Chapter 17 Project Management PDF

Chapter 17 - Project Management
CHAPTER 17
PROJECT MANAGEMENT
Teaching Notes
In managing operations, we are often faced with activities that do not fit into the usual day-to-day
operations of the firm. These non-typical, unusual activities of the firm are called projects. Due to their
unique nature, projects require different management approaches and techniques. A list of project
examples is given below:
1. Installation of a new bar coding system
2. Installation of a new computerized production and inventory control system
3. Design and development of a product prototype
4. Feasibility study to decide whether to buy new machinery
5. Acquisition and installation of new CNC (Computer Numerically Controlled) machinery
6. Conversion of the plant layout from process layout to group technology layout
7. Selection of a new plant site
8. Construction of a new facility
9. Planning, organizing, and managing a professional conference or a trade show
10. Planning, organizing, and managing major sports events such as the Olympics, sports festivals,
the NCAA basketball tournament, etc.
Project management involves planning, controlling, and directing the non-typical activities facing the
firm. In managing projects, project managers are assigned to schedule the work, to adhere to a given
budget, and to monitor the progress of the work through its various stages. For larger projects, project
teams are formed. These project teams may include workers from within the company involved in the
project and from other outside companies (e.g., a consulting firm). Depending on the size and type of the
project, an internal project manager and possibly project team members may receive full or partial release
from their regular duties. This duty release is given because it would be very difficult for an employee to
manage the responsibilities of a time consuming project and to fulfill the responsibilities of normal day-
to-day activities.
Projects are not necessarily single-time events. They can be repeated in similar settings. In managing a
project, the project team is usually responsible for managing and controlling the following four factors:
1. The length of project completion time
2. Resources
3. Quality
4. Cost
Projects progress through a life cycle consisting of five phases:
1. Initiating: Outlining the expected costs, benefits, and risks associate with a project. It also
includes defining major project goals and choosing a project manager.
2. Planning: Providing details on deliverables, the scope of the project, the budget, the schedule and
milestones, performance objectives, resources needed, a quality plan, and a plan for handling
risks.
3. Executing: the actual work of the project is carried out. The project is managed as activities are
completed, resources are consumed, and milestones are reached.
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Education.
4. Monitoring and Controlling: This phase occurs at the same time as project execution. It involves
comparing actual progress with planned progress, taking corrective action if needed, and
monitoring and corrective action to ensure that it achieves the desired effect.
5. Closing: This phase ends the project and involves handing off the project deliverables, obtaining
customer acceptance, documenting lessons learned, and releasing resources.
Answers to Discussion and Review Questions

1. To manage a project effectively, a project manager must employ a certain set of management
skills. The project manager must manage:
a. the work so that all of the necessary activities are accomplished in the desired sequence and
performance goals are met.
b. the human resources so that those working on the project have directions and motivation.
c. communications so that everybody has the information needed to do the work.
d. quality so that performance objectives are realized.
e. time so that the project is completed on schedule.
f. costs so that the project is completed within budget.
g. scope so that the project stays within the prescribed scope.
However, because project work is unique, one-time operations designed to accomplish a set of
objectives in a limited timeframe, the project manager must exhibit leadership skills. Leadership
skills are less tangible than the skills listed above and may include the following:
a. the ability to deal with change.
b. deciding what changes are needed and when to make the changes.
c. working with the project team to make the necessary changes.
d. the ability to handle undesirable or unexpected consequences of making changes.
e. the ability to manage/motivate people with varying background and skills who may also be
reporting to other managers in their respective functional areas.
f. the ability to persuade and cooperate with others to fulfill project goals given that the project
manager may not have the formal authority to accomplish some of the goals of the project.
2. The project champion is the person within the company who is designated to promote and support
the project. The project champion can be instrumental in facilitating the work of the project
manager by promoting the project to other managers who might be asked to share resources with
the project team. The project champion also promotes the benefits of the project to employees
who may be asked to work on portions of the project. Because the project champion plays a very
important role in facilitating the project, both the project manager and the project team need to
keep the project champion informed about the status of the project. The project manager and team
may inform the project champion through a combination of face-to-face meetings and status
reports.
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3. The steps in risk management are:

a. Identify the risks.
b. Evaluate each risk to determine its probability of occurrence and the potential consequences
if it does occur.
c. Risk reduction by using redundant (backup) systems, frequent monitoring of critical project
dimensions with the goal of catching and eliminating problems early, transferring risk by
outsourcing a project activity, or by sharing risks with an outside party, e.g., through
partnering.
4. Examples of issues that may arise on projects include the temptation to understate costs or to
withhold information to get a project approved, pressure to alter or make misleading statements
on status reports, falsifying records, compromising workers safety, and approving substandard
work. The project manager can minimize such issues by maintaining and enforcing ethical
standards and by demonstrating ethical behavior.
5. The advantages of using project management software include the following:
a. It imposes a methodology and a common project management terminology.
b. It provides a logical planning structure.
c. It can enhance communication among team members.
d. It can flag the occurrence of constraint violations.
e. It automatically formats reports.
f. It can generate multiple levels of summary reports and detailed reports.
g. It enables what-if scenarios.
h. It can generate various chart types, including basic Gantt charts.
6. Work Breakdown Structure (WBS) is a hierarchical listing of what must be done during the
project. It breaks down the entire project into manageable smaller portions called activities or
tasks. WBS is important because it establishes a logical framework for identifying the required
activities of the project.
7. a. A path e. Beta distribution
b. The critical path f. Normal distribution
c. Dummy activity g. Crashing
d. Path slack
8. The primary advantages of PERT are:
a. The PERT chart forces the manager to organize and quantify available information and to
recognize where additional information is needed.
b. The PERT chart provides a graphic display of the project and its major activities.
c. The PERT chart identifies (a) activities that should be closely watched because of the
potential for delaying the project and (b) other activities that have slack time and can be
delayed without affecting project completion time. This raises the possibility of reallocating
resources to shorten the project.
The primary limitations of PERT are:
a. Managers may unwittingly overlook one or more important activities when developing the
project network.
b. Precedence relationships may not all be correct as shown.
c. Time estimates may include a fudge factor.
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d. There may be a tendency to focus solely on activities that are on the critical path. As the
project progresses, other paths may become critical. Furthermore, major risk events may not
be on the critical path.
9. A probabilistic estimate of a projects completion time based solely on the variance of the critical
path might be misleading because near-critical paths can have distributions that overlap the
distribution of the critical path time, which may result in a lower probability of timely completion
than that based solely on the time distribution of the critical path. When path time distributions do
not overlap, probabilistic estimates based solely on the critical path are acceptable.
10. a. Expected activity time is a weighted average of optimistic, most-likely, and pessimistic time
t o 4t m t p
for each activity: t e
6
b. Variance of an activity measures the extent of activity variability.
(t p t o )2
Variance
36
c. The standard deviation of a paths time is a measure of the extent of variability of path time.
It is computed by summing the variances of activities that comprise the path and then taking
the square root of that sum.
11. A person might wish to be involved with a critical path activity because the critical path generates
more attention than the other paths do. Hence, those associated with activities that are on the
critical path are often in the spotlight. If they perform well, there is a good possibility for
recognition and reward. On the other hand, there can be an inordinate amount of pressure
associated with the critical path activities, and some would just as soon avoid that pressure.
12. Potential benefits of working on projects include the dynamic environment that surrounds a
project, the challenge of working under pressure and solving new problems, opportunities to meet
new people and to increase future job opportunities, the status among fellow workers from being
associated with the project, and the team spirit to achieve successful project completion.
Some of the risks associated of working on a project include working for two bosses who impose
different demands, the disruption in friendships and daily routines, the risk of being replaced on
the current job, and the fear of being associated with an unsuccessful project because of the
adverse effect it might have on career advancement.
13. Some aspects of the project managers job that make it more demanding than the job of a
manager working in a more routine framework include: Authority may not be commensurate with
responsibility, the environment often is more dynamic than is the case with more routine jobs,
there may be a much wider range of skills among subordinates, conflicts may arise between
project workers and those not involved with the project (e.g., on other projects or non-project
work), and balancing time, cost, and quality objectives can be stressful.
14. The main benefit of the project organization is the focus on project activities that results from
having project team members work full-time only on project activities.
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Taking Stock
1. The trade-offs associated with time and cost estimates for a proposed project involve the
relationship between spending and time. A project manager could crash (shorten) a project by
spending more on additional resources for critical path activities.
2. When assessing the cost of a project, the project manager, specialized project personnel dedicated
to handling certain project activities, someone from the finance department, and someone from
top management must be involved in assessing the cost of a project.
3. Two ways that technology has had an impact on project management:
a. Project management software: As project management software becomes more sophisticated,
the ability of a project manager to manage, direct, and control different aspects of the project
becomes easier.
b. Internet and e-mail: The ability to obtain quotes and prices on the Internet has provided a
significant convenience and has reduced the negotiation times for various activities, making
the prices of activities more competitive. Both the Internet and e-mail make sharing project
files easier for team members also. Finally, the Internet enables project team members in
remote locations to hold virtual meetings to discuss status reports, issues, etc.
Critical Thinking Exercises

