om lec 5- project management

8/2/2019 OM Lec 5- Project Management

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Project Management


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What is a Project Management? Project: a series of related activities usually directed toward some

major output and requiring a significant period of time to perform Project management: the application of the knowledge, skills, tools,

and techniques necessary to successfully complete a project. According to the Project Management Institute ( www.pmi.org ), the

body of knowledge of project management can be divided into fivecategories:

1. initiation2. planning3. execution4. control5. closure
http://www.pmi.org/http://www.pmi.org/


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Characteristics of a Project

A unique, one-time effort Requires the completion of a large number

of interrelated activities Resources, such as time and/or money, are

limited Typically has its own management structure


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Characteristics for Projects

Projects generally have or include: Pre-specified deliverables after completion Pre-established limits and exclusions Specific intermediate goals or performance milestones. An element of risk Teams made up of several individuals who come from

different departments or functional areas or who have

unique skills Team members work on multiple projects at the same

time


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Example Projects in Different FunctionalAreas that Impact the Value Chain


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Matrix Project


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Three InterrelatedConstraints in Project Management

All project management decisions involve three factors:time, resources, and cost


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Project ManagementTools and Techniques

The discipline of project management has anumber of tools and procedures that enable theproject team to organize its work to meet theobjectives under the constraints:

Work Breakdown Structure Precedence Relationship and Time Estimates Gantt Chart Network Diagram

Critical Path Method (CPM) Cost and Time Tradeoff Analysis Program Evaluation and Review Technique (PERT) Resource Management


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Work Breakdown Structure

Work breakdown structure (WBS): anapproach that defines a project in terms of itssubprojects, tasks, and activities

Most fundamental technique for designing andorganizing

Activity : the smallest work package that canbe assigned to a single worker or a team

It is essential that care is taken to develop arealistic work breakdown structure.


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Precedence Relationshipand Time Estimates

Precedence relationship analysis :identification of the relationships and thesequence of activities within a project

Great care is taken to estimate theapproximate completion time for eachactivity.

The project schedule, cost, and resourcerequirements depend on the precedencerelationships and time estimates forindividual tasks.


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Gantt Chart

Gantt chart: a special type of horizontal barchart used to display the schedule for an entireproject

Named after Henry Gantt, who originallydeveloped the chart in the 1910s.

A Gantt chart with different color codes can beused to track performance while the project isin progress.


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An Example of a Gantt Chart


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Network Diagram

Network diagram : a diagram with arrows andnodes (circles) created to display a sequence of activities within a project

Activity on node (AON) approach : a networkdiagram that shows each activity as a circle (ora node) and connects the activities with arrows

Activity on arrow (AOA) convention : a networkdiagram in which each activity is representedby an arrow, and the nodes are used to showthe beginning and end points


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Activity on Node (AON)and Activity on Arrow (AOA) Conventions

for Representing Network Diagrams


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Types of Critical Path Methods

CPM- Used when activity times are known with certainty Used to determine timing estimates for the

project, each activity in the project, and slacktime for activities

PERT with Three Activity Time Estimates Used when activity times are uncertain Used to obtain the same information as the

Single Time Estimate model and probabilityinformation

Time-Cost Models Used when cost trade-off information is a

major consideration in planning Used to determine the least cost in reducing

total project time


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Critical Path Method

Critical path method : an algorithm for schedulingactivities within a project for the fastest and mostefficient execution

Critical path : the path within a project that takes

the longest time to complete Dictates the project completion time, the bottleneck

path or the binding constraint Critical activities : the project activities making up

a critical path Slack : the amount of flexibility in scheduling an

activity within a project


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Computing the Critical Path

Earliest start (ES) = 0 for all activities withoutpredecessors; = largest of earliest finish times of allimmediate predecessor activities.

Earliest finish (EF) = ES + task duration, workingforward in the project network

Latest finish (LF) = for all ending activities =minimum project duration; = smallest of lateststart times for all successor activities.

Latest start (LS) = LF - task duration, workingbackwards in the project network


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CPM with Single Time Estimate

Consider the following consulting project :Activity Designation Immed. Pred. Time (Weeks)Assess customer's needs A None 2

Write and submit proposal B A 1Obtain approval C B 1Develop service vision and goals D C 2Train employees E C 5Quality improvement pilot groups F D, E 5Write assessment report G F 1

Develop a critical path diagram and determine theduration of the critical path and slack times for all

activities.


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First draw the network

A(2) B(1) C(1)

D(2)

E(5)

F(5)G(1)

A None 2

B A 1

C B 1

D C 2

E C 5F D,E 5

G F 1

Act. Imed. Pred. Time


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Determine early starts and early finish times

ES=9EF=14 ES=14EF=15ES=0EF=2 ES=2EF=3 ES=3EF=4

ES=4

EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

Hint: Start with ES=0and go forward in thenetwork from A to G.


