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Chapter 3

Project Management

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OBJECTIVES

 Definition of Project Management

 Work Breakdown Structure

 Project Control Charts

 Structuring Projects

 Critical Path Scheduling

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Project Management
Defined
 Project is a series of related jobs usually
directed toward some major output and
requiring a significant period of time to
perform
 Project Management are the
management activities of planning,
directing, and controlling resources
(people, equipment, material) to meet the
technical, cost, and time constraints of a
project
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Gantt Chart
Vertical
VerticalAxis:
Axis: Horizontal
Horizontal bars
bars used
used toto denote
denote length
length
Always
AlwaysActivities
Activities of
of time
time for
for each
each activity
activity or
or job.
job.
or
or Jobs
Jobs

Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6

Time Horizontal
HorizontalAxis:
Axis: Always
AlwaysTime
Time
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Pure Project
A pure project is where a self-contained team
works full-time on the project

Structuring Projects Pure Project:

Advantages
 The project manager has full authority
over the project
 Team members report to one boss
 Shortened communication lines
 Team pride, motivation, and commitment
are high

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Structuring Projects Pure

Project: Disadvantages
 Duplication of resources
 Organizational goals and policies

are ignored
 Lack of technology transfer
 Team members have no functional

area "home"

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Functional Project
A functional project is housed within
a functional division
President

Research and
Engineering Manufacturing
Development

Project Project Project Project Project Project Project Project Project

A B C D E F G H I

Example,
Example, Project
Project “B”
“B” is
is in
in the
the functional
functional
area
area of
of Research
Research and
and Development.
Development.
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Structuring Projects
Functional Project:
Advantages
 A team member can work on
several projects
 Technical expertise is maintained

within the functional area

 The functional area is a “home”

after the project is completed

 Critical mass of specialized

knowledge
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Structuring Projects
Functional Project:
Disadvantages
 Aspects of the project that are not
directly related to the functional
area get short-changed
 Motivation of team members is

often weak
 Needs of the client are secondary

and are responded to slowly

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Matrix Project Organization

Structure
President

Research and
Engineering Manufacturing Marketing
Development

Manager
Project A

Manager
Project B

Manager
Project C

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Structuring Projects
Matrix: Advantages

 Enhanced communications between functional

areas
 Pinpointed responsibility
 Duplication of resources is minimized
 Functional “home” for team members
 Policies of the parent organization are followed

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Structuring Projects
Matrix: Disadvantages

 Too many bosses

 Depends on project manager’s

negotiating skills

 Potential for sub-optimization

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Work Breakdown Structure

A work breakdown structure defines the
hierarchy of project tasks, subtasks, and
work packages
Level Program

1 Project 1 Project 2

2 Task 1.1 Task 1.2

3 Subtask 1.1.1 Subtask 1.1.2

4 Work Package 1.1.1.1 Work Package 1.1.1.2

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Network-Planning Models

 A project is made up of a sequence of activities

that form a network representing a project
 The path taking longest time through this
network of activities is called the “critical path”
 The critical path provides a wide range of
scheduling information useful in managing a
project
 Critical Path Method (CPM) helps to identify the
critical path(s) in the project networks

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Prerequisites for Critical

Path Methodology

A project must have:

well-defined jobs or tasks whose

completion marks the end of the project;

independent jobs or tasks;

and tasks that follow a given sequence.

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Types of Critical Path

Methods
 CPM with a Single Time Estimate
– Used when activity times are known with certainty
– Used to determine timing estimates for the project, each
activity in the project, and slack time for activities
 CPM with Three Activity Time Estimates
– Used when activity times are uncertain
– Used to obtain the same information as the Single Time
Estimate model and probability information
 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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Steps in the CPM with

Single Time Estimate
 1. Activity Identification
 2. Activity Sequencing and Network

Construction
 3. Determine the critical path

– From the critical path all of the project

and activity timing information can be
obtained

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

Develop a critical path diagram and determine

the duration of the critical path and slack times
for all activities.
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First draw the network

Act. Imed. Pred. Time

A None 2
B A 1
C B 1
D C 2
E C 5
F D,E 5
D(2)
G F 1

A(2) B(1) C(1) F(5) G(1)

E(5)

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Determine early starts and early

finish times
ES=4
EF=6

ES=0 ES=2 ES=3 D(2)

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

A(2) B(1) C(1) F(5) G(1)

ES=4
EF=9
Hint:
Hint:Start
Startwith
withES=0
ES=0
and
andgo
goforward
forwardininthe
the E(5)
network
networkfrom
fromAAtotoG.
G.

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Hint:
Hint:Start
Startwith
withLF=15
LF=15
Determine late or
orthe
thetotal
totaltime
timeofofthe
the
starts and late ES=4 project
project and
andgogo
finish times EF=6 backward
backwardin inthe
the
network
networkfrom
fromGGto toA.
A.
ES=0 ES=2 ES=3 D(2)
ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4
LF=9

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Critical Path & Slack

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

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4 Duration=15 weeks

LF=9

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Example 2. CPM with Three

Activity Time Estimates

Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
B None 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

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Example 2. Expected
Time Calculations
ET(A)=
ET(A)=3+4(6)+15
3+4(6)+15
Immediate Expected 66
Task Predecesors Time
A None 7 ET(A)=42/6=7
ET(A)=42/6=7
B None 5.333
C A 14 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
D A 5 A
B
None
None
3
2
6
4
15
14
E C 11 C
D
A
A
6
2
12
5
30
8
F D 7 E C 5 11 17
F D 3 6 15
G B 11 G B 3 9 27
H E,F 1 4 7
H E,F 4 I G,H 4 19 28

