Project Management

These slides are only for the learning purposes of the Operations
Management course. Do not distribute these slides. Slides are not a
substitute for readings / textbook and are only meant to complement the
textbook and readings.

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Project Management
◼ Project is a series of related jobs usually directed toward some major
output and requiring a significant period of time to perform

◼ Project Management - the management activities of planning,

directing, and controlling resources (people, equipment, material) to
meet the technical, cost, and time constraints of a project
◼ What are the Key Metrics
◼ How is it different? ◼ Time
◼ Limited time frame ◼ Cost
◼ Narrow focus, specific objectives ◼ Performance objectives
◼ Less bureaucratic (Content)
◼ Why is it used? ◼ What are the Key Success Factors?
◼ Special needs ◼ Top-down commitment

◼ Pressures for new or improved ◼ Having a capable project

products or services manager

◼ Having time to plan

◼ Careful tracking and control

◼ Good communications 2
Major Administrative Issues
President

Research and
◼ Executive responsibilities Development
Engineering Manufacturing

◼ Project selection
ProjectProject Project ProjectProject Project ProjectProject Project
◼ Project manager selection A B C D E F G H I
◼ Organizational structure
Example, Project “B” is in the functional area of
Research and Development.

◼ Organizational alternatives
◼ Pure Project
◼ Functional Project President

◼ Matrix Organization
Research and
Engineering Manufacturing Marketing
Development

Manager
Project A

Manager
Pros & Cons??? Project B

Manager
Project C
3
Key Decisions
◼ Deciding which projects to implement
◼ Selecting a project manager
◼ Selecting a project team
◼ Planning and designing the project
◼ Managing and controlling project resources
◼ Deciding if and when a project should be terminated

Work Quality
Project Manager Human Resources Time
Responsible for: Communications Costs

4
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

Work Breakdown Structure e.g., Large Optical Scanner Design
Planning & Scheduling: Gantt Chart

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Network Planning Models Network Diagram
PERT: Program Evaluation and Review Technique ◼ Precedence diagram
◼ Activity-on-node (AON)
CPM: Critical Path Method
◼ Graphically displays project activities ◼ Activities
◼ Estimates how long the project will take ◼ Events
◼ Indicates most critical activities
◼ Show where delays will not affect project

◼ Path
◼ Sequence of activities that
leads from the starting node
to the finishing node
◼ Critical path
◼ The longest path; determines
expected project duration
◼ Critical activities
◼ Activities on the critical path
◼ Slack
◼ Allowable slippage for path;
the difference in the length of
path and the length of critical
path 8
Time Estimates
◼ Deterministic
◼ Time estimates that are fairly certain
◼ Probabilistic
◼ Estimates of times that allow for
variation

◼ Single Time Estimate

◼ Used when activity times are known with

certainty ◼ Optimistic time
◼ Used to determine timing estimates for ◼ Time required under optimal
the project, each activity in the project, conditions
and slack time for activities
◼ Pessimistic time
◼ Three Activity Time Estimates ◼ Time required under worst
conditions
◼ Used when activity times are uncertain
◼ Most likely time
◼ Used to obtain the same information as ◼ Most probable length of time
the Single Time Estimate model and that will be required
probability information 9
Network - Exercise

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AON

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Draw the network

Tips:

(1) Use pencil.

(2) Start and end with a single node.
(3) Avoid having paths cross each other.
(4) Have activities go from left to right.
(5) Use only one arrow between any pair of
nodes

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Example: Using 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.
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)
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: Start with ES=0
and go forward in the E(5)
network from A to G.
Determine late starts and late Hint: Start with LF=15 or
finish times
the total time of the project
ES=4 and go backward in the
EF=6 network from G to 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
Critical Path & Slack

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

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
Duration = 15 weeks
Example: Using 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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Expected Time Calculations

ET(A)= 3+4(6)+15
Immediate Expected 6
Task Predecesors Time
A None 7 ET(A)=42/6=7
B None 5.333
C A 14 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
D A 5 A None 3 6 15
E C 11 B None 2 4 14
C A 6 12 30
F D 7 D A 2 5 8
E C 5 11 17
G B 11 F D 3 6 15
H E,F 4 G B 3 9 27
H E,F 1 4 7
I G,H 18 I G,H 4 19 28

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

Expected Time =
6
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Expected Time Calculations

Immediate Expected
ET(B)= 2+4(4)+14
Task Predecesors Time 6
A None 7
B None 5.333 ET(B)=32/6=5.333
C A 14
D A 5 Immediate
E C 11 Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
F D 7 B None 2 4 14
G B 11 C A 6 12 30
D A 2 5 8
H E,F 4 E C 5 11 17
F D 3 6 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 Likely Time) + Pess. Time

Expected Time =
6
20
Pessim . - O ptim . 2
A ctivity variance,  2
= ( )
6

Task Optimistic Most Likely Pessimistic Variance

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

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

 2

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Network

Expected duration of the project is the expected duration of the longest path

Expected Duration of the

Project = 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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What does the expected duration TE of the project mean?

t
TE = 54

There’s a 50% chance of the project to be completed within

54 days
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Probability Exercise

What is the probability of finishing this project in

less than 53 days?

