project management

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project management

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Managing Projects

Projects are usually large & infrequent or onetime.

No two projects are the same.

Projects are usually fairly long.

Several months to many years

phases

Most people are only involved with a part of a

project

overall purview of a single department or

group, other departments are often involved.

Projects

The three main goals of project

management are

1. Complete the project on time or earlier.

2. Complete the project on or under

budget.

3. Meet the specifications to the

satisfaction of the customer.

Project

Scope & Objectives

Defining a projects scope, time frame,

allocated resources and objective, is

essential.

An Objective Statement provides the

purpose of the project.

A Specific time frame is established for

starting and ending the project.

Necessary resources must be defined.

Project costs and personnel allocations

are stated.

Project Structures

The team is housed in a

specific functional area. Assistance from other

Functional Structure:

for the project manager. (Best for large projects.)

Pure Project:

functional and project structures . Members remain

Matrix Structure:

coordinates across functional areas. Having two

bosses (dual authority) can cause problems.

PERT CPM GERT

Program Evaluation and Review Technique

PERT (Program Evaluation and Review Technique)

is utilized when activity times are uncertain

(involved risk).

times are known and certain.

projects.

It overcomes many of the limitations of PERT and

CPM

Project Management

Steps

tasks that must be completed, and in what

sequence.)

network showing task relationships)

(Determine the time estimates for each task)

(Determine the cost of each task.)

5. Assess Risks

(Probability analysis)

Step 1

Describe the project

What is the project?

When does the project start and end?

What activities make up the project?

Activities are defined as the smallest

units of work that a project manager is

expected to schedule and control.

...a managers project description should reflect

only the level of detail that he or she needs in

order to make scheduling and resource allocation

decisions.

have an owner who is responsible for

seeing that the work is accomplished.

Relationships

between Activities

A project is a sequence of activities.

Large projects have interrelated sequences.

every activity in a project has one or more

activities that must be done immediately

prior.

These are called Precedent (Pre-cee-ent)

activities

They must be defined before the project begins.

EG: In order to bury a body you must first dig a hole.

Step 2

Develop a Network Model

A Network Diagram visually displays the

interrelated activities using nodes (circles)

and arcs (arrows) that depict the

relationships between activities.

It is a graphical diagram.

For very large projects it may only be a numerical

arrangement of activities rather than graphical.

Activity On Arc (AOA)

Activity On Node (AON) (We will use AON)

Two Types

of Network Models

Activity-on-Arc (AOA)

Time

Time

Time

Activity D

Activity E

Activity-on-Node (AON)

Activity

Activity

E

Link

We will

use this!

like.

The is the earliest you can start an

activity. It is determined by the early

finish time of the precedent activity. If

there are two or more precedent

activities, this time is the same as

precedent activity with the latest

Early Finish time.

between the early start (ES) and late

start times (LS) or the early finish

(EF) and late finish (EF) times.

S = LS - ES

S = LF - EF

Slack

Activity

Early Name Early

Start

Finish

Late

Late

Start Activity Finish

Duration

the activity duration.

or

an activity--determined by

adding the activity time

(duration) to the early start time.

an activity without delaying

project completion. It is the

same as the Late Start time of

the next activity. If there are two

or more subsequent activities,

this time is the same as the

earliest of those Late Start

times.

Assignment

The earliest you can start this

assignment it is immediately after

this class ends.

week, expressed in hours, since that

is the unit of time used for the

activities. It would be how long you

could delay doing the assignment.

Slack

one hour before the

class in which it is

due to start it; in

this case one week

from now.

Start

Finish

Late

Start 1 hour

Late

Finish

earliest you can complete this

assignment is one hour after

class ends.

time.

Precedent

Relationships

Precedent relationships determine the sequence

for accomplishing activities. They specify that any

given activity cannot start until its preceding activity

or activities have been completed.

Activity On Node approach

nodes (circles) represent

activities, and the arcs

(arrows) represent the

sequential relationships

between them.

