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Published by soedito, 2019-11-25 17:19:44

CH_08_PROJECT_MANAGEMENT

CH_08_PROJECT_MANAGEMENT

Project Management

Chapter 8 8-1

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Topics

■ The Elements of Project Management
■ CPM/PERT Networks
■ Probabilistic Activity Times
■ Microsoft Project
■ Project Crashing and Time-Cost Trade-Off
■ Formulating the CPM/PERT Network as a Linear

Programming Model

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-2

Overview

■ Network representation is useful for project analysis.
■ Networks show how project activities are organized and are used to

determine time duration of projects.
■ Network techniques used are:

▪ CPM (Critical Path Method)
▪ PERT (Project Evaluation and Review Technique)
■ Developed independently during late 1950’s.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-3

Elements of Project Management

■ Management is generally perceived as concerned with planning,
organizing, and control of an ongoing process or activity.

■ Project Management is concerned with control of an activity for a
relatively short period of time after which management effort ends.

■ Primary elements of Project Management to be discussed:
Project Planning
Project Team
Project Control

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-4

Elements of Project Management 8-5
Project Planning

■ Objectives
■ Project Scope
■ Contract Requirements
■ Schedules
■ Resources
■ Personnel
■ Control
■ Risk and Problem Analysis

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Elements of Project Management
The Project Team

■ Project team typically consists of a group of individuals from various
areas in an organization and often includes outside consultants.

■ Members of engineering staff often assigned to project work.

■ Project team may include workers.

■ Most important member of project team is the project manager.

■ Project manager is often under great pressure because of uncertainty
inherent in project activities and possibility of failure. Potential
rewards, however, can be substantial.

■ Project manager must be able to coordinate various skills of team
members into a single focused effort.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-6

The Project Management Process

Figure 8.1 The project management process 8-7

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Elements of Project Management
Scope Statement

■ Document providing common understanding of project.

■ Justification describing the factors giving rise to need for project.

■ Expected results and what constitutes success.

■ List of necessary documents and planning reports.

■ Statement of work (SOW) - a planning document for individuals,

team members, groups, departments, subcontractors and suppliers,
describing what are required for successful completion on time.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-8

Elements of Project Management
Work Breakdown Structure (WBS) (1 of 2)

■ WBS breaks down project into major components (modules).

■ Modules are further broken down into activities and, finally, into
individual tasks.

■ Identifies activities, tasks, resource requirements and relationships
between modules and activities.

■ Helps avoid duplication of effort.

■ Basis for project development, management , schedule, resources and
modifications.

■ Approaches for WBS development:
1. Top down process 2. Brainstorm entire project

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-9

Elements of Project Management
Work Breakdown Structure (2 of 2)

Figure 8.2 WBS for Computer Order-processing System Project 8-10

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Elements of Project Management
Responsibility Assignment Matrix (1 of 2)

■ Project manager assigns work elements to organizational units,
departments, groups, individuals or subcontractors.

■ Uses an organizational breakdown structure (OBS).

■ OBS is a table or a chart showing which organizational units are
responsible for work items.

■ OBS leads to the responsibility assignment matrix (RAM)

■ RAM shows who is responsible for doing the necessary work in
the project

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-11

Elements of Project Management
Responsibility Assignment Matrix (2 of 2)

Figure 8.3 A responsibility assignment matrix
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-12

Elements of Project Management
Project Scheduling

■ Project Schedule evolves from planning documents, with focus on
timely completion.

■ Critical element in project management – source of most conflicts and
problems.

■ Schedule development steps: 2. Sequence activities,
1. Define activities, 4. Construct schedule.
3. Estimate activity times,

■ Gantt chart and CPM/PERT techniques can be useful.

■ Computer software packages available, e.g. Microsoft Project.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-13

Elements of Project Management
Gantt Chart (1 of 2)

■ Popular, traditional technique, also known as a bar chart -developed

by Henry Gantt (1914).