1. Project management techniques are designed to handle unusual or atypical activities. They do not
lend themselves very well to managing the day-to-day activities of organizations. Projects by
definition are different from normal operations of the firm. They are usually not repeated and
very expensive to design and develop due to their unique and special characteristics. Because
business managers have experience dealing with the normal, day-to-day activities, they can utilize
many of the existing, well-known techniques and methods designed to manage day-to-day
operations of the firm or to solve typical problems faced by the firm. Utilization of project
management techniques in managing the normal functions of a business would result in a waste
of time and resources and may not provide satisfactory results in a timely fashion.
2. Three examples of unethical conduct involving projects include any of three of the following:
a. If a p project manager understated costs to get a project approved, this action would violate
the Virtue Principle.
b. If a project manager compromised workers safety to complete a project on time, this action
would violate the Utilitarian Principle and the Virtue Principle.
c. If a project manager approved substandard work, this action would violate the Utilitarian
Principle and the Virtue Principle.
d. If a project manager asked a subordinate to understate costs or to make misleading statements
about project progress, this action would violate the Rights Principle and the Virtue Principle.
e. If a project manager falsified records, this action would violate the Virtue Principle.
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Solutions
1. Use the network diagrams given in the text to determine both the critical path and the expected
project duration. The critical path and the expected project duration are indicated below with an
*. Expected duration for each path equals the sum of the activity times on the path.
a.
Path Expected Duration
12471012 4 + 9 + 5 + 2 + 3 = 23
12581012 4 + 8 + 7 + 2 + 3 = 24
13691112 10 + 6 + 4 + 5 + 6 = 31*
b. Path Expected Duration

124689 5 + 18 + 3 + 4 + 9 + 2 = 41
125689 5 + 18 + 10 + 4 + 9 + 2 = 48
125789 5 + 18 + 10 + 11 + 9 + 2 = 55*
13789 5 + 13 + 11 + 9 + 2 = 40
c. Path Expected Duration

1251216 10 + 14 + 13 + 7 = 44*
1361316 14 + 15 + 6 + 4 = 39
1371416 14 + 11 + 13 + 3 = 41
148910111516 3 + 8 + 1 + 0 + 7 + 6 + 10 = 35
14810111516 3 + 8 + 4 + 7 + 6 + 10 = 38
d.

A-D 7 + 8 = 15
B-E 3+4=7
C-F-E 5 + 7 + 4 = 16
C-F-G 5 + 7 + 6 = 18*
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2. a. Ch Sh
Lib Sel
Out Inst
Write
Ck
Sub
Note: The answers for this problem assume that Chris will prepare the paper on the new
computer, but will prepare the outline by hand.
b. 1. AOA diagram (All times are in hours)

Lib
Ch 2.0 Out
0.6 0.4
Start Write Ck Sub End
Sh Inst 3.0 0.5 0.2
2.0 Sel 0.8
1.0
2. AON diagram (All times are in hours)
Ch 0.6 Lib 2.0 Out 0.4
Start Write 3.0 Ck 0.5 Sub 0.2 End
Sh 2.0 Sel 1.0 Inst 0.8
c. The paths and their expected duration times are given below. Expected duration for each path
equals the sum of the activity times on the path.
Expected
Path Duration
Ch-Lib-Out-Write-Ck-Sub 6.7 hours
Sh-Sel-Inst-Write-Ck-Sub 7.5 hours*
Conclusion: Critical path is Sh-Sel-Inst-Write-Ck-Sub and the expected duration is 7.5
hours.
d. The project could take longer than the expected duration if any activity on the critical path is
delayed or if the other activities on the parallel path (Ch-Lib-Out) are delayed by more than
0.8 hours (7.5 6.7).
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Blank forms to distribute to students if desired:
3a. Bank location.

Weeks after start
Activity 2 4 6 8 10 12 14 16 18 20
1-2
1-3
2-4
2-5
3-5
4-5
5-6
b. Solved Problem #2.

Weeks after start
Activity 2 4 6 8 10 12 14 16 18
1-2
2-5
2-4
1-3
3-4
4-5
3. a. Bank location.
Weeks after start
Activity 2 4 6 8 10 12 14 16 18 20
1-2
1-3
2-4
2-5
3-5
4-5
5-6
b. Solved Problem #2.

Weeks after start
Activity 2 4 6 8 10 12 14 16 18
1-2
2-5
2-4
1-3
3-4
4-5
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4. a.
A
E
Dummy
Immediate
Activity Predecessor
A
B
C A
E C
F A,B
End E,F
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4. b. Case 1: Activity on-Arrow Diagram
D
2
A 5
E K
B End
F H
1 3 6 8
C I
G
4 7
Case 2: Activity-on-Arrow Diagram
L 5
M
2 N
J 6 P
End
9
V
K R
1 3 7
Q W
S
4 T
8
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4. c. Case 1: Activity-on-Node Diagram
A D
Start B E
End
F H
C G I
Case 2: Activity-on-Node Diagram
L M
J
N P
K R
V
Start
S
Q End
T
W
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LS LF
21 26 ES EF
5. a. 21 13 5 18 26
13 18
4 7
12 9 2 28
4 20
11 28
4 2 10 21
8
11 2 3 31
7 4 4 7 28 24
0 21
5 8
19 26
12 19 26
19 12
1 12 19
31
0 10 6 31
0
11 25
10
3 6 5 25
10 25
10 4 25
10 9
6 20
16 16 20 20
16 16 20
Summary:
Activity ES EF LS LF Slack
12 0 4 7 11 7
13 0 10 0 10 0
24 4 13 12 21 8
25 4 12 11 19 7
36 10 16 10 16 0
47 13 18 21 26 8
58 12 19 19 26 7
69 16 20 16 20 0
710 18 20 26 28 8
810 19 21 26 28 7
911 20 25 20 25 0
1012 21 24 28 31 7
1112 25 31 25 31 0
Note: Slack = LS ES or LF EF.
Conclusion: Critical path is 1-3-6-9-11-12. Expected project duration is 31.
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5. b.
Summary:
Activity ES EF LS LF Slack
1 0 5 0 5 0
2 5 23 5 23 0
3 5 18 20 33 15
4 23 26 37 40 14
5 23 33 23 33 0
6 33 37 40 44 7
7 33 44 33 44 0
8 44 53 44 53 0
9 53 55 53 55 0
Note: Slack = LS ES or LF EF.
Conclusion: Critical path is 1-2-5-7-8-9. Expected project duration is 55.
LS LF
ES EF
37 40
23 26
5 23 40 44
5 23 4 33 37
3
2 23 33 6
23 33
18 4
0 5 44 53 53 55
0 5 44 53
5 53 55
10
1
20 33 8 9
5
5 18 33 44
33 44 9 2
3
7
13
11
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6. The network diagram is given in Problem 1, Part a. After 12 weeks, activities 1-2, 1-3, and 2-4
have been finished; activity 2-5 is 75% finished; and activity 3-6 is 50% finished. How many
weeks after the original start date time should the project be finished. The original path expected
durations are given below:

