10,000
$16,000
$ 8,000
2
3
2
4
4
3
5
2
ActivityES LS)
BudgetedCost per
Week
E(t)Total
BudgetedCost
$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, 8e by Render/Stair/Hanna
13-26 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General FoundryGeneral FoundryBudget RangesBudget Ranges
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-27 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General FoundryGeneral FoundryMonitoring & ControllingMonitoring & Controlling
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-28 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Critical Path MethodCritical Path MethodSteps in Project Steps in Project
CrashingCrashing
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, 8e by Render/Stair/Hanna
13-29 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
General FoundryGeneral FoundryNormal/Crash Costs & Normal/Crash Costs &
TimesTimesA
ctiv
ity
Nor
mal
T
ime
Cra
sh
Tim
e
Nor
mal
C
ost
Nor
mal
C
ost
Cra
sh C
ost
Per
Wee
k
On the Critical Path?
A 2 1 22,000 23,000 1,000 Yes
B 3 1 30,000 34,000 2,000 No
C 2 1 26,000 27,000 1,000 Yes
D 4 3 48,000 49,000 1,000 No
E 4 2 56,000 58,000 1,000 Yes
G 3 2 30,000 30,500 500 No
G 5 2 80,000 86,000 2,000 Yes
H 2 1 16,000 19,000 3,000 Yes
To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna
13-30 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458
Crash & NormalCrash & NormalTimes and CostsTimes and Costs
$34,000
$33,000
$32,000
$31,000
$30,000
ActivityCost
CrashCost
NormalCost
Crash TimeNormal Time
Time (Weeks)1 2 3
Normal
Crash
per week 20002000
4000
1 - 3
30000 - 34000
TimeCrash Time Normal
Cost Normal -Cost Crash
Week
PerCost
Crash