Nodes are simplified in the following examples.

AON

S precedes T which

precedes U

Activity Relationships

S & T must be completed

before U can be started.

S has been completed.

T

S

U

T

S

U

Activity Relationships

have been completed.

been completed. V cannot begin

until T has been completed.

Activity Relationships

completed; V cannot begin until both T &

U have been completed.

S

Logic

Errors

This is a logic error. C cannot be an

immediate predecessor of both G &H if

G is also an immediate predecessor of H.

network diagrams. If you see a triangle, then it is a

logic error. Eliminate the short cut.

(A sample project)

Activity

A

B

C

D

E

F

G

H

I

J

K

Description

Immediate

Predecessor(s)

Select site and do site survey.

Select equipment.

Prepare final construction plans and layout.

Bring utilities to the site.

Interview applicants and fill positions in

nursing, support staff, maintenance,

and security.

Purchase and take delivery of equipment.

Construct the hospital.

Develop an information system.

Install the equipment.

Train nurses and support staff.

Responsibility

(A sample project)

Activity

A

B

C

D

E

F

G

H

I

J

K

Description

Immediate

Predecessor(s)

Select site and do site survey.

Select equipment.

Prepare final construction plans & layout.

Bring utilities to the site.

Interview applicants and fill positions in

nursing, support staff, maintenance,

and security.

Purchase and take delivery of equipment.

Construct the hospital.

Develop an information system.

Install the equipment.

Train nurses and support staff.

Activity Times

A

B

B

A

12

9

10

10

24

10

C

D

A

E,G,H

F,I,J

35

40

15

4

6

Diagramming the Network

Activity

Times (wks)

Immediate

Predecessors

A

12

10

10

24

10

35

40

15

E,G,H

F,I,J

Start

Finish

Activity Paths

Paths are sequences of

activities between a

projects start and finish.

Path

A-I-K

A-F-K

A-C-G-J-K

B-D-H-J-K

B-E-J-K

Time (wks)

33

28

67

69

43

Start

Finish

Path

The longest path is the

critical path!

Path

A-I-K

A-F-K

A-C-G-J-K

B-D-H-J-K

B-E-J-K

Time (wks)

33

28

67

69

43

Project Expected

Time is 69 wks.

Start

Finish

PERT or CPM ?

CPM (Critical Path Method) Activity

times are certain, so only one time

estimate for each activity is needed.

Decision making under Certainty

Technique) is used when activity times

are uncertain. (Decision making under risk)

It requires three time estimates for each

activity.

(Best case, most likely time, and worst case)

PERTs

Three time-estimates

OPTIMISTIC TIME: Best time if everything

goes perfectly when doing the activity.

REALISTIC TIME: Most likely time for the

activity

PESSIMISTIC TIME: A worst-case situation

B + 4M + P

Expected Time = ------------------6 is given a weight of four, and the

In this example, the most likely time

other two times (pessimistic and optimistic) are each given weights of

one.

Risky activity times make the project length risky, so there is a need

for risk assessment based on the probability distribution of times.

(Standard deviation and variance are computed by the software.)

Activity Slack

Activity slack is the maximum length of time that an

activity can be delayed without delaying the entire project.

can start an activity and the latest time we can

start the activity without delaying the project.

The critical path activities have zero slack.

For the St. Adolfs Hospital project, 69 weeks is

the project length because 69 weeks is the

longest path.

Project delays beyond the projected completion

date often involve penalties.

Times

Earliest Start Time (ES) for an activity is the earliest

finish time of the immediately preceding activity.

earliest start time plus how long it takes to do it (activity

time).

Latest Start Time (LS) is the latest you can finish the

activity minus the activitys estimated duration.

the activity time.

The latest finish time is the same as the latest start time of the activity

activity which follows it. (Latest start and finish times for each activity

are computed starting at the projects last activity completion time

and working forward.)