■ Direct precursor of CPM/PERT for monitoring work progress.

■ A visual display of project schedule showing activity start and finish

times and where extra time is available.

■ Suitable for projects with few activities and precedence relationships.

■ Drawback: precedence relationships are not always discernible.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-14

Elements of Project Management
Gantt Chart (2 of 2)

Figure 8.4 A Gantt chart 8-15

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Elements of Project Management
Project Control

■ Process of ensuring progress toward successful completion.

■ Monitoring project to minimize deviations from project plan and
schedule.

■ Corrective actions necessary if deviations occur.

■ Key elements of project control
Time management
Cost management
Performance management
Earned value analysis.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-16

The Project Network
CPM/PERT

Activity-on-Arc (AOA) Network

■ A branch reflects an activity of a project.

■ A node represents the beginning and end of activities, referred to as

events.

■ Branches in the network indicate precedence relationships.

■ When an activity is completed at a node, it has been realized.

Figure 8.5 Nodes and Branches

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-17

The Project Network
Concurrent Activities

■ Network aids in planning and scheduling.
■ Time duration of activities shown on branches.
■ Activities can occur at the same time (concurrently).

■ A dummy activity shows a precedence relationship but reflects

no passage of time.
■ Two or more activities cannot share the same start and end nodes.

Figure 8. 7 A Dummy Activity

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-18

The Project Network
House Building Project Data

No. Activity Activity Predecessor Duration (Months)
1. Design house and - 3

obtain financing 1 2
2. Lay foundation 1 1
3. Order Materials 2, 3 3
4. Build house 2, 3 1
5. Select paint 5 1
6. Select carpet 4, 6 1
7. Finish work

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-19

The Project Network
AOA Network for House Building Project

Figure 8.6 8-20
Expanded Network for Building a
House Showing Concurrent Activities

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Project Network
AON Network for House Building Project

Activity-on-Node (AON) Network

A node represents an activity, with its label and time shown on the node
The branches show the precedence relationships
Convention used in Microsoft Project software

Figure 8.8

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-21

The Project Network
Paths Through a Network

Path Events
A 1247
B 12567
C 1347
D 13567

Table 8.1 8-22
Paths Through the House-Building Network

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Project Network
The Critical Path

The critical path is the longest path through the network; the

minimum time the network can be completed. From Figure 8.8:

Path A: 1 → 2 → 4 → 7 3 + 2 + 3 + 1 = 9 months

Path B: 1 → 2 → 5 → 6 → 7 3 + 2 + 1 + 1 + 1= 8 months

Path C: 1 → 3 → 4 → 7 3 + 1 + 3 + 1 = 8 months

Path D: 1 → 3 → 5 → 6 → 7 3 + 1 + 1 + 1 + 1 = 7 months

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-23

The Project Network
Activity Start Times

Figure 8.9 Activity start time

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-24

The Project Network
Activity-on-Node Configuration

Figure 8.10 Activity-on-Node Configuration 8-25

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Project Network
Activity Scheduling : Earliest Times

■ ES is the earliest time an activity can start: ES = Maximum (EF)

■ EF is the earliest start time plus the activity time: EF = ES + t

Figure 8.11 Earliest activity start and finish times 8-26

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Project Network
Activity Scheduling : Latest Times

■ LS is the latest time an activity can start without delaying critical path time:
LS = LF - t

■ LF is the latest finish time. LF = Minimum (LS)

Figure 8.12 Latest activity start and finish times 8-27

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Project Network
Activity Slack Time (1 of 2)

Slack is the amount of time an activity can be delayed without

delaying the project: S = LS – ES = LF - EF

Slack Time exists for those activities not on the critical path for

which the earliest and latest start times are not equal.

Shared Slack is slack available for a sequence of activities.