12471012 4 + 9 + 5 + 2 + 3 = 23
12581012 4 + 8 + 7 + 2 + 3 = 24
13691112 10 + 6 + 4 + 5 + 6 = 31*
One way of solving this problem is to look at the effects on each path:
Path 1-2-4-7-10-12:
Activities 1-2 and 2-4 were estimated to require take 4 + 9 = 13 weeks. They finished in 12
weeks. In other words, Activity 2-4 finished 1 week early. The net effect is to reduce the expected
time of this path by 1 week to 22 weeks.
Path 1-2-5-8-10-12:
Activities 1-2 and 2-5 were estimated to require 4 + 8 = 12 weeks. Activity 2-5 is 75%
completed; therefore, 25% of the activity time (.25 * 8 = 2 weeks) remains. Activity 2-5 should
have been completed at the end of 12 weeks but is running 2 weeks late. The net effect is to
increase the expected time of this path by 2 weeks to 26 weeks.
Path 1-3-6-9-11-12:
Activities 1-3 and 3-6 were estimated to require 10 + 6 = 16 weeks. Activity 3-6 is 50%
completed; therefore, 50% of the activity time (.50 * 6 = 3 weeks) remains. This means that this
activity should be completed 1 week early because it should be completed by the end of week 15.
The net effect is to reduce the expected time of this path by 1 week to 30 weeks.
Conclusion: The longest path (1-3-6-9-11-12) is estimated to take 30 weeks. Therefore, the
expected project duration is 30 weeks. The original estimated project duration was 31 weeks. We
estimate that the project should be completed 1 week early.
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7. a. C
5
2 E
A
F G End
D 3 6
8
Start
1
B I
4 H
7
b. Activity te 2
A 6.00 4/36
B 8.50 9/36
C 8.17 25/36
D 12.00 36/36
E 6.33 16/36
F 6.00 4/36
G 3.50 25/36
H 4.17 1/36
I 6.83 9/36
Path A-C-E:
Expected duration = 6.00 + 8.17 + 6.33 = 20.50
Variance = 4/36 + 25/36 + 16/36 = 45/36
45
Standard deviation = = 1.118
36
Path D-F-G:
Variance = 36/36 + 4/36 + 25/36 = 65/36
65
Standard deviation = 36 = 1.344
Path B-H-I:
Variance = 9/36 + 1/36 + 9/36 = 19/36
19
36
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Specified time = 24 days or less:

Path A-C-E:
24 20.50
= = 3.13
1.118
Probability of completion 24 days = 1.00 (z value > +3.00treat probability of completion

as being = 1.00)
Path D-F-G:
24 21.50
= = 1.86
1.344
Using Appendix B Table B: Probability of completion 24 days = 0.9686
Path B-H-I:
24 19.50
= = 6.20
0.726
Probability of completion 24 days = 1.00 (z value > +3.00treat probability of completion

as being = 1.00)
Probability of completion 24 days = 1.00 x 0.9686 x 1.00 = 0.9686

Path A-C-E:
21 20.50
= = 0.45
1.118
Probability of completion 21 days = 0.6736
Path D-F-G:
21 21.50
= = 0.37
1.344
Path B-H-I:
21 19.50
= = 2.07
0.726
Probability of completion 21 days = 0.9808
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c. Assume it is the end of the 7th day. Activities A and B have been completed while
Activity D is 50% completed. Time estimates for the completion time of Activity D are
5, 6, and 7. Activities C and H are ready to begin. We can re-draw the network as shown
below.
Revised D: te = [5 + (4*6) + 7]/6 = 36/6 = 6.00

Revised Variance of D = (7 5)2 / 36 = 4/36
In the modified network, the expected times and variances are:
Activity te 2
C 8.17 25/36
D 6.00 4/36
E 6.33 16/36
F 6.00 4/36
G 3.50 25/36
H 4.17 1/36
I 6.83 9/36
The revised project diagram is:
C (8.17) E (6.33)
End D (6.00) F (6.00) G (3.50)

1
7th 3 5 6
y
H (4.17)
I (6.83)
Path C-E:
Expected duration from start of project = 7 + (8.17 + 6.33) = 21.50
Variance = 25/36 + 16/36 = 41/36
41
Path D-F-G:
Expected duration from start of project = 7 + (6.00 + 6.00 + 3.50) = 22.50
Variance = 4/36 + 4/36 + 25/36 = 33/36
33
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Path H-I:
Expected duration from start of project = 7 + (4.17 + 6.83) = 18.00
Variance = 1/36 + 9/36 = 10/36
10

Path C-E:
24 21.50
= = 2.34
1.067
Path D-F-G:
24 22.50
= = 1.57
0.957
Path H-I:
24 18.00
= = 11.39
0.527
Probability of completion 24 days = 1.0000 (z value > +3.00treat probability of

completion as being = 1.0000)

Path C-E:
21 21.50
= = 0.47
1.067
Path D-F-G:
21 22.50
= = 1.57
0.957
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Path H-I:
21 18.00
= = 5.69
0.527
Probability of completion 21 days = 1.0000 (z value > +3.00treat probability of

d. The partners want to shorten the project by 2 days as long as it does not cost more than
$20,000. The cost per day (in thousands) to crash activities is shown below:
Activity First Crash Second Crash

C $8 $10
D $10 $11
E $9 $10
F $7 $9
G $8 $9
H $7 $8
I $6 $8
Step 1:
The paths and their expected duration are shown below:

C-E 21.50
D-F-G 22.50
H-I 18.00
Critical path is D-F-G.
Rank critical activities according to crash costs:
Cost per Day

Activity to Crash
F $7
G $8
D $10
Activity F should be shortened 1 day because it has the lowest crashing cost ($7,000).
Path D-F-G now will be 21.50 days as shown below.
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Step 2:

C-E 21.50
D-F-G 21.50
H-I 18.00
Critical paths are C-E and D-F-G.
Cost per Day

Path Activity to Crash
C-E C $8
E $9
D-F-G G $8
F $9
D $10
Choose one activity on each path to crash:

Activity C should be shortened 1 day because it has the lowest crashing cost ($8,000) on
Path C-E.
Activity G should be shortened 1 day because it has the lowest crashing cost ($8,000) on
Path D-F-G.
Path C-E now will be 20.50 days.
Path D-F-G now will be 20.50 days.
Conclusion: Total crashing cost is $7,000 + $8,000 + $8,000 = $23,000, which is $3,000
over budget. The partners have to determine whether the benefits of crashing the project
by 1 day or by 2 days are worth the extra cost.
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8. Expected
Path Duration Variance Std. Dev.
A 10 1.21 1.100
B 8 2.00 1.414
C 12 1.00 1.000
D 15 2.89 1.700
E 14 1.44 1.200
a. Probability (Time 16 weeks):
Path A:
16 10
= = 5.45
1.100
Probability of completion 16 weeks = 1.0000 (z value > +3.00treat probability of completion
as being = 1.0000)
Path B:
16 8
= = 5.66
1.414
as being = 1.0000)
Path C:
16 12
= = 4.00
1.000
as being = 1.0000)
Path D:
16 15
= = 0.59
1.700
Using Appendix B Table B: Probability of completion 16 weeks = 0.7224
Path E:
16 14
= = 1.67
1.200
Conclusion: Probability (T 16) = 1.0000 x 1.0000 x 1.0000 x 0.7224 x 0.9525 = 0.6881
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b. Probability (Time 15 weeks):
Path A:
15 10
= = 4.55
1.100
as being = 1.0000)
Path B:
15 8
= = 4.95
1.414
as being = 1.0000)
Path C:
15 12
= = 3.00
1.000
Path D:
15 15
= = 0.00
1.700
Path E:
15 14
= = 0.83
1.200
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c. Probability (Time 13 weeks):
Path A:
13 10
= = 2.73
1.100
Path B:
13 8
= = 3.54
1.414
as being = 1.0000)
Path C:
13 12
= = 1.00
1.000
Path D:
13 15
= = 1.18
1.700
Path E:
13 14
= = 0.83
1.200
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9. Given:
Standard
Path Activity Mean Deviation
A C 5 1.3
D 4 1.0
B E 8 1.6
Probability (T > 10 weeks):
Path A:
Expected duration = 5 + 4 = 9
Standard deviation:
We must find the variance of the path first by squaring the individual standard deviations to find
the variance for each activity, add the variances, and take the square root of the sum.
Variance = 1.32 + 1.02 = 1.690 + 1.000 = 2.690
Standard deviation = 2.690 = 1.640
10 9
= = 0.61
1.640
Path B:
Expected duration = 8
Standard deviation = 1.600
10 8
= = 1.25
1.600
Conclusion: Probability (T 10 weeks) = 0.7291 x 0.8944 = 0.6521

