CH 18 Project Management

COLLIER/EVANS
OM
1
Project
8
Management
LEARNING OUTCOMES
1 Explain the key issues associated with
project management
2 Describe how to apply the Critical Path
Method (CPM)
3 Explain how to make time/cost
tradeoff decisions in projects
4 Describe how to calculate probabilities
for project completion time using PERT
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OM5 | CH18
Project
Temporary and customized
initiative that consists of many
smaller tasks and activities that
must be coordinated and completed
To finish the entire initiative on time
and within budget
Project management: Involves all

activities associated with planning,
scheduling, and controlling projects
OM5 | CH18
The Scope of Project Management

Define
Understand the goal of the project, responsibilities,
deliverables, and what must be accomplished
Plan
Determine the steps needed to execute the project,
delegate tasks, and identify start and completion
dates
Organize
Coordinate the resources to execute the plan costeffectively

Control
Collect and assess status reports and changes to
baselines
Close
Compile statistics, reassign people, and a lessons
learned list
OM5 | CH18
Principles for Project Managers

Manage people individually and as
a project team
Reinforce the commitment and
excitement of the project team
Keep everyone informed
Build agreements and consensus
among the team
Empower the project team
OM5 | CH18
Organizational Structure
Pure project structure with team
members assigned exclusively to
projects and report to a project
manager
Results in duplication of resources
Pure functional structure charters

projects exclusively within
functional departments
Ignores cross-functional issues
OM5 | CH18
Organizational Structure
Matrix structure lends resources to
projects while still maintaining
functional control
Minimizes duplication of resources and
facilitates communication
OM5 | CH18
Exhib
18.2
Contributors and
it
Impediments to Project
Success
OM5| CH18
Techniques for Planning,

Scheduling, and Controlling
Projects
Factors that affect all project
management decisions
Time
Resources
Cost
OM5 | CH18
Techniques for Planning,

Scheduling, and Controlling
Projects
Project definition
Identifying the activities that must be completed and
the sequence to perform them
Resource planning
Determining resource needs for each activity
Project scheduling
Specifying a time schedule for the completion of
each activity
Project control
Establishing controls for determining progress and
responding to problems
OM5 | CH18
10
Project Definition
Activities: Discrete tasks that
consume resources and time
Immediate predecessors:
Activities that must be completed
immediately before an activity may
start
Precedence relationships ensure that
activities are performed in the proper
sequence when they are scheduled
OM5 | CH18
11
Exhib
18.3
Project Activities and
it
Precedence Relationships
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12
Project Definition
Work breakdown structure: Hierarchical
tree of end items that will be accomplished
by the project team during the project
Project network: Consists of nodes and
arcs, which define the precedence
relationships between activities
Nodes: Set of circles or boxes, which represent
activities
Arcs: Set of arrows
This is called an activity-on-node (AON) network
representation
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13
Exhib
18.4
Project Network for the
it
Software Integration Project
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Resource Planning
Developing time estimates for each
activity and allocating resources
that will be required
Cost control is a vital part of
project management, and resource
planning aids in good budgeting
OM5 | CH18
15
Project Scheduling With the

Critical Path Method
Critical path: Sequence of
activities that takes the longest
time and defines the total project
completion time
Assumptions
- Project network defines a correct
sequence of work in terms of
technology and workflow
- Activities are to be independent of
one another with clearly defined
start and finish dates
OM5 | CH18
16

Assumptions
- Activity time estimates are accurate
and stable
- Once an activity is started it
continues uninterrupted until it is
completed
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17

Earliest start (ES) and earliest
finish (EF) times are computed by
moving through the project
network in a forward fashion
Rules for calculating activity times
Rule 1 - EF = ES + T
Rule 2 - ES time for an activity equals
the largest EF time of all immediate
predecessors
Rule 3 - LS = LF - T
Rule 4 - LF time for an activity is the
OM5 | CH18
18
Exhib
18.6
Activity-on-Node Format and
it
Definitions
OM5| CH18
19
Project Control
Schedule: Specifies when
activities are to be performed
Due to uncertainty of task times,
unavoidable delays, or other problems,
projects rarely progress on schedule
Gantt charts graphically depict the

project schedule
Project management software can
assist in allocating limited
resources, that are shared among
all the activities
OM5 | CH18
20
Figur
18.1
e
Gantt Chart Symbols
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21
Gannt Chart
Time/Cost Trade-Offs
Crashing a project: Reducing the
total time to complete the project
to meet a revised due date
Crash time: Shortest possible time
the activity can realistically be
completed
Crash cost: Total additional cost
associated with completing an activity
in its crash time rather than in its
normal time
OM5 | CH18
23
Time/Cost Trade-Offs
Crash cost per unit of time
= Crash cost - normal cost/normal
time crash time
Crashing an activity: Reducing
its normal time, possibly up to its
limit, the crash time
OM5 | CH18
24
Exhib
18.12 Normal Versus Crash Activity
it
Analysis
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25
Uncertainty in Project
Management
Project evaluation and review
technique (PERT) is another
approach to project management
PERT was developed to handle
uncertainties in activity completion
times
In contrast, CPM assumes that
activity times are constant
OM5 | CH18
26
Management
PERT estimates are obtained for
each activity
Optimistic time - Activity time under
ideal conditions
Most probable time - Most likely
activity time under normal conditions
Pessimistic time - Activity time if
breakdowns or serious delays occur
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27
Management
Expected Time = (a + 4m + b)/6
Variance = (b a)2/36
Where,
- a is the optimistic time estimate
- m is most likely or probable
- b is the pessimistic time estimate
PERT assumes a beta probability

distribution
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28
Management
Critical path is found using the
expected times in the same fashion
as in the critical path method
PERT allows us to investigate the
effects of uncertainty of activity
times on the project completion
time
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29
SUMMARY
Project is temporary and
customized initiative that consists
of many smaller tasks and
activities that must be coordinated
and completed
To finish the entire initiative on time
and within budget
Project management which

involves all activities associated
with planning, scheduling, and
controlling projects
OM5 | CH18
30
KEY TERMS
Activities
Arcs
Crash cost
Crash time
Crashing a project
Crashing an activity
Critical path
Immediate predecessors
Nodes
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31
KEY TERMS
Project
Project management
Project network
Schedule
Work breakdown structure
OM5 | CH18
32

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COLLIER/EVANS

Project management: Involves all

The Scope of Project Management

Coordinate the resources to execute the plan costeffectively

Principles for Project Managers

Pure functional structure charters

Techniques for Planning,

Techniques for Planning,

Project Scheduling With the

Project Scheduling With the

Project Scheduling With the

Gantt charts graphically depict the

Gantt Chart Symbols

PERT assumes a beta probability

Project management which

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