I G,H 18
Opt. Time + 4(Most Li kely Time) + Pess. Time
Expected T ime =
6
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Ex. 2. Expected Time

Calculations

Immediate Expected ET(B)=

ET(B)=2+4(4)+14
2+4(4)+14
Task Predecesors Time 66
A None 7
B None 5.333 ET(B)=32/6=5.333
ET(B)=32/6=5.333
C A 14
D A 5 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
E C 11 A None 3 6 15
B None 2 4 14
F D 7 C A 6 12 30

G B 11 D
E
A
C
2
5
5
11
8
17
H E,F 4 F
G
D
B
3
3
6
9
15
27
I G,H 18 H
I
E,F
G,H
1
4
4
19
7
28

Opt. Time + 4(Most Li kely Time) + Pess. Time

Expected T ime =
6
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Ex 2. Expected Time
Calculations
Immediate Expected ET(C)=
ET(C)=6+4(12)+30
6+4(12)+30
Task Predecesors Time
A None 7 66
B None 5.333
C A 14 ET(C)=84/6=14
ET(C)=84/6=14
D A 5
E C 11 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
F D 7 A
B
None
None
3
2
6
4
15
14
G B 11 C
D
A
A
6
2
12
5
30
8
H E,F 4 E
F
C
D
5
3
11
6
17
15
I G,H 18 G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

Opt. Time + 4(Most Li kely Time) + Pess. Time

Expected T ime =
6
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Example 2. Network

Duration = 54 Days
C(14) E(11)

A(7) H(4)
D(5) F(7)

I(18)

B G(11)
(5.333)

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Example 2. Probability
Exercise
What
What isis the
theprobability
probability of
of finishing
finishing this
this project
project in
in
less
less than
than 53
53 days?
days?

p(t < D)
D=53
t
TE = 54
D - TE
Z =
∑ cp
σ 2

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Pessim. - Optim. 2
Activity v ariance, σ = (
2
)
6

Task Optimistic Most Likely Pessimistic Variance

A 3 6 15 4
B 2 4 14
C 6 12 30 16
D 2 5 8
E 5 11 17 4
F 3 6 15
G 3 9 27
H 1 4 7 1
I 4 19 28 16

(Sum the variance along the critical ∑ = 41

σ 2

path.)
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p(t < D)

t
D=53 TE = 54
D - TE 53 - 54
Z = = = -.156
∑σ cp
2 41

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

There
There isis aa 43.8%
43.8% probability
probability that
that this
this project
project will
will be
be
completed
completed in in less
less than
than 53
53 weeks.
weeks.
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Ex 2. Additional Probability
Exercise

 What

What is
is the
the probability
probability that
that the
the
project
project duration
duration will
will exceed
exceed 56
56
weeks?
weeks?

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Example 2. Additional
Exercise Solution

p(t < D)

t
TE = 54
D=56
D - TE 56 - 54
Z = = = .312
∑σ cp
2 41

p(Z
p(Z >> .312)
.312) == .378,
.378, or
or 37.8
37.8 %
% (1-NORMSDIST(.312))
(1-NORMSDIST(.312))
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Time-Cost Models
 Basic Assumption: Relationship
between activity completion time and
project cost

 Time Cost Models: Determine the

optimum point in time-cost tradeoffs
– Activity direct costs
– Project indirect costs
– Activity completion times

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 CPM 35

Assumptions/Limitations
 Project activities can be identified as entities
(There is a clear beginning and ending point
for each activity.)
 Project activity sequence relationships can be
specified and networked
 Project control should focus on the critical
path
 The activity times follow the beta distribution,
with the variance of the project assumed to
equal the sum of the variances along the
critical path
 Project control should focus on the critical
path

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 36

Question Bowl

Which of the following are examples

of Graphic Project Charts?
a. Gantt
b. Bar
c. Milestone
d. All of the above
e. None of the above

Answer: d. All of the above

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Question Bowl

Which of the following are one of the

three organizational structures of
projects?
a. Pure
b. Functional
c. Matrix
d. All of the above
e. None of the above

Answer: d. All of the above

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Question Bowl
A project starts with a written description of the
objectives to be achieved, with a brief statement
of the work to be done and a proposed schedule
all contained in which of the following?
a. SOW
b. WBS
c. Early Start Schedule
d. Late Start Schedule
e. None of the above

Answer: a. SOW (or Statement of Work)

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 39

Question Bowl
For some activities in a project there may
be some leeway from when an activity can
start and when it must finish. What is this
period of time called when using the Critical
Path Method?
a. Early start time
b. Late start time
c. Slack time
d. All of the above
e. None of the above

Answer: c. Slack time

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 40

Question Bowl
How much “slack time” is permitted in the “critical
path” activity times?
a. Only one unit of time per activity
b. No slack time is permitted
c. As much as the maximum activity time in the
network
d. As much as is necessary to add up to the total
time of the project
e. None of the above
Answer: b. No slack time is permitted (All
critical path activities must have zero slack
time, otherwise they would not be critical to
the project completion time.)

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 41

Question Bowl

When looking at the Time-Cost Trade Offs in the

Minimum-Cost Scheduling time-cost model,
we seek to reduce the total time of a project
by doing what to the least-cost activity
choices? Answer: a. Crashing
a. Crashing them them (We “crash” the
b. Adding slack time least-cost activity
c. Subtracting slack time times to seek a reduced
d. Adding project time total time for the
e. None of the above entire project and we
do it step-wise as
inexpensively as
possible.)
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End of Chapter 3

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