Probability (T > 10 weeks) = 1.0000 0.6521 = 0.3479
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10. Given:
The project described below is scheduled to be completed in 11 weeks.
Standard
Path Activity Mean Deviation
A C 4 0.70
D 6 0.90
B E 3 0.62
F 9 1.90
a. If you were the manager of this project, would you be concerned? Explain.
Probability (T 11 weeks):
Path A:
Standard deviation:
We must find the variance of the path first by squaring the individual standard deviations to
find the variance for each activity, add the variances, and take the square root of the sum.
Variance = 0.702 + 0.902 = 0.490 + 0.810 = 1.300
11 10
= = 0.88
1.140
Path B:
Standard deviation:
We must find the variance of the path first by squaring the individual standard deviations to
find the variance for each activity, add the variances, and take the square root of the sum.
Variance = 0.622 + 1.902 = 0.384 + 3.610 = 3.994
11 12
= = 0.50
1.998
Conclusion: Probability (T 11 weeks) = 0.8106 x 0.3085 = 0.2501. The manager should be

concerned because there is only a 0.2501 probability of finishing on time.
17-25
Education.
b. If there is a penalty of $5,000 a week for each week the project is late, what is the probability
of incurring a penalty of at least $5,000?
This question is asking what the probability will be that the project will take at least 12 weeks
(which would be 1 week late).
Path A:
12 10
= = 1.75
1.140
Using Appendix B Table B: Probability of completion < 12 weeks = 0.9599
Path B:
12 12
= = 0.00
1.998
Using Appendix B Table B: Probability of completion < 12 weeks = 0.5000
Conclusion: Probability (T < 12 weeks) = 0.9599 x 0.5000 = 0.4800

Probability (T 12 weeks) = 1.0000 0.4800 = 0.5200
17-26
Education.
11. Given:
We are given the following times (optimistic, most likely, and pessimistic) for each activity in the
table below.
a. Determine the expected completion time for each path and its variance.
Most
Activity Optimistic Likely Pessimistic Mean Variance
1-2 8 8 8 8.00 0/36
2-3 11 12 13 12.00 4/36
2-4 5 6 7 6.00 4/36
2-5 10 12 14 12.00 16/36
3-8 9 10 12 10.17 9/36
4-6 14 18 26 18.67 144/36
4-7 13 13 13 13.00 0/36
5-9 7 10 12 9.83 25/36
6-11 8 10 14 10.33 36/36
7-11 10.5 13 15.5 13.00 25/36
8-11 5 7 10 7.17 25/36
9-10 10 11 12 11.00 4/36
10-11 6 6 6 6.00 0/36
Path 1-2-3-8-11:
Expected completion time = 8.00 + 12.00 + 10.17 + 7.17 = 37.34
Variance = 0/36 + 4/36 + 9/36 + 25/36 = 38/36
38
36
Path 1-2-4-6-11:
Variance = 0/36 + 4/36 + 144/36 + 36/36 = 184/36
184
Path 1-2-4-7-11:
Variance = 0/36 + 4/36 + 0/36 + 25/36 = 29/36
29
Standard deviation =36 = 0.898
17-27
Education.
Path 1-2-5-9-10-11:
Expected completion time = 8.00 + 12.00 + 9.83 + 11.00 + 6.00 = 46.83
Variance = 0/36 + 16/36 + 25/36 + 4/36 + 0/36 = 45/36
45
b. Determine the probability that the project will require more than 49 weeks.
Probability (T > 49 weeks):
Path 1-2-3-8-11:
49 37.34
= = 11.35
1.027
Probability of completion 49 weeks = 1.0000 (z value > +3.00treat probability of
Path 1-2-4-6-11:
49 43.00
= = 2.65
2.261
Path 1-2-4-7-11:
49 40.00
= = 10.02
0.898
Path 1-2-5-9-10-11:
49 46.83
= = 1.94
1.118
Conclusion: Probability (T 49 weeks) = 1.0000 x 0.9960 x 1.0000 x 0.9738 = 0.9699

Probability (T > 49 weeks) = 1.0000 0.9699 = 0.0301
17-28
Education.
c. Determine the probability that the project will be completed in 46 weeks or less.
Path 1-2-3-8-11:
46 37.34
= = 8.43
1.027
Path 1-2-4-6-11:
46 43.00
= = 1.33
2.261
Path 1-2-4-7-11:
46 40.00
= = 6.68
0.898
Path 1-2-5-9-10-11:
46 46.83
= = 0.74
1.118
Conclusion: Probability (T 46 weeks) = 1.0000 x 0.9082 x 1.0000 x 0.2296 = 0.2085
17-29
Education.
12. Given:
We are given the following times (optimistic, most likely, and pessimistic) for each activity in the
table below.
Most
Activity Optimistic Likely Pessimistic Mean Variance
A 2 4 6 4.00 16/36
D 6 8 10 8.00 16/36
E 7 9 12 9.17 25/36
H 2 3 5 3.17 9/36
F 3 4 8 4.50 25/36
G 5 7 9 7.00 16/36
B 2 2 3 2.17 1/36
I 2 3 6 3.33 16/36
J 3 4 5 4.00 4/36
K 4 5 8 5.33 16/36
C 5 8 12 8.17 49/36
M 1 1 1 1.00 0/36
N 6 7 11 7.50 25/36
O 8 9 13 9.50 25/36
End
a. Construct a network diagram.

D
5 E
2
F 9
A H
6 G
Start End
1
1 B
K 2
I J
3 7 1
C 0 O
M N
4 8 1
1
17-30
Education.
b. The project manager will receive a bonus of $1,000 if the project is finished within 26 weeks.
P (T 26):
Path A-D-E-H:
Variance = 16/36 + 16/36 + 25/36 + 9/36 = 66/36
66
26 24.34
= = 1.23
1.354
Path A-F-G:
Expected completion time = 4.00 + 4.50 + 7.00 = 15.50
Variance = 16/36 + 25/36 + 16/36 = 57/36
57
26 15.50
= = 8.35
1.258
Path B-I-J-K:
Variance = 1/36 + 16/36 + 4/36 + 16/36 = 37/36
37
26 14.83
= = 11.02
1.014
Path C-M-N-O:
Variance = 49/36 + 0/36 + 25/36 + 25/36 = 99/36
99
26 26.17
= = 0.10
1.658
Conclusion: The probability of receiving a bonus of $1,000 = Probability (T 26 weeks) =
0.8907 x 1.0000 x 1.0000 x 0.4602 = 0.4099
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Education.
The project manager will receive a bonus of $500 if the project is finished within 27 weeks.
P (T 27):
Path A-D-E-H:
27 24.34
= = 1.96
1.354
Path A-F-G:
27 15.50
= = 9.14
1.258
Path B-I-J-K:
27 14.83
= = 12.00
1.014
Path C-M-N-O:
27 26.17
= = 0.50
1.658
Conclusion: The probability of receiving a bonus of $500 = Probability (T 27 weeks) =

0.9750 x 1.0000 x 1.0000 x 0.6915 = 0.6742
17-32
Education.
13. Given:
We have the following list of activities for a project and crashing costs:
Path Activity Duration (weeks) First Crash Second Crash

Top A 5 $8 $10
B 6 $7 $9
C 3 $14 $15
Middle D 3 $9 $11
E 7 $8 $9
C 3 $14 $15
Bottom F 5 $10 $15

G 5 $11 $13
H 5 $12 $14
Determine which activities should be crashed to shorten the project by 3 weeks as cheaply as
possible. Draw the precedence diagram first.
B
2
4
C
A E
7
D
3
1
H
6
F
G
5
17-33
Education.
Step 1:

A-B-C 14
D-E-C 13
F-G-H 15
Critical path is F-G-H.
Cost per Week

Activity to Crash
F $10
G $11
H $12
Activity F should be shortened 1 week because it has the lowest crashing cost ($10). Path
F-G-H now will be 14 weeks as shown below.
Activities crashed to this point: Step 1: F (first crash).
Step 2:

A-B-C 14
D-E-C 13
F-G-H 14
Critical paths are A-B-C and F-G-H.
Cost per Week

A-B-C B $7
A $8
C $14
F-G-H G $11
H $12
F $15
17-34
Education.