12

I 27

15

0 A 12

12 F 22

63 K 69

12

10

12

Start

C 22

22

10

B 9

9

D 19

10

9 E 33

24

G 57

Finish

35

19

H 59

40

59

J 63

4

Path

A-I-K

A-F-K

A-C-G-J-K

B-D-H-J-K

B-E-J-K

Time (wks)

33

28

67

69

43

12

takes 69 weeks

15

12

12 F 22

63 K 69

10

12

12

Start

Critical Path

I 27

C 22

22

10

B 9

9

D 19

10

9 E 33

24

G 57

Finish

35

19

H 59

40

59

J 63

4

(You start with the last activity and work toward the first activity)

I

12

27

48 15 63

12

12 F 22

2 12 14

53 10 63

12

22

14 10 24

Start

B 9

0 9 9

9

19

9 10 19

9 E 33

35 24 59

Latest

start

time

63 K 69

63 6 69

22 G 57

24

59

Finish

35

H

19

59

19 40 59

Latest

finish

time

59

J 63

59 4 63

Nod

e

Duratio

n

ES

LS

Slac

k

12

10

12

14

10

24

35

26

10

12

53

41

35

22

24

40

19

19

12

12 F 22

15

12

48

36

2 12 14

53 10 63

59

59

63

63

LS and ES or EF and LF

I

12

27

48 15 63

12

22

14 10 24

Start

Activity Slack

Analysis

B 9

0 9 9

9

19

9 10 19

9 E 33

35 24 59

63 K 69

63 6 69

22 G 57

24

59

Finish

35

H

19

59

19 40 59

59

J 63

59 4 63

Project Costs

Total Project Costs =

direct costs + indirect costs + penalty costs

Direct costs include labor, materials, and any other

costs directly related to project activities.

Indirect costs include administration, depreciation,

financial, and other variable overhead costs.

project time.

The shorter the duration of the project, the lower the indirect

costs will be.

going over the projected due date.

Minimizing Costs

We do cost analysis to determine the

project schedule that minimizes total

project costs.

When crashing an activity or project, extra money is

spent on direct costs, but money is saved on indirect

costs and possible penalties.

A minimum-cost schedule is determined by starting

with the normal project time schedule and shortening

activities along the critical path until the costs of

crashing (direct costs) start to exceed the savings in

indirect costs and penalty costs.

New critical paths usually appears while doing this.

Minimum Cost Schedule

a. Determine the projects critical path(s).

b. Find the activity or activities on the critical

path(s) with the lowest cost of crashing

(shortening) per week.

c. Reduce the time for this activity until

a. it cannot be further reduced,

b. or another path becomes critical,

c. or the increase in direct costs exceed the savings that

result from lower indirect costs.

are no longer decreasing.

.

do this.

contractor says D and H cannot be

shortened. J is the least costly to

shorten at $1000 a week. Contractor

says it can be shortened to 1 week.

12

27

48 15 63

12

12 F 22

2 12 14

53 10 63

63 K 69

63 6 69

12

22

14 10 24

22 G 57

24

59

B 9

0

D 19

9

H 59

19

J 63

59

0 9 9

9 10 19

19 40 59

59 4 63

Start

9 E 33

35 24 59

Finish

35

Shorten from 4

weeks to 1 week

compare the cost of shortening J by 3

weeks ($3,000 in additional direct

costs) with savings in indirect costs,

to see if the total cost is lower.

Assessing Risks

Risk is a measure of the probability

(and consequences) of not completing

a project on time.

A major responsibility of the project

manager at the start of a project is to

develop a risk-management plan.

A Risk-Management Plan identifies

the key risks to a projects success and

prescribes ways to circumvent them.

1. Service/Product Risks: If the project involves a

new service or product, several risks can arise.

advances made once the project has started, rendering

obsolete the technology chosen for service or product.

selections and inexperience, lack of cooperation,

etc.

