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  1. Managing Projects Chapter 10

  2. What is a Project? • A project has a unique purpose • A project is temporary • A project requires resources • A project should have a primary sponsor or customer • A project involves uncertainty

  3. What is Project Management? • The application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements

  4. Benefits of Project Management • Better coordination among functional areas • Ensure that tasks are completed even when there is personnel turnover • Minimize the need for continuous reporting • Identification of realistic time limits • Early identification of problems • Improved estimating capability • Easier to monitor success

  5. Measures of Project Success • Completed on-time • Completed within budget • Delivery of required specifications • Acceptance by customer • Minimum number of scope changes (change orders)

  6. What do Project Manager do? • Manage the people and resources necessary to meet scope, time, cost, and quality goals • Reinforce excitement in the project • Manage conflict • Empower team members • Encourage risk taking and creativity • Communicate the progress of the team with managers and customers

  7. Building the Project Team • Forming • Storming • Norming • Performing

  8. Quantitative Tools • Gantt Charts • Project Network Diagram • PERT uses AON (Activity on Node) methodology • Many software programs (i.e., MS Project) use boxes and arrows to display activities

  9. Quantitative Analyses • Constructing PERT diagrams and analyzing the critical path • Developing cost-time trade-off slopes • Incorporating uncertainty into activity times

  10. Constructing PERT DiagramsBaking a Cake Example

  11. PERT C5 G60 H5 A1 B8 D5 E1 F30 Note: * Notation represents the activity code and the expected duration (t) * Critical Path = A-B-D-E-F-G-H = 110 minutes

  12. Notation for Critical Path Analysis

  13. PERT ES = 9 EF = 9+5=14 Begin at 1st activity and make ES = 0 ES = 45 (larger of 45, 14) EF = 105 ES = 0 EF = 0+1=1 C5 G60 H5 A1 B8 ES = 105 EF = 110 ES = 1 EF = 1+8=9 D5 E1 F30 ES = 15 EF = 45 ES = 9 EF = 9+5=14 ES = 14 EF = 15 ES = EFpredecessor(if more than 1 EFpredecessorthen use the largest value) EF = ES + t

  14. PERT LS = 40 LF = 45 LS = (105-60)=45 LF = LSsuccessor=105 LS = 0 LF = 1 C5 G60 H5 A1 B8 LS = 1 LF = 9 (smaller of 40, 9) D5 E1 F30 LS = 9 LF = 14 LS = 15 LF = 45 LS = 14 LF = 15 LS = (LF-t) =(110-5)=105 LF = EF = 110 Begin at last activity and make LF=EF = 110 LF = LSsuccessor(If more than 1LF = LSsuccessorthen use the smallest value) LS = LF-t

  15. PERT Total Slack (TS) = LS-ES or LF-EF Activities that have zero slack are critical, meaning they cannot be delayed without delaying the project completion time

  16. Gantt Chart • See either: • Demonstration in MS Project • Hardcopy distributed in class

  17. Project Network Diagram(produced by MS Project) • See either: • Demonstration in MS Project • Hardcopy distributed in class

  18. Tennis Tournament Example

  19. Tennis Tournament ExamplePERT Possible paths: A-C-D-G-I-J (16), A-C-F-H-J (12), A-C-E-I-J (20), A-C-E-H-J (18), B-F-H-J (15) Critical path = A-C-E-I-J (20)

  20. Tennis Tournament ExamplePERT

  21. Gantt Chart • See either: • Demonstration in MS Project • Figure 10.8 in textbook

  22. Project Network Diagram(produced by MS Project) • See either: • Demonstration in MS Project • Figure 10.9 in textbook

  23. Trades-OffsCost and Time • Cost and time are inversely related • As time to complete a project goes down, costs for the project go up • As time goes up, costs go down

  24. Project Costs

  25. Activity Crashing • An activity is considered to be “crashed” when it is completed in less time than is normal by applying additional labor or equipment

  26. Determining the Impact of Activity Crashing • To determine the impact of activity crashing begin by identifying the Expedite-Cost Slope for each activity • To do this, a manager must identify “normal” and “crash” time and cost estimates

  27. Tennis Tournament ExampleCost and Time Estimates *Slope = Crash Cost – Regular Cost(15 – 5) = 10 = 10 Normal Duration – Crash Duration (2 – 1) 1

  28. Activity Cost-Time Trade-off(Activity Code E) Activity E: Normal Time = 10, Crash Time = 6, Normal Cost = $20, Crash Cost = $40)

  29. Incorporating Uncertainty into Activity Times • When a manager is unsure of the activity duration times, he/she needs to estimate activity times using a Beta distribution • The Beta distribution allows the manager to develop a probable range of times in which the activity time will fall

  30. Beta Distribution of Activity Duration

  31. Beta Distribution Time Estimates • Optimistic Time (A) – activity duration if no problems occur • Most Likely Time (M) – activity duration that is most likely to occur • Pessimistic Time (B) – activity duration if extraordinary problems arise

  32. Formulas • Activity time (t) = (A + 4M + B)/6 • Standard deviation (σ) = (B - A)/6 • Variance (σ2) = (B – A)2/36

  33. Assessing ProbabilityTennis Tournament Example • Let’s say we plan to begin the tennis tournament project on October 25th and plan to have it completed within 24 days (November 18th) because the tennis stadium is booked after that. • As a manager, you have estimated the optimistic, most likely, and pessimistic times for each activity • Now you want to find the probability that you will be able to finish the project in 24 days

  34. Time Estimates Tennis Tournament Example

  35. Time Estimates – Critical Path Tennis Tournament Example ∑t = 2.00 + 3.00 + 10.00 + 3.00 + 2.00 = 20 days ∑σ2 = 0.11 + 0.11 + 4.00 + 1.00 + 0.00 = 5.22 days ∑σ = 0.33 + 0.33 + 2.00 + 1.00 + 0.00 = 3.66

  36. Building Time DistributionTennis Tournament Example Z = (X – μ)/σ Z = (24 – 20)/√5.22 Z = 1.75 Z Table (p. 579 of textbook) shows that a Z value of 1.75 refers to a probability of (0.5000 – 0.4599)= 0.0401 or .04 Therefore, there is a 4% probability that the project would not be completed in 24 days