Activity B should be shortened 1 week because it has the lowest crashing cost ($7) on
Path A-B-C.
Activity G should be shortened 1 week because it has the lowest crashing cost ($11) on
Path F-G-H.
Path A-B-C now will be 13 weeks as shown below.
Path D-F-G now will be 13 weeks as shown below.
Activities crashed to this point: Step 1: F (first crash). Step 2: B (first crash) & G (first
crash).
Step 3:

A-B-C 13
D-E-C 13
F-G-H 13
Critical paths are A-B-C, D-E-C, and F-G-H.
Cost per Week

A-B-C A $8
B $9
C $14
D-E-C E $8
D $9
C $14
F-G-H H $12
G $13
F $15

At first glance, it appears that we should crash Activity A on Path A-B-C and Activity E
on Path D-E-C. The combined crashing cost would be $8 + $8 = $16. However, Activity
C is on both paths and could be crashed for $14.
Activity C should be shortened 1 week at a crashing cost of $14.
Activity H should be shortened 1 week because it has the lowest crashing cost ($12) on
Path F-G-H.
Paths A-B-C, D-E-C, and F-G-H will decrease to 12 weeks.
Activities crashed to this point: Step 1: F (first crash). Step 2: B (first crash) & G (first
crash). Step 3: C (first crash) & H (first crash).
17-35
Education.
A summary of the crashing steps is shown below:
Length after Length after Length after

Path Initial time crashing 1 week crashing 2 weeks crashing 3 weeks
A-B-C 14 wk. 14 wk. 13 wk. 12 wk.
D-E-C 13 wk. 13 wk. 13 wk. 12 wk.
F-G-H 15 wk. 14 wk. 13 wk. 12 wk.
Step 1 Crashing Step 2 Crashing Step 3 Crashing

Activity Cost Activity Cost Activity Cost
F $10 B $7 C $14
G 11 H 12
$18 $26
Conclusion: Expected project duration = 12 weeks. Total crashing cost = $10 + $18 + $26 = $54.
17-36
Education.
14. Given:
We have the activities and crashing costs shown below:
Immediate Normal Time Crashing Cost ($000) Crashing Cost ($000)

Activity Predecessor (weeks) First Week Second Week
A --- 12 $15 $20
B A 14 $10 $10
C --- 10 $5 $5
D C 17 $20 $21
E C 18 $16 $18
F C 12 $12 $15
G D 15 $24 $24
H E 8 --- ---
I F 7 $30 ---
J I 12 $25 $25
K B 9 $10 $10
M G 3 --- ---
N H 11 $40 ---
P H, J 8 $20 $20
End K, M, N, P
Construct a network diagram:

B
A K
Start
End
C M
G
D N
P
E
H
F
J
I
17-37
Education.
Determine a minimum-cost crashing schedule that will shave five weeks off the project length:
Step 1:
A-B-K 35
C-D-G-M 45
C-E-H-N 47
C-E-H-P 44
C-F-I-J-P 49
Critical path is C-F-I-J-P.
Cost per Week
Activity to Crash
C $5
F $12
P $20
J $25
I $30
Activity C should be shortened 1 week because it has the lowest crashing cost ($5).
Paths C-D-G-M, C-E-H-N, C-E-H-P, and C-F-I-J-P all will decrease 1 week as shown below.
Activities crashed to this point: Step 1: C (first week).
Step 2:
A-B-K 35
C-D-G-M 44
C-E-H-N 46
C-E-H-P 43
C-F-I-J-P 48
Cost per Week
Activity to Crash
C $5
F $12
P $20
J $25
I $30
Activity C should be shortened 1 week because it has the lowest crashing cost ($5).
Paths C-D-G-M, C-E-H-N, C-E-H-P, and C-F-I-J-P all will decrease 1 week.
Activities crashed to this point: Step 1: C (first week). Step 2: C (second week).
17-38
Education.
Step 3:
A-B-K 35
C-D-G-M 43
C-E-H-N 45
C-E-H-P 42
C-F-I-J-P 47

Cost per Week
Activity to Crash
F $12
P $20
J $25
I $30
Activity F should be shortened 1 week because it has the lowest crashing cost ($12).
Path C-F-I-J-P will decrease 1 week as shown below.
Activities crashed to this point: Step 1: C (first week). Step 2: C (second week). Step 3: F (first
week).
Step 4:
A-B-K 35
C-D-G-M 43
C-E-H-N 45
C-E-H-P 42
C-F-I-J-P 46

Cost per Week
Activity to Crash
F $15
P $20
J $25
I $30
Activity F should be shortened 1 week because it has the lowest crashing cost ($15).
Path C-F-I-J-P will decrease 1 week as shown below.
week). Step 4: F (second week).
17-39
Education.
Step 5:
A-B-K 35
C-D-G-M 43
C-E-H-N 45
C-E-H-P 42
C-F-I-J-P 45
Critical paths are C-E-H-N and C-F-I-J-P.

Cost per Week
C-E-H-N E $16
N $40
C-F-I-J-P P $20
J $25
I $30
Activity E should be shortened 1 week because it has the lowest crashing cost ($16) on Path C-E-
H-N. Paths C-E-H-N and C-E-H-P each will decrease 1 week.
Activity P should be shortened 1 week because it has the lowest crashing cost ($20) on Path C-F-
I-J-P. Paths C-E-H-P and C-F-I-J-P each will decrease 1 week as shown below.
week). Step 4: F (second week). Step 5: E (first week) & P (first week).
The final duration for each path is shown below:

A-B-K 35
C-D-G-M 43
C-E-H-N 44
C-E-H-P 40
C-F-I-J-P 44
17-40
Education.
Length after Length after Length after Length after Length after
Path Initial crashing 1 crashing 2 crashing 3 crashing 4 crashing 5
time week weeks weeks weeks weeks
A-B-K 35 wk. 35 wk. 35 wk. 35 wk. 35 wk. 35 wk.
C-D-G-M 45 wk. 44 wk. 43 wk. 43 wk. 43 wk. 43 wk.
C-E-H-N 47 wk. 46 wk. 45 wk. 45 wk. 45 wk. 44 wk.
C-E-H-P 44 wk. 43 wk. 42 wk. 42 wk. 42 wk. 40 wk.
C-F-I-J-P 49 wk. 48 wk. 47 wk. 46 wk. 45 wk. 44 wk.
Step 1 Crashing Step 2 Crashing Step 3 Crashing Step 4 Crashing Step 5 Crashing
Activity Cost Activity Cost Activity Cost Activity Cost Activity Cost
C $5 C $5 F $12 F $15 E $16
P 20
$36
Conclusion: Expected project duration = 44 weeks. Total crashing cost = $5 + $5 + $12 + $15 + $36 =
$73(000) = $73,000.
17-41
Education.
15. Given:
We have the following activities and crashing costs ($000):
Crashing Costs ($000)
First Second Third
Activity Week Week Week
1-2 $18 $22 ---

2-5 $24 $25 $25
5-7 $30 $30 $35
7-11 $15 $20 ---
11-13 $30 $33 $36
1-3 $12 $24 $26
3-8 --- --- ---
8-11 $40 $40 $40
3-9 $3 $10 $12
9-12 $2 $7 $10
12-13 $26 --- ---
1-4 $10 $15 $25
4-6 $8 $13 ---
6-10 $5 $12 ---
10-12 $14 $15 ---
Indirect costs total $40(000) per week.
17-42
Education.
a. Determine the optimum time-cost crashing plan.