Activity LS ES LF EF Slack, S

*1 0 0 33 0 Table 8.2

*2 3 3 55 0

3 43 54 1

*4 5 5 88 0

5 65 76 1

6 76 87 1

*7 8 8 9 9 0 *Critical path

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-28

The Project Network
Activity Slack Time (2 of 2)

Figure 8.13 Activity slack 8-29

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Probabilistic Activity Times

■ Activity time estimates usually cannot be made with
certainty.

■ PERT used for probabilistic activity times.

■ In PERT, three time estimates are used: most likely time
(m), the optimistic time (a), and the pessimistic time (b).

■ These provide an estimate of the mean and variance of a

beta distribution: 2

variance: v =  b - a 

6 



mean (expected time): t = a + 4m + b
6

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-30

Probabilistic Activity Times
Example (1 of 3)

Figure 8.14 Network for Installation Order Processing System

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-31

Probabilistic Activity Times
Example (2 of 3)

Table 8.3 Activity Time Estimates for Figure 8.14

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-32

Probabilistic Activity Times
Example (3 of 3)

Figure 8.15 Earliest and Latest Activity Times 8-33

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Probabilistic Activity Times
Expected Project Time and Variance

■ Expected project time is the sum of the expected times of the

critical path activities.

■ Project variance is the sum of the critical path activities’ variances

■ The expected project time is assumed to be normally distributed

(based on central limit theorem).

■ In example, expected project time (tp) and variance (vp) interpreted as
the mean (µ) and variance (σ2) of a normal distribution:

µ = 25 weeks 8-34
σ2 = 62/9

= 6.9 (weeks)2

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Probability Analysis of a Project Network (1 of 2)

■ Using the normal distribution, probabilities are determined
by computing the number of standard deviations (Z) a
value is from the mean.

■ The Z value is used to find corresponding probability in
Table A.1, Appendix A.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-35

Probability Analysis of a Project Network (2 of 2)

Figure 8.16 Normal Distribution of Network Duration 8-36

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Probability Analysis of a Project Network
Example 1 (1 of 2)

What is the probability that the new order processing system will be
ready by 30 weeks?

µ = 25 weeks

σ2 = 6.9 σ = 2.63 weeks
Z = (x-µ)/ σ = (30 -25)/2.63 = 1.90

Z value of 1.90 corresponds to probability of .4713 in Table A.1,
Appendix A. Probability of completing project in 30 weeks or less:
(.5000 + .4713) = .9713.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-37

Probability Analysis of a Project Network
Example 1 (2 of 2)

Figure 8.17 Probability the Network Will Be Completed in 30 Weeks or Less

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-38

Probability Analysis of a Project Network
Example 2 (1 of 2)

■ A customer will trade elsewhere if the new ordering system is not
working within 22 weeks. What is the probability that she will be
retained?
Z = (22 - 25)/2.63 = -1.14

■ Z value of 1.14 (ignore negative) corresponds to probability of
.3729 in Table A.1, appendix A.

■ Probability that customer will be retained is .1271

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-39

Probability Analysis of a Project Network
Example 2 (2 of 2)

Figure 8.18 Probability the Network Will Be Completed in 22 Weeks or Less

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 8-40

CPM/PERT Analysis with
QM for Windows & Excel QM (1 of 2)

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CPM/PERT Analysis with
QM for Windows & Excel QM (2 of 2)

Exhibit 8.2

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Analysis with Microsoft Project (1 of 13)

Microsoft Project handles only AON networks.

Exhibit 8.3

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Analysis with Microsoft Project (2 of 13)

Exhibit 8.4

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Analysis with Microsoft Project (3 of 13)

Exhibit 8.5

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Analysis with Microsoft Project (4 of 13)

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Exhibit 8.6 8-46

Analysis with Microsoft Project (5 of 13)

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Figure 8.7

8-47

Analysis with Microsoft Project (6 of 13)

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Figure 8.8

8-48

Analysis with Microsoft Project (7 of 13)

Exhibit 8.9

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Analysis with Microsoft Project (8 of 13)

Exhibit 8.10

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