MAR 3203 Chapter 3: Project Management

3 phases of project management

1. Planning — Goal setting, defining the project, and team organization

2. Scheduling — Relates people, money, and supplies to specific activities and relates activities to each other

3. Controlling — The firm monitors resources, costs, quality, and budgets; also revises or changes plans and shifts resources to meet time and cost demands

Project planning

Projects can be defined as a series of related tasks directed toward a major output

• Project organization

• Work breakdown structure (WBS)

Project organization

An organization formed to ensure that programs (projects) receive the proper management and attention

Can be temporary or permanent (matrix organization)

Ethical issues project managers face

1. Offers of gifts from contractors

2. Pressure to alter status reports to mask delays

3. False reports for charges of time and expenses

4. Pressures to compromise quality to meet bonuses or avoid scheduling penalties

Work breakdown structure (WBS)

Defines a project by dividing it into more and more detailed components

Levels of hierarchy:

1. Project

2. Major tasks in project

3. Subtasks in major tasks

4. Activities (or “work packages”) to be completed

Project scheduling

The sequencing and allotment of time to all project activities

• Shows the relationship of each activity to others and the whole project

• Identifies the precedence relationships among activities

• Encourages the setting of realistic time and cost estimates for each activity

• Helps make better use of people, money, and material resources by identifying critical project bottlenecks

Gantt chart

Used during project scheduling; planning charts used to schedule resources and allocate time

Ensures that

1. Activities are planned

2. Order of performance is documented

3. Activity time estimates are recorded

4. Overall project time is developed

Project controlling

Computerized programs produce a broad variety of PERT/CPM reports including

1. Detailed cost breakdowns for each task

2. Total program labor curves

3. Cost distribution tables

4. Functional cost and hour summaries

5. Raw material and expenditure forecasts

6. Variance reports

7. Time analysis reports

8. Work status reports

Projects may be managed using the waterfall or agile approaches

Waterfall projects

Projects that progress smoothly in a step-by-step manner until completed

Agile projects

Ill-defined projects requiring collaboration and constant feedback to adjust to project unknowns

Program evaluation and review technique (PERT)

A project management technique that employees three time estimates for each activity

Critical path method (CPM)

A project management technique that uses only one estimate per activity—makes the assumption that activity times are known with certainty

Critical path

The computed longest time path(s) through a network

Represents tasks that will delay the entire project if they are not completed on time zero slack time

6 steps of PERT/CPM

1. Define the project and prepare the work breakdown structure (WBS)

2. Develop the relationships among the activities; decide precedents

3. Draw the network connecting all the activities

4. Assign time and/or cost estimates to each activity

5. Compute the longest time path through the network aka the critical path

6. Use the network to help plan, schedule, monitor, and control the project

Activity-on-node (AON)

A network diagram in which nodes designate activities

Activity-on-arrow (AOA)

A network diagram in which arrows designate activities

Dummy activity

Common activity in AOA networks that does not exist and has no time and is inserted into a network to maintain the logic of the network

Critical path analysis

A process that helps determine a project schedule

Two distinct starting and ending times for each activity are calculated:

• Earliest start (ES)

• Earliest finish (EF)

• Latest start (LS)

• Latest finish (LF)

Forward pass

A process that identifies all the early start and early finish times

Earliest start:

• Before an activity can start, all its immediate predecessors must be finished

• 1 immediate predecessor, ES = EF_predecessor

• Multiple immediate predecessors, ES = maximum EF_predecessor

Earliest finish:

• Sum of its earliest start time (ES) and its activity time

Backward pass

A process that identifies all the late start and late finish times and begins with the last activity in the project

Latest finish:

• If an activity is an immediate predecessor for 1 activity, its LF = LS of the activity that immediately follows it

• If an activity is an immediate predecessor of >1 activities, its LF is the minimum of all LS values of the activities that immediately follow it

Latest start:

• The difference of its latest finish time (LF) and its activity time

Slack time

Free time for an activity—the length of time an activity can be delayed without delaying the entire project

Critical activities

Activities with zero slack are on the critical path

Critical path

A continuous path through the project network that

• Starts at the first activity in the project

• Terminates at the last activity in the project

• Includes only critical activities

Total slack

When two of more noncritical activities appear successively in a path, they share total slack—delaying either activity by 1 week causes not only that activity, but also the other activity, to lose its slack

Crashing

Shortening activity time in a network in the cheapest manner possible to reduce time on the critical path so total completion time is reduced

Crash time

The shortest duration required to complete an activity

4 steps of crashing a project

1. Compute the crash cost per week/time period for each activity in the network: Crash cost per period = (Crash cost - Normal cost) / (Normal time - Crash time)

2. Using the current activity times, find the critical path(s) in the network and identify the critical activities

3. If single critical path, select the activity that can still be crashed and has the smallest crash cost per period; if multiple critical paths, select one activity from each path

4. Update all activity times and stop crashing if desired due date has been reached

Advantages of PERT and CPM

1. Especially useful when scheduling and controlling large projects

2. Straightforward concept and not mathematically complex

3. Graphic networks help highlight relationships among project activities

4. Critical path and slack time analyses help pinpoint activities that need to be closely watched

5. Project documentation and graphs point out who is responsible for various activities

6. Applicable to a wide variety of projects

7. Useful in monitoring not only schedules but costs too

Limitations of PERT and CPM

1. Project activities have to be clearly defined, independent, and stable in their relationships

2. Precedence relationships must be specified and networked together

3. Time estimates tend to be subjective and are subject to fudging by managers who fear being overly optimistic

4. Inherent danger of placing too much emphasis on the longest aka critical path. Near-critical paths need to be monitored as well