3. Operations Risk: Information inaccuracy, misscommunications, bad project timing, weather

ANALYZING PROBABILITIES

What is the probability that our sample

project will finish in 69 weeks as scheduled?

100%

(Why?)

(This means we were certain of all of our activity

times.)

You only do risk analysis if you use PERT

PERT and

PROBABILITIES

With PERTs three time-estimates, we get a

mean (average) time and a variance for

each activity and each path.

and variance.

In order to compute probabilities (assuming a

normal distribution) we need the activity

means and variances.

Most computer packages calculate this for you.

Probability

of Project Completion

The probability of a project being completed by a

given date is a function of the mean activity times and

variances along the critical path(s).

The probability of a specific activity being completed

by a given date is a function of the mean activity times

and variances along the longest path leading up to that

activity.

If you have more than one critical path, focus on the

path with the greatest variance.

depending on the mean and variance of its

activities.

Distributions &

Probability

A Beta distribution is often used for the three

estimates of each activity

This allows skewed distributions.

Optimistic------Most likely -----------------------Pessimistic

(3 ------------- 5 ---------------------------------- 11)

probabilities.

A distribution of activity-means is a normal

distribution, even though each activity time

may be a beta distribution.

Beta Distribution

Probability

estimates skewed (Beta Distribution), but

the path along which this activities lie has a

normal distribution and thus a mean and

variance.

a

Optimistic

b

Mean

Pessimistic

Time

Figuring

Probabilities

that the variance of the critical path is 2.147

You wish to know the probability of the project going over

42 days.

The square root of the variance of 2.147 = Std. Dev. =

1.465

POM/QM software gives you the variance of the critical

path.

Std. Dev.

In this example, Z = (42 days - 40 days) / 1.465 = 1.365

table to get the probability of the project taking 42 days.

.9139

(In this case you need to interpolate between the Z values of .9313 and .9147)

Thus the probability of going over 42 days is 100 - 91.39 = 8.61%

along the critical path. Sum of

its variances = 2.147

Std. Dev. = 1.465 weeks

Project Length

(critical path)

is 40 weeks

Probability of

completing

the project in

42 weeks is

91.39%

Probability of

exceeding 42

weeks is 8.61%

40 42

Project duration (weeks)

A 69-week Project

What is the Probability of it taking 72 weeks?

Critical

Path

Variance

T = 72 weeks

C = 69 weeks

TC

2 = (variances of activities along critical path) z = 2

2 = 1.78 + 1.78 + 2.78 + 5.44 + 0.11 = 11.89

z=

72 69

11.89

Z = 0.870

z=

3

3.44818

.8078 or 80.78% is the probability of the project taking 72 wks.

Going over 72 weeks would be 100 80.78 = 19.22%

Probability of Completing Project On Time

Normal distribution:

Mean = 69 weeks;

= 3.45 weeks

Length of

critical path is

69 weeks

Probability of

taking 72 weeks

is 0.8078 or

80.78%

Probability of

exceeding 72

weeks is 0.1922

or 19.22%

69 72

Project duration (weeks)

Resource-Related Problems

Padded Time Estimates: Many timeestimates come with a built-in cushion

that management may not realize.

Latest Date Mentality: The tendency

for employees (and students) to

procrastinate until the last moment before

starting.

Failure to Deliver Early, even if the

work is completed before the latest finish

date.

Resource-Related Problems

Path Mergers

activity paths combine at a particular node.

Both paths must be completed up to this point,

which will eliminate any built-up slack.

Multitasking

is the performance of

multiple project activities at the same time.

Work on some activities is often delayed for

other work.

Loss of Focus

if the critical path changes frequently.

Failure to have all the needed resources on

PERT / CPM

ADVANTAGES

Enables Resource Management &

Allocation

You can move slack resources to

critical points

Visualize relationships (The big

picture)

Can be complex to set up

relationships in large project

Time estimates are often biased.

Near critical paths are easily

overlooked.