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Determine late starts and late finishtimes

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

LS=14

LF=15

LS=9

LF=14

LS=4LF=9

LS=7LF=9

LS=3LF=4

LS=2LF=3

LS=0LF=2

Hint: Start with LF=15or the total time of the

project and gobackward in thenetwork from G to A.


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Critical Path & Slack

ES=9

EF=14

ES=14

EF=15

ES=0

EF=2

ES=2

EF=3

ES=3

EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

LS=14

LF=15

LS=9

LF=14

LS=4 LF=9

LS=7LF=9

LS=3

LF=4

LS=2

LF=3

LS=0

LF=2

Duration=15 weeks

Slack=(7-4)=(9-6)= 3 Wks


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Program Evaluationand Review Technique (PERT)

The technique is based on the assumption thatan activitys duration follows a probability

distribution instead of being a single value. The probabilistic information about the

activities is translated into probabilistic

information about the project.


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PERT

Three time estimates are required to compute theparameters of an activitys duration distribution:

pessimistic time (t p ) - the time the activity would takeif things do not go well

most likely time (t m ) - the consensus best estimate of the activitys duration

optimistic time (t o ) - the time the activity would takeif things do go well


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PERT

From these three time estimates about anactivity, two probability distribution parameters

are calculated: the mean (t e ) and the variance(Vt ).

te = ( to + 4t m + tp ) / 6

Vt = [ ( t p - to ) / 6 ] 2


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Example: PERT

Task

Immediate

Predecesors Optimistic Most Likely PessimisticA None 3 6 15B None 2 4 14C A 6 12 30D A 2 5 8

E C 5 11 17F D 3 6 15G B 3 9 27H E,F 1 4 7I G,H 4 19 28


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Example. Expected Time Calculations

ET(A)= 3+4(6)+15

6

ET(A)=42/6=7Task

ImmediatePredecesors

ExpectedTime

A None 7B None 5.333C A 14D A 5E C 11F D 7

G B 11H E,F 4I G,H 18

TaskImmediate

Predecesors Optimistic Most Likely PessimisticA None 3 6 15B None 2 4 14C A 6 12 30D A 2 5 8

E C 5 11 17F D 3 6 15G B 3 9 27H E,F 1 4 7I G,H 4 19 28

Expected Time =Opt. Time + 4(Most Likely Time) + Pess. Time

6


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Network Diagram

A(7)

B(5.333)

C(14)

D(5)

E(11)

F(7)

H(4)

G(11)

I(18)

Duration = 54 Days


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Exercise

What is the probability of finishing this project inless than 53 days?

p(t < D)

TE = 54

Z =D - T E

cp2

t

D=53


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A c tiv ity v a ria n ce , = (P ess im . - O p tim .

6)2 2

Task Optimistic Most Likely Pessimistic VarianceA 3 6 15 4B 2 4 14C 6 12 30 16D 2 5 8E 5 11 17 4F 3 6 15G 3 9 27

H 1 4 7 1I 4 19 28 16

(Sum the variance along the critical path .) 2 = 41


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There is a 43.8% probability that this project will be completed in less than 53 weeks.

p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)

Z =D - T

=53-54

41= -.156E

cp2

TE = 54

p(t < D)

tD=53


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Additional Probability Exercise

What is the probability that theproject duration will exceed 56weeks?


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Additional Exercise Solution

tTE = 54

p(t < D)

D=56

Z =D - T

=56-54

41= .312E

cp2

p(Z > .312) = .378 , or 37.8 % (1-NORMSDIST(.312))


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Activity Cost-Time Tradeoffs

Project managers may have the option orrequirement to crash the project, or

accelerate the completion of the project. This is accomplished by reducing the length of

the critical path(s).

The length of the critical path is reduced byreducing the duration of the activities on thecritical path

Ch t 18 P j t M t


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Crashing a project refers to reducing the total

time to complete the project to meet a reviseddue date.

Crash time is the shortest possible time theactivity can realistically be completed.

Crash cost is the total additional costassociated with completing an activity in itscrash time rather than in normal time.

Crash cost per unit of time =

Crash Cost Normal CostNormal Time Crash Time

Chapter 18 Project Management


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Activity crashing

Activity time

Crashing activity

Crashtime

Crashcost

Normal Activity

Normaltime

Normalcost

Slope = crash cost per unit time


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Crashing - Considerations

Pick activities on the Critical Path Determine Crash/Day costs

Start with lowest cost crash/day Determine other effects of shortening

critical path activities Continue to crash/analyze until

optimum solution reached. Analyze Project Cost/Duration Graph


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Computer Softwarefor Project Management

Artemis Views (Artemis Management Systems ) FastTrack Schedule (AEC Software) Microsoft Project (Microsoft Corp.) Oracle Projects (Oracle Corp.) PowerProject (ASTA Development) Primavera Project Planner (Primavera Systems) SuperProject (Computer Associates International) TurboProject (IMSI)

om lec 5- project management

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