3 Managing Projects

PowerPoint presentation to accompany

Heizer, Render, and Al-Zu’bi
Operations Management, Arab World Edition

Original PowerPoint slides by Jeff Heyl

Adapted by Zu’bi Al-Zu’bi

3-1
Project Characteristics

 Single unit
 Many related activities
 Difficult production planning and
inventory control
 General purpose equipment
 High labor skills

3-2
Examples of Projects

 Building Construction

 Research Project

3-3
Management of Projects

1. Planning - goal setting, defining

the project, team organization
2. Scheduling - relates people,
money, and supplies to specific
activities and activities to each
other
3. Controlling - monitors resources,
costs, quality, and budgets;
revises plans and shifts resources
to meet time and cost demands
3-4
Project Management Activities

 Planning
 Objectives
 Scheduling
 Resources  Project activities
 Work break-down  Start & end times
structure  Network
 Organization

 Controlling
 Monitor, compare, revise, action
3-5
 Time/cost estimates
Project Planning, Budgets
Scheduling, and Engineering diagrams
Controlling
Cash flow charts
Material availability details

Budgets
Delayed activities report
Slack activities report

Figure 3.1

CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules

Before Start of project During

project Timeline project
3-6
Project Planning

 Establishing objectives
 Defining project
 Creating work breakdown structure
 Determining
resources
 Forming organization

3-7
Project Organization

 Often temporary structure

 Uses specialists from entire company
 Headed by project manager
 Coordinates activities
 Monitors schedule and costs
 Permanent structure called ‘matrix
organization’
3-8
Project Organization
Works Best When

1. Work can be defined with a specific goal

and deadline
2. The job is unique or somewhat unfamiliar
to the existing organization
3. The work contains complex interrelated
tasks requiring specialized skills
4. The project is temporary but critical to the
organization
5. The project cuts across organizational
lines
3-9
 A Sample Project Organization

President

Human Quality
Resources Marketing Finance Design Production
Mgt

Project 1 Project
Manager
Mechanical Test
Technician
Engineer Engineer

Project 2 Project
Manager
Electrical Computer
Technician
Engineer Engineer
Figure 3.2

3 - 10
The Role of
the Project Manager

• Highly visible
• Responsible for making sure that:

1. All necessary activities are finished in order

and on time
2. The project comes in within budget
3. The project meets quality goals
4. The people assigned to the project receive
motivation, direction, and information

3 - 11
The Role of
the Project Manager

Project managers should be:

 Good coaches
 Good communicators
 Able to organize activities from a variety of
disciplines

3 - 12
Ethical Issues

 Project managers face many ethical

decisions on a daily basis
 The Project Management Institute has
established an ethical code to deal with
problems such as:
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. Pressure to compromise quality to meet
schedules

3 - 13
Work Breakdown Structure

Level
1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or work packages)
to be completed

3 - 14
 Work Breakdown Structure
Develop Windows 7
Level 1 1.0
Operating System

Software Project System

Level 2 1.1 1.2 1.3
Design Management Testing

Develop Module
Level 3 1.1.1 Planning 1.2.1 1.3.1
GUIs Testing

Ensure Compatibility Cost/Schedule Defect

with Earlier Versions 1.1.2 Management 1.2.2 Testing 1.3.2

Compatible with
Level 4 [Link]
Windows ME
(Work packages)
Compatible with
[Link]
Windows Vista

Compatible with Figure 3.3

Windows XP [Link]

3 - 15
Project Scheduling
 Identifying precedence relationships
 Sequencing activities
 Determining activity times & costs
 Estimating material & worker
requirements
 Determining
critical activities

3 - 16
Purposes of Project Scheduling

1. Shows the relationship of each activity

to others and to the whole project
2. Identifies the precedence relationships
among activities
3. Encourages the setting of realistic time
and cost estimates for each activity
4. Helps make better use of people,
money, and material resources by
identifying critical bottlenecks in the
project
3 - 17
Scheduling Techniques

1. All activities are planned for

2. Their order of performance is
accounted for
3. The activity time estimates are
recorded
4. The overall project time is
developed

3 - 18
Project Management Techniques

 Gantt chart
 Critical Path Method (CPM)
 Program Evaluation and Review
Technique (PERT)