GERT

(Graphical Evaluation and Review

Technique)

Gives more flexibility to project planning than

PERT/CPM

be completed or notcompleted

(Succeed or fail)

PERT & CPM both require all activities be

successfully completed. GERT does not require

this.

GERT Allows looping back (redoing an

activity) or skipping an activity entirely.

GERT

(Graphical Evaluation and Review

Technique)

What the book says: It is a procedure for the

study of stochastic networks composed of

EXCLUSIVE-OR, INCLUSIVE-OR, and AND nodes

(vertices) and multi-parameter branches

(transmittances or edges).The total concept of

stochastic networks, the transformation, and the

evaluation method is labeled GERT.

GERT is a means of handling stochastic networks

with logical nodes. The GERT analysis is finished

when the system is represented by an equivalent

one-branch function yielding the system's failure

or success probabilities as time dependent

probabilities.

Sample Problem

What is the probability of

completing the project in

23 weeks?

Sample Problem

4.0

8.0

0.0

4.0

A

4.0

Start

B

5.5

12.0

16.0

20.0

Finish

9.0

9.0

4.0

8.0

5.5

5.5

0.0

0.0

C

3.5

15.5

15.5

F

9.0

6.5

15.5

15.5

9.0

9.0

5.5

5.5

5.5

6.5

14.5

15.5

G

4.5

20.0

20.0

Sample Problem

This is how the POM-QM software package draws the solution.

Note that D is not an immediate predecessor of E, but A is

an immediate predecessor of E. The program draws the line

from A through D to E.

Sample Problem

Critical path = 20

weeks

we find that the probability of completing

the project in 23 weeks or less is 0.9357.

Homework #2

Due next week

the network and solve it manually

using the AON method. No credit if you

use the computer.

Problems 2 and 3 are on the following

slides.

Use the POM/QM software for these last

two problems.

Problem 1

Do manually (no computer)

A project has the following precedence relationships and

activity times. Draw the network diagram and

calculate the total slack for each activity. Which

activities are on the critical path?

Activity

Immediate

Predecessor(s)

15

B,C

12

F,G

1. There are logic errors in the data. You will have to run the program in order

to find them. Then make the appropriate corrections and re-run the problem

to get the correct solution. Identify the critical path and its length.

2. Include 4 printouts: Input screen, PERT/CPM results table, Precedence

graph and the Gantt chart of early & late times.

Activities for Problem #2

Time

Precedents

None

D,E

Installation of plumbing

Installation of electrical

D,E

D,E,F

Homework, Problem 3

(next slide)

Use the POM/OM package. Answer the following

questions:

a. Identify the critical path(s).

b. How long is the path nearest to the critical path?

c. What is the probability that the project will take longer

than 38 days? (Table of Normal Probabilities is on the

last slide.)

d. What is the probability that the near critical path will

take longer than 38 days?

e. Include 5 printouts: Input screen, PERT/CPM results

table, Precedence graph, Task time computations, and

the Gantt chart ofearly & late times.

Problem #3

Activity

Precedent

Optimistic

Most Likely

Pessimistic

10

10

10

15

13

E, F

11

10

H, I, J

Sample POM/QM

Input Table Printout

Note that this is CPM since there is only one time estimate for

each activity. You will need to change the method for PERT.

Sample POM/QM

Solution Table printout

Sample PERT/CPM

Precedence Graph Printout

start blocks or end blocks.

In your homework computer

problem, you will have more than

one ending node. This is not an

error. Connect them to an End

Block if it will help you visualize it.

logic error. D should

not be an immediate

predecessor of F.

Sample Gantt

Chart Printout

POM/QM Printing

Hint

Avoid using the print screen button on the bottom left

of the screen or in the file menu.

Screen prints are small and very hard to read.

Select the File pull-down menu and use the Print

option.

You can then indicate which items you wish to print

and get a much better output.

OPTION: Download the free program Jing. It is

available for Mac and PC, and what I use for the

printouts on my PPT slides.

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