We will continue crashing as long as the crashing cost at a given step $40.
Step 1:
1-2-5-7-11-13 35
1-3-8-11-13 32
1-3-9-12-13 20
1-4-6-10-12-13 33
Critical path is 1-2-5-7-11-13.
Cost per Week
Activity to Crash
7-11 $15
1-2 $18
2-5 $24
5-7 $30
11-13 $30
Activity 7-11 should be shortened 1 week because it has the lowest crashing cost ($15) and
this cost is $40.
Path 1-2-5-7-11-13 will decrease 1 week as shown below.
Activities crashed to this point: Step 1: 7-11 (first week).
Step 2:
1-2-5-7-11-13 34
1-3-8-11-13 32
1-3-9-12-13 20
1-4-6-10-12-13 33
Critical path is 1-2-5-7-11-13.
Cost per Week
Activity to Crash
1-2 $18
7-11 $20
2-5 $24
5-7 $30
11-13 $30
Activity 1-2 should be shortened 1 week because it has the lowest crashing cost ($18) and
this cost is $40. Path 1-2-5-7-11-13 will decrease 1 week as shown below.
Activities crashed to this point: Step 1: 7-11 (first week). Step 2: 1-2 (first week).
17-43
Education.
Step 3:
1-2-5-7-11-13 33
1-3-8-11-13 32
1-3-9-12-13 20
1-4-6-10-12-13 33
Critical paths are 1-2-5-7-11-13 & 1-4-6-10-12-13.
Cost per Week
1-2-5-7-11-13 7-11 $20
1-2 $22
2-5 $24
5-7 $30
11-13 $30
1-4-6-10-12-13 6-10 $5
4-6 $8
1-4 $10
10-12 $14
12-13 $26
Activity 7-11 should be shortened 1 week because it has the lowest crashing cost ($20) on
Path 1-2-5-7-11-13, which will decrease 1 week as shown below.
The combined crashing cost = $25 and is $40.
Activities crashed to this point: Step 1: 7-11 (first week). Step 2: 1-2 (first week). Step 3: 7-
11 (second week) & 6-10 (first week).
17-44
Education.
Step 4:
1-2-5-7-11-13 32
1-3-8-11-13 32
1-3-9-12-13 20
1-4-6-10-12-13 32
Critical paths are 1-2-5-7-11-13, 1-3-8-11-13, & 1-4-6-10-12-13.
Cost per Week
1-2-5-7-11-13 1-2 $22
2-5 $24
5-7 $30
11-13 $30
1-3-8-11-13 1-3 $12
11-13 $30
8-11 $40
1-4-6-10-12-13 4-6 $8
1-4 $10
6-10 $12
10-12 $14
12-13 $26
Activity 11-13 should be shortened 1 week on Paths 1-2-5-7-11-13 & 1-3-8-11-13 because it
has the lowest crashing cost ($30) to shorten both paths. Both paths will decrease 1 week as
shown below.
Activity 4-6 should be shortened 1 week because it has the lowest crashing cost ($8) on Path
1-4-6-10-12-13, which will decrease 1 week as shown below.
The combined crashing cost = $38 and is $40.
11 (second week) & 6-10 (first week). Step 4: Activity 11-13 (first week) & Activity 4-6
(first week).
17-45
Education.
Step 5:
1-2-5-7-11-13 31
1-3-8-11-13 31
1-3-9-12-13 20
1-4-6-10-12-13 31
Cost per Week
1-2-5-7-11-13 1-2 $22
2-5 $24
5-7 $30
11-13 $33
1-3-8-11-13 1-3 $12
11-13 $33
8-11 $40
1-4-6-10-12-13 1-4 $10
6-10 $12
4-6 $13
10-12 $14
12-13 $26
Activity 11-13 could be shortened 1 week on Paths 1-2-5-7-11-13 & 1-3-8-11-13 because it
has the lowest crashing cost ($33) to shorten both paths. Both paths would decrease 1 week.
Activity 1-4 could be shortened 1 week because it has the lowest crashing cost ($10) on Path
1-4-6-10-12-13, which would decrease 1 week.
The combined crashing cost = $43 and is > $40. Stop.
The marginal cost of crashing > marginal benefit of crashing. We stop crashing after Step 4.
17-46
Education.
Length after Length after Length after Length after

Path Initial crashing 1 crashing 2 crashing 3 crashing 4
time week weeks weeks weeks
1-2-5-7-11-13 35 34 33 32 31
1-3-8-11-13 32 32 32 32 31
1-3-9-12-13 20 20 20 20 20
1-4-6-10-12-13 33 33 33 32 31
Step 1 Crashing Step 2 Crashing Step 3 Crashing Step 4 Crashing

Activity Cost Activity Cost Activity Cost Activity Cost
7-11 $15 1-2 $18 7-11 $20 11-13 $30
6-10 $ 5 4-6 $ 8
$25 $38
Conclusion: Expected project duration = 31 weeks (shortened by 4 weeks).

Total crashing cost = $15 + $18 + $25 + $38 = $96.
Total indirect costs = 31 x $40 = $1,240.
Total cost over 31 weeks = $96 + $1,240 = $1,336(000) = $1,336,000
b. Plot the total-cost curve that describes the least expensive crashing schedule that will reduce
the project length by 6 weeks:
In Part a of this problem, we reduced the project length by 4 weeks. We must decrease the
project length by 2 more weeks. We will start with Step 5 from Part a above.
17-47
Education.
Step 5:
1-2-5-7-11-13 31
1-3-8-11-13 31
1-3-9-12-13 20
1-4-6-10-12-13 31

Cost per Week
1-2-5-7-11-13 1-2 $22
2-5 $24
5-7 $30
11-13 $33
1-3-8-11-13 1-3 $12
11-13 $33
8-11 $40
1-4-6-10-12-13 1-4 $10
6-10 $12
4-6 $13
10-12 $14
12-13 $26
Activity 11-13 should be shortened 1 week on Paths 1-2-5-7-11-13 & 1-3-8-11-13 because it
has the lowest crashing cost ($33) to shorten both paths. Both paths will decrease 1 week as
shown below.
The combined crashing cost = $43.
(first week). Step 5: Activity 11-13 (second week) & Activity 1-4 (first week).
17-48
Education.
Step 6:
1-2-5-7-11-13 30
1-3-8-11-13 30
1-3-9-12-13 20
1-4-6-10-12-13 30

Cost per Week
1-2-5-7-11-13 1-2 $22
2-5 $24
5-7 $30
11-13 $36
1-3-8-11-13 1-3 $12
11-13 $36
8-11 $40
1-4-6-10-12-13 6-10 $12
4-6 $13
10-12 $14
1-4 $15
12-13 $26
Path 1-3-8-11-13, which will decrease 1 week as shown below.
The combined crashing cost = $46.
(first week). Step 5: Activity 11-13 (second week) & Activity 1-4 (first week). Step 6:
Activity 1-2 (second week), Activity 1-3 (first week), & Activity 6-10 (second week).

1-2-5-7-11-13 29
1-3-8-11-13 29
1-3-9-12-13 20
1-4-6-10-12-13 29
17-49
Education.
Length Length Length Length Length Length

Path Initial after after after after after after
time crashing 1 crashing 2 crashing 3 crashing 4 crashing 5 crashing 6
week weeks weeks weeks weeks weeks
1-2-5-7-11-13 35 34 33 32 31 30 29
1-3-8-11-13 32 32 32 32 31 30 29
1-3-9-12-13 20 20 20 20 20 20 20
1-4-6-10-12-13 33 33 33 32 31 30 30
Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Crashing Crashing Crashing Crashing Crashing Crashing
Activity Cost Activity Cost Activity Cost Activity Cost Activity Cost Activity Cost
7-11 $15 1-2 $18 7-11 $20 11-13 $30 11-13 $33 1-2 $22
6-10 $ 5 4-6 $ 8 1-4 $10 1-3 $12
$25 $38 $43 6-10 $12
$46

Total crashing cost = $15 + $18 + $25 + $38 + $43 + $46 = $185.
Total indirect costs = 29 x $40 = $1,160.
Total cost over 29 weeks = $185 + $1,160 = $1,345(000) = $1,345,000
The table below summarizes the cumulative crashing cost, indirect cost, and total cost for
project lengths of 35, 34, 33, 32, 31, 30, and 29 weeks:
Cumulative Cumulative
Project Weeks Crash Cost Indirect Cost Total Cost
Length Shortened ($000) ($000) ($000)
35 0 0 35(40) = 1,400 1,400
34 1 15 34(40) = 1,360 1,375
33 2 15 + 18 = 33 33(40) = 1,320 1,353
32 3 33 + 25 = 58 32(40) = 1,280 1,338
31 4 58 + 38 = 96 31(40) = 1,240 1,336
30 5 96 + 43 = 139 30(40) = 1,200 1,339
29 6 139 + 46 = 185 29(40) = 1,160 1,345
17-50
Education.
The total cost-curve is plotted below:
1,400
Total
Cost
($000)
1,300
0 29 30 31 32 33 34 35
Project Length
(weeks)
17-51
Education.
16. Given:
We have the following crashing costs for activities:
Crash Cost Crash Cost

Activity 1st Week 2nd Week
K $410 $415
L $125 ---
N $45 $45
M $300 $350
J $50 ---
Q $200 $225
P --- ---
Y $85 $90
Z $90 ---
The network diagram is shown below:
M
L P Z
Start K Q Y End
N J
Develop a crashing schedule given that Mr. T wants delivery in 32 weeks or he will impose a
penalty of $375 for each week his yacht is late:
We will crash as long as the crash cost at a step $375.
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Step 1:

K-L-M-Q-P-Z 39
K-L-M-Q-Y 32
K-N-J-Q-P-Z 39
K-N-J-Q-Y 32
Critical paths are K-L-M-Q-P-Z & K-N-J-Q-P-Z.
Cost per Week

K-L-M-Q-P-Z Z $90
L $125
Q $200
M $300
K $410
K-N-J-Q-P-Z N $45
J $50
Z $90
Q $200
K $410
Activity Z should be shortened 1 week because it has the lowest crashing cost ($90) to crash
both critical paths, which both will decrease by 1 week as shown below. This cost is $375.
Activities crashed to this point: Step 1: Activity Z (1st week).
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Step 2:

K-L-M-Q-P-Z 38
K-L-M-Q-Y 32
K-N-J-Q-P-Z 38
K-N-J-Q-Y 32
Cost per Week

K-L-M-Q-P-Z L $125
Q $200
M $300
K $410
K-N-J-Q-P-Z N $45
J $50
Q $200
K $410
Activity L should be shortened 1 week because it has the lowest crashing cost ($125) on Path
K-L-M-Q-P-Z, which will decrease Paths K-L-M-Q-P-Z & K-L-M-Q-Y 1 week as shown
below.
Activity N should be shortened 1 week because it has the lowest crashing cost ($45) on Path
K-N-J-Q-P-Z, which will decrease Paths K-N-J-Q-P-Z & K-N-J-Q-Y 1 week as shown
below.
Combined crashing cost = $170. This cost is $375.
Activities crashed to this point: Step 1: Activity Z (1st week). Step 2: Activity L (1st week) &
Activity N (1st week).
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Education.
Step 3:

K-L-M-Q-P-Z 37
K-L-M-Q-Y 31
K-N-J-Q-P-Z 37
K-N-J-Q-Y 31
Cost per Week

K-L-M-Q-P-Z Q $200
M $300
K $410
K-N-J-Q-P-Z N $45
J $50
Q $200
K $410
Activity Q should be shortened 1 week because it has the lowest crashing cost ($200) to
crash both critical paths. This cost is $375. All four paths will decrease by 1 week as shown
below.
Activity N (1st week). Step 3: Activity Q (1st week).
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Education.
Step 4:

K-L-M-Q-P-Z 36
K-L-M-Q-Y 30
K-N-J-Q-P-Z 36
K-N-J-Q-Y 30
Cost per Week

K-L-M-Q-P-Z Q $225
M $300
K $410
K-N-J-Q-P-Z N $45
J $50
Q $225
K $410
Activity Q should be shortened 1 week because it has the lowest crashing cost ($225) to
crash both critical paths. This cost is $375. All four paths will decrease by 1 week as shown
below.
Activity N (1st week). Step 3: Activity Q (1st week). Step 4: Activity Q (2nd week).
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Step 5:

K-L-M-Q-P-Z 35
K-L-M-Q-Y 29
K-N-J-Q-P-Z 35
K-N-J-Q-Y 29
Cost per Week

K-L-M-Q-P-Z M $300
K $410
K-N-J-Q-P-Z N $45
J $50
K $410
Activity M should be shortened 1 week because it has the lowest crashing cost ($300) on
Path K-L-M-Q-P-Z, which will decrease Paths K-L-M-Q-P-Z & K-L-M-Q-Y 1 week as
shown below.
Activity N should be shortened 1 week because it has the lowest crashing cost ($45) on Path
K-N-J-Q-P-Z, which will decrease Paths K-N-J-Q-P-Z & K-N-J-Q-Y 1 week as shown
below.
Combined crashing cost = $345. This cost is $375.
Activity N (1st week). Step 3: Activity Q (1st week). Step 4: Activity Q (2nd week). Step 5:
Activity M (1st week) & Activity N (2nd week).
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Step 6:

K-L-M-Q-P-Z 34
K-L-M-Q-Y 28
K-N-J-Q-P-Z 34
K-N-J-Q-Y 28
Cost per Week

K-L-M-Q-P-Z M $350
K $410
K-N-J-Q-P-Z J $50
K $410
Activity M could be shortened 1 week because it has the lowest crashing cost ($350) on Path
K-L-M-Q-P-Z, which would decrease Paths K-L-M-Q-P-Z & K-L-M-Q-Y 1 week.
Activity J could be shortened 1 week because it has the lowest crashing cost ($50) on Path
K-N-J-Q-P-Z, which would decrease Paths K-N-J-Q-P-Z & K-N-J-Q-Y 1 week.
However, combined crashing cost = $400. This cost is > $375. Stop.
Do not perform this crashing. We are finished crashing after Step 5.
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Length Length Length Length Length

Path Initial after after after after after
time crashing 1 crashing 2 crashing 3 crashing 4 crashing 5
week weeks weeks weeks weeks
K-L-M-Q-P-Z 39 38 37 36 35 34
K-L-M-Q-Y 32 32 31 30 29 28
K-N-J-Q-P-Z 39 38 37 36 35 34
K-N-J-Q-Y 32 32 31 30 29 28
Step 1 Step 2 Step 3 Step 4 Step 5

Crashing Crashing Crashing Crashing Crashing
Activity Cost Activity Cost Activity Cost Activity Cost Activity Cost
z $90 L $125 Q $200 Q $225 M $300
N $ 45 N $ 45
$170 $345

Total crashing cost = $90 + $170 + $200 + $225 + $345 = $1,030.
Mr. Ts yacht will be 2 weeks late.
Total penalty cost = 2 x $375 = $750.
Total Cost = Crashing Cost + Penalty Cost = $1,030 + $750 = $1,780.
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Education.
17. Given:
We have the following activities and time estimates:
Path Activity Optimistic Most Likely Pessimistic

Top A 4 5 6
B 7 8 10
C 3 5 9
Bottom D 7 8 11
E 2 3 4
F 1 4 6
Draw the network:
B 4
2
A C
Start 6 End
1
F
D
3 E 5
Standard
Path Activity Optimistic Most Likely Pessimistic Mean Deviation
Top A 4 5 6 5.00 4/36
B 7 8 10 8.17 9/36
C 3 5 9 5.33 36/36
Bottom D 7 8 11 8.33 16/36

E 2 3 4 3.00 4/36
F 1 4 6 3.83 25/36
a. Determine the expected duration of the project.
Path A-B-C:
Variance = 4/36 + 9/36 + 36/36 = 49/36
Path D-E-F:
Variance = 16/36 + 4/36 + 25/36 = 45/36
Conclusion: Expected project completion = 18.50 days.
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b. Determine the probability that the project will take at least 18 days.
Probability (T 18):
Path A-B-C:
49
18 18.50
= = 0.43
1.167
Using Appendix B Table B: Probability of completion < 18 days = 0.3336
Path D-E-F:
45
36
18 15.16
= = 2.54
1.118
Using Appendix B Table B: Probability of completion < 18 days = 0.9945
Conclusion: Probability (T < 18) = 0.3336 x 0.9945 = 0.3318

Probability (T 18) = 1.0000 0.3318 = 0.6682.
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18. Given:
We are given the events, probabilities, and costs in the table below:
Event Probability Cost ($000)

1 .25 15
2 .35 25
3 .20 55
4 .80 10
5 .10 77
6 .40 55
7 .60 50
Create a risk matrix for this project. Use a vertical scale of $0 to $80.
$80 5
$60
3 6
Cost 7
$40
$20 2
1
4
0 .25 .50 .75 1.00

Probability of Occurring
Conclusion: The manager should be most concerned about Event #7, which has a greater than
50% probability of occurring and a relatively high cost.
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19. Given:
We are given the events, probabilities, and costs in the table below:
Event Probability Cost ($000)

1. Equipment breakdown .20 40
2. Vendor is late with key segment. .60 200
3. Subcontractor has labor issues. .30 140
4. Weather problems. Unknown 15
5. Funding delays. .40 to .60 50
6. Testing delays. .40 20
Create a matrix for this project:
$200 2
$150
3
Cost $100
$50 5
1
6
4
0 .25 .50 .75 1.00
Probability of Occurring
The weather problems (4) and funding delays (5) are placed using the highest probabilities
because we are conservative (i.e., we will assume the worst case).
Conclusion: The manager should be most concerned about Event 2 (vendor is late with key
segment) due to its greater than 50% probability and its high cost.
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Education.
Case: The Mexican Crazy Quilt

