Project Management Chapter Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-1 Chapter Topics ■The Elements of Project Management ■CPM/PERT Networks ■Probabilistic Activity Times ■Microsoft Project ■Project Crashing and Time-Cost Trade-Of ■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 efort 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 Project Planning ■Objectives ■Project Scope ■Contract Requirements ■Schedules ■Resources ■Personnel ■Control ■Risk and Problem Analysis Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-5 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 staf 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 Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-6 The Project Management Process Figure 8.1 Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall The project 8-7 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)breaks down project into major components WBS (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 efort ■ Basis for project development, management , schedule, resources and modifications ■ Approaches for WBS development: Top down process Copyright ©1 2010 Pearson Education, Inc Publishing as2 Brainstorm entire project Prentice Hall 8-9 Elements of Project Management Work Breakdown Structure (2 of 2) Figure 8.2 WBS for Computer Order-processing System Projec Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-10 The CPM/PERT Network Example Problem Solution with Excel (1 of 4) B6:B12 Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall Exhibit 8-68 The CPM/PERT Network Example Problem Solution with Excel (2 of 4) Exhibit 8.18 Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-69 The CPM/PERT Network Example Problem Solution with Excel (3 of 4) Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall Exhibit 8-70 The CPM/PERT Network Example Problem Solution with Excel (4 of 4) Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall Exhibit 8-71 Project Crashing with Linear Programming Example – Model Minimize Z =Problem $400y12 + 500y 23 + 3000y24 + 200y45 + Formulation 7000y46 + 200y56 + 7000y67 subject to: y12 ≤ y12 + x2 - x1 ≥ 12 x7 ≤ 30 y23 ≤ y23 + x3 - x2 ≥ xi, yij ≥ Objective is y24 ≤ y24 + x4 - x2 ≥ to minimize y34 ≤ y34 + x4 - x3 ≥ the cost of y45 ≤ y45 + x5 - x4 ≥ crashing y46 ≤ y46 + x6 - x4 ≥ 12 y56 ≤ y56 + x6 - x5 ≥ y67 ≤ x67 + x7 - x6 ≥ xi = earliest event time of node I xj = earliest event time of node j Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall amount of time by which activity i → j is crashed y = 8-72 Project Crashing with Linear Programming Excel Solution (1 of 3) Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall Exhibit 8-73 Project Crashing with Linear Programming Excel Solution (2 of 3) Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall Exhibit 8-74 Project Crashing with Linear Programming Excel Solution (3 of 3) Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall Exhibit 8-75 Example Problem Problem Statement and Data (1 of 2) Given this network and the data on the following slide, determine the expected project completion time and variance, and the probability that the project will be completed in 28 days or less Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-76 Example Problem Problem Statement and Data (2 of 2) Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-77 Example Problem Solution (1 of 4) Step 1: Compute the expected activity times and variances  2 b - a a + 4m + b v =   t=     Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-78 Example Problem Solution (2 of 4) Step 2: Determine the earliest and latest activity times & slacks Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-79 Example Problem Solution (3 of 4) Step 3: Identify the critical path and compute expected completion time and variance  Critical path (activities with no slack): → → →  Expected project completion time: = 9+5+6+4 = 24 days  Variance: vp = + 4/9 + 4/9 + 1/9 = (days)2 Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-80 Example Problem Solution (4 of 4) Step 4: Determine the Probability That the Project Will be Completed in 28 days or less (µ = 24, σ = √5) Z = (x - µ)/σ = (28 -24)/√5 = 1.79 Corresponding probability from Table A.1, Appendix A, is 4633 and P(x ≤ 28) = 4633 + = 9633 Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-81 Copyright © 2010 Pearson Education, Inc Publishing as Prentice Hall 8-82 .. .Chapter Topics ■The Elements of Project Management ■CPM/PERT Networks ■Probabilistic Activity Times ■Microsoft Project... 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... of an activity for a relatively short period of time after which management efort ends ■ Primary elements of Project Management to be discussed:  Project Planning  Project Team  Project Control