The probability that all the paths in the project are

complete within 53 days

Expexted Duration
Paths for each path Path Variance
ACEHI 54 41
ADFHI 41 26
BGI 34.33 36

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The probability that all Path: ACEHI
the paths in the project
are complete within 53
days

Path Variance = 41

Path: ADFHI The probability that path

ACEHI is completed within
53 days

&
Path Variance = 26
The probability that path
ADFHI is completed within
Path: BGI 53 days

&

The probability that path

BGI is completed within 53
Path Variance = 36
days 25
Compute the Z score for each path
D - TE -path
Z=
 path
 2
Expexted Duration
Paths for each path Path Variance
ACEHI 54 41 -0.16
ADFHI 41 26 2.35
BGI 34.33 36 3.11

53 - 54
Z=
41

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Use the NORMSDIST(Z, Cumulative) Obtain the
probabilities from the
function in Excel or Obtain the P( )
cumulative standard
values from the Std. Normal Table normal distribution

P(t<D) = P(Z)
0.4379
0.9907
0.9991

What is the probability of finishing this project in

less than 53 days?

The probability that all the paths in the project are

complete within 53 days
0.4379 * 0.9907 * 0.9991 = 0.4334 = 43.34%
There is a 43.34% chance that this project will be
completed in less than 53 weeks. 27
◼ What is the probability that the project duration will exceed 56
weeks?

1 - p(t < D)
p(t < D)

t
D=56
First, compute the
probability that all the
paths in the project are
complete within 56 days
Compute the Z score for each path
D - TE -path
Z=
 path
 2
Expexted Duration
Paths for each path Path Variance
ACEHI 54 41 0.31
ADFHI 41 26 2.94
BGI 34.33 36 3.61

56 - 54
Z=
41
Use the NORMSDIST(Z,
Cumulative) function in Excel Obtain the probabilities from the
or Obtain the P() values from cumulative standard normal
the Std. Normal Table distribution
Z P(t<D) = P(Z)
0.31 0.6226
2.94 0.9984
3.61 1.0000
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◼ What is the probability that the project duration will exceed 56
weeks?

1 - the probability that all the paths in the project are

complete within 56 days

1 - p(t < D)
p(t < D)

t
D=56
1 – (0.6226 * 0.9984 * 1.0) = 1 – 0.6216 = 37.84%

There is a 37.84% chance that this project will take

more than 56 days for its completion
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Optimi Most Pessi Expect Varian
stic likely mistic ed ce
A 5 6 7 6.00 0.11
B 8 8 11 8.50 0.25
Three recent college graduates have formed a partnership and have
C 6 8 11 8.17 0.69
opened an advertising firm. Their first project consists of activities
D 9 12 15 12.00 1.00
E 5 6 9 6.33 0.44
listed in the following table. F 5 6 7 6.00 0.11
G 2 3 7 3.50 0.69
H 4 4 5 4.17 0.03
I 5 7 8 6.83 0.25

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◼ Draw the precedence diagram. What’s the expected duration of
completing the project?

◼ What is the probability that the project can be completed in 24 days

or less? In 21 days or less?

◼ Hint
◼ Compute the expected time and the variance for each activity
◼ Draw the precedence / network diagram
◼ List the expected time for each activity in the precedence diagram
◼ Identify all the paths and their durations and then find the critical path
(the longest path)
◼ Find the probability of completion

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Practice

◼ What is the expect duration of the project?

◼ What is the probability that the project can be completed in 34
weeks? In 32 weeks?
◼ What is the probability that the project will take more than 36
weeks?

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CPM 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

Time-cost Trade-offs: Crashing

◼ Crash – shortening activity duration

◼ Procedure for crashing

◼ Crash the project one period at a time
◼ Only an activity on the critical path
◼ Crash the least expensive activity
◼ Multiple critical paths: find the sum of crashing the least expensive
activity on each critical path

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Technology for Managing Projects

◼ Project Management (MS Project,

Primavera)

◼ Collaboration tools (MS

SharePoint)

◼ Product Lifecycle Management

Advantages

◼ ERP (Project Systems) ◼ Imposes a methodology

◼ Portfolio Management ◼ Provides logical planning structure
◼ Project Costing ◼ Enhances team communication
◼ Flag constraint violations
◼ Automatic report formats
◼ Multiple levels of reports
◼ Enables what-if scenarios
◼ Generates various chart types 37
Project Risk Management
◼ Risk: occurrence of events that have undesirable consequences
◼ Delays
◼ Increased costs
◼ Inability to meet specifications
◼ Project termination

◼ Risk Management
◼ Identify potential risks
◼ Analyze and assess risks
◼ Work to minimize occurrence of risk
◼ Establish contingency plans

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The
Wish…. ☺

A project manager, a software developer, and a hardware engineer are in Brighton for three weeks helping
out on a project.

About midweek, they decide to take a lunchtime walk up and down the beach. Halfway up the beach, they
come across a lamp. As they rub the lamp, a genie appears and says, I will grant each of you one wish.

The hardware engineer says, I want to spend the rest of my life living in a huge mansion with no money
worries. The genie grants his wish.

The software developer says, I would like to spend the rest of my life living on a yacht cruising the
Caribbean with no money worries. The genie grants his wish.

Then it is the project manager's turn. And what would your wish be? Asked the genie.

I want them both back after lunch replies the project manager.
www.projectsmart.co.uk
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Thank you

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More Practice…. ☺
◼ How many weeks will it take to complete the project?
◼ How much slack does the non-critical activities have?

How many weeks will it take to complete the project?

What are the chances of completing this project within 20 weeks? What are the chance
the project duration exceeding 16 weeks?

Time Estimates (weeks) A B

Activity Optimistic Most Likely Pessimistic End
Start
A 2 3 7
B 4 6 10
C 2 4 7
C D
D 5 9 16
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