The case combines behavioral considerations in project management with development of a foreign
subsidiary. Although some students will have minor problems getting all the names straight, I think you
will find that the case produces good discussion as well as a realistic view of the sorts of difficulties often
encountered on projects.
1. Linderman Industries was correct to adopt a project organization for getting the Mexican
subsidiary started because this was a one-time, unique effort requiring the planning and
coordination of diverse activities. In addition, much of the work cut across functional boundaries.
2. Naturally, the division managers would be opposed to releasing their best people to work on the
project. In fact, while the project might be important to top management, the division managers
undoubtedly had different priorities based on how they were evaluated, not on the success or
failure of this particular project. Rather, their evaluations would concern ongoing activities
directly related to their divisions.
3. Many people are quite content to work in a stable environment, where there is little chance of
unexpected events that might upset the established routine. These people are risk-adverse; they
are fully content to operate in a static environment. Moreover, experienced workers might have
witnessed similar projects that involved project personnel leaving the organization or moving into
less desirable jobs once the project had been completed. Thus, Bert Mill might have wanted to
avoid that possibility.
4. Conway realized that he might go to the well once too often: not every argument would be
decided in his favor. Moreover, he undoubtedly recognized that these arguments stirred up a
certain amount of resentment, which would bode ill for any future dealings he might have with
these people. In fact, that is just what happened when he took the disagreement that engineer Bob
Cates was having with the Mexican engineer on layout to Bobs former boss, Sam Sargis.
5. To begin with, firms must recognize the potential problems, and then set up a mechanism to deal
with them before they occur. One possible approach to the problem might be to rotate people in
and out of the project. This would involve shorter worker absences from their regular jobs, which
would translate into these workers keeping their full-time positions. On that basis, more people
like Bert Mill might be willing to work on the project. In addition, more people would have an
opportunity to expand their job horizons.
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Case: Time, Please

Given:
Expected Standard
Path Duration (weeks) Deviation
A 10 4
B 14 2
C 13 2
Project duration for Smitty to include in the proposal for a 5% risk of not delivering the project on
time:
This means we would like a 0.9500 probability of completion within the specified time. When we take the
probability of completion within the specified time for each path and multiply these probabilities, we need
to obtain a joint probability of at least 0.9500.
We start by looking for a Z value in Appendix B Table B corresponding to 0.9500:

z = 1.645.
Next, we can analyze the length of each path if we use this corresponding z value (1.645):
Path A: 10 + (1.645)(4) = 16.58

Path B: 14 + (1.645)(2) = 17.29
Path C: 13 + (1.645)(2) = 16.29
We know that we need all three probabilities to be > 0.9500; therefore we can start by focusing on the
longest path (Path B) and specify the project completion time as 17.29 days as a starting point.
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We can set up a spreadsheet in Excel to automate our calculations. To find a probability for a z value
using Excel, we enter the following formula: =NORMSDIST(z), where z = the cell where we have
calculated z.
Column
Row A B C D E
1 Path Mean Sigma z value Prob.
2 A 10 4 1.8225 0.9658
3 B 14 2 1.645 0.9500
4 C 13 2 2.145 0.9840
5 Completion = 17.29
6 Prob. of Completion = 0.9028
We enter the following formulas in the spreadsheet above:

Cell D2: =($E$5-B2)/C2
Cell D3: =($E$5-B3)/C3
Cell D4: =($E$5-B4)/C4
Cell E2: =ROUND(NORMSDIST(D2),4)
Cell E6: =ROUND(E2*E3*E4,4)
Note: We will use Cell E5 to enter the desired completion time.
As shown above, the probability of completing the project within 17.29 days is 0.9028, which is less than
0.9500.
From here, we can experiment by entering project completion times greater than 17.29 days until the
value in Cell E6 is close to 0.9500. An alternate approach would be to create a simple Excel Solver model
to solve this. Note: We will carry the project completion time to two decimals.
After experimentation, a project completion time of 18.02 days gives us a probability of project
completion of 0.9501 as shown in the table below.
Column
Row A B C D E
2 A 10 4 2.005 0.9775
3 B 14 2 2.01 0.9778
4 C 13 2 2.51 0.9940
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Project duration for Smitty to include in the proposal for a 10% risk of not delivering the project
on time:
This means we would like a 0.9000 probability of completion within the specified time.
We know that when we started with a project completion of 17.29 days above, the probability of
completion was 0.9028 (just above 0.9000).
We can lower the project completion time from 17.29 until the value in Cell E6 is close to 0.9000. As
shown in the table below, a project completion time of 17.26 days provides a probability of completion of
0.9002.
Column
Row A B C D E
2 A 10 4 1.815 0.9652
3 B 14 2 1.63 0.9484
4 C 13 2 2.13 0.9834
Project duration for Smitty to include in the proposal for a 15% risk of not delivering the project
on time:
This means we would like a 0.8500 probability of completion within the specified time.
We know that when we used a project completion of 17.26 days above, the probability of completion was
0.9002.
We can lower the project completion time from 17.26 until the value in Cell E6 is close to 0.8500. As
shown in the table below, a project completion time of 16.78 days provides a probability of completion of
0.8506.
Column
Row A B C D E
2 A 10 4 1.695 0.9550
3 B 14 2 1.39 0.9177
4 C 13 2 1.89 0.9706
The pros of quoting project times aggressively are the ability to secure new business or to win project
approval.
The cons of quoting project times aggressively are the increased probability of missing the deadline,
which could lead to severe consequences for the project manager.
The pros of quoting project times conservatively are the increased probability of meeting the deadline.
The cons of quoting project times conservatively are the reduced likelihood of being able to secure new
business or to gain project approval.
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Chapter 17 - Project Management

Answers to Discussion and Review Questions

3. The steps in risk management are:

Critical Thinking Exercises

b. Path Expected Duration

c. Path Expected Duration

Path Expected Duration

b. 1. AOA diagram (All times are in hours)

2. AON diagram (All times are in hours)

Ch 0.6 Lib 2.0 Out 0.4

Start Write 3.0 Ck 0.5 Sub 0.2 End

Sh 2.0 Sel 1.0 Inst 0.8

Blank forms to distribute to students if desired:

3a. Bank location.

b. Solved Problem #2.

b. Solved Problem #2.

4. b. Case 1: Activity on-Arrow Diagram

Case 2: Activity-on-Arrow Diagram

4. c. Case 1: Activity-on-Node Diagram

Case 2: Activity-on-Node Diagram

Conclusion: Critical path is 1-3-6-9-11-12. Expected project duration is 31.

Conclusion: Critical path is 1-2-5-7-8-9. Expected project duration is 55.

Path Expected Duration

Specified time = 24 days or less:

Probability of completion 24 days = 1.00 (z value > +3.00treat probability of completion

Using Appendix B Table B: Probability of completion 24 days = 0.9686

Probability of completion 24 days = 1.00 (z value > +3.00treat probability of completion

Probability of completion 24 days = 1.00 x 0.9686 x 1.00 = 0.9686

Specified time = 21 days or less:

Probability of completion 21 days = 0.6736

Using Appendix B Table B: Probability of completion 21 days = 0.3557

Probability of completion 21 days = 0.9808

Probability of completion 21 days = 0.6736 x 0.3557 x 0.9808 = 0.2350

Revised D: te = [5 + (4*6) + 7]/6 = 36/6 = 6.00

In the modified network, the expected times and variances are:

The revised project diagram is:

End D (6.00) F (6.00) G (3.50)

Specified time = 24 days or less:

Using Appendix B Table B: Probability of completion 24 days = 0.9904

Using Appendix B Table B: Probability of completion 24 days = 0.9418

Probability of completion 24 days = 1.0000 (z value > +3.00treat probability of

Probability of completion 24 days = 0.9904 x 0.9418 x 1.0000 = 0.9328

Specified time = 21 days or less:

Using Appendix B Table B: Probability of completion 21 days = 0.3192

Using Appendix B Table B: Probability of completion 21 days = 0.0582

Probability of completion 21 days = 1.0000 (z value > +3.00treat probability of

Probability of completion 21 days = 0.3192 x 0.0582 x 1.0000 = 0.0186

Activity First Crash Second Crash

Path Expected Duration

Rank critical activities according to crash costs:

Cost per Day

Path Expected Duration

Rank critical activities according to crash costs:

Cost per Day

Choose one activity on each path to crash:

a. Probability (Time 16 weeks):

Conclusion: Probability (T 16) = 1.0000 x 1.0000 x 1.0000 x 0.7224 x 0.9525 = 0.6881

b. Probability (Time 15 weeks):

Conclusion: Probability (T 15) = 1.0000 x 1.0000 x 0.9987 x 0.5000 x 0.7967 = 0.3978

c. Probability (Time 13 weeks):

Conclusion: Probability (T 13) = 0.9968 x 1.0000 x 0.8413 x 0.1190 x 0.2033 = 0.0203

Probability (T > 10 weeks):

Using Appendix B Table B: Probability of completion 10 weeks = 0.7291