3 - 19
A Simple Gantt Chart

Time
J F M A M J J A S

Design
Prototype
Test
Revise
Production

3 - 20
Service For an Aircraft at layover to reduce the turnaround time

Deplaning
Passengers
Baggage claim
Baggage Container offload
Pumping
Fueling
Engine injection water
Cargo and mail Container offload
Main cabin door
Galley servicing
Aft cabin door
Lavatory servicing Aft, center, forward
Drinking water Loading
First-class section
Cabin cleaning
Economy section
Cargo and mail Container/bulk loading
Galley/cabin check
Flight services
Receive passengers
Operating crew Aircraft check
Baggage Loading
Passengers Boarding

0 10 20 30 40
Time, Minutes
Figure 3.4
3 - 21
Project Control Reports

 Detailed cost breakdowns for each task

 Total program labor curves
 Cost distribution tables
 Functional cost and hour summaries
 Raw materials and expenditure forecasts
 Variance reports
 Time analysis reports
 Work status reports

3 - 22
PERT and CPM

 Network techniques
 Developed in 1950s
 Consider precedence
relationships and
interdependencies
 Each uses a different estimate of
activity times

3 - 23
Six Steps of PERT & CPM

1. Define the project and prepare the

work breakdown structure
2. Develop relationships among the
activities - decide which activities
must precede and which must
follow others
3. Draw the network connecting all of
the activities
3 - 24
Six Steps PERT & CPM

4. Assign time and/or cost estimates to

each activity
5. Compute the longest time path
through the network – this is called
the critical path
6. Use the network to help plan,
schedule, monitor, and control the
project

3 - 25
Questions PERT & CPM
Can Answer

1. When will the entire project be

completed?
2. What are the critical activities or tasks
in the project?
3. Which are the noncritical activities?
4. What is the probability the project will
be completed by a specific date?

3 - 26
Questions PERT & CPM
Can Answer

5. Is the project on schedule, behind schedule,

or ahead of schedule?
6. Is the money spent equal to, less than, or
greater than the budget?
7. Are there enough resources available to
finish the project on time?
8. If the project must be finished in a shorter
time, what is the way to accomplish this at
least cost?

3 - 27
 A Comparison of AON and AOA Network
Conventions

Activity on Activity Activity on

Node (AON) Meaning Arrow (AOA)
A comes before
(a) A B C B, which comes
before C. A B C
A A
A and B must both
(b) C be completed
before C can start. C
B B
B
B and C cannot
(c) A begin until A is B
completed. A
C C
Figure 3.5 3 - 28
 A Comparison of AON and AOA Network
Conventions
Figure 3.5

Activity on Activity Activity on

Node (AON) Meaning Arrow (AOA)

C and D cannot
A C begin until both A C
(d) A and B are
completed.
B D B D
C cannot begin
until both A and B
A C are completed; D A C
(e) cannot begin until Dummy activity
B is completed. A
B D dummy activity is
introduced in AOA. B D
3 - 29
 A Comparison of AON and AOA Network
Conventions

Activity on Activity Activity on

Node (AON) Meaning Arrow (AOA)

B and C cannot
begin until A is
completed. D
A B D cannot begin A B D
until both B and
(f) C are completed. Dummy
A dummy C
C activity
activity is again
introduced in
AOA.

Figure 3.5 3 - 30
 AON Example

Cairo Finest Paper Mills'

Table 3.1
Activities and Predecessors
Immediate
Activity Description Predecessors
A Build internal components —
B Modify roof and floor —
C Construct collection stack A
D Pour concrete and install frame A, B
E Build high-temperature burner C
F Install pollution control system C
G Install air pollution device D, E
H Inspect and test F, G

3 - 31
 AON Network for
Cairo Finest

Activity A
A (Build Internal Components)

Start

Activity B
Start B (Modify Roof and Floor)
Activity

Figure 3.6
3 - 32
 AON Network for
Cairo Finest

Activity A Precedes Activity C

A C

Start

B D

Activities A and B
Precede Activity D Figure 3.7
3 - 33
 AON Network for
Cairo Finest

F
A C

E
Start H

B D G

Arrows Show Precedence

Relationships Figure 3.8
3 - 34
AOA Network for
Cairo Finest

C
2 4
(Construct
Stack)
F
Co (In
nt al

nt sta
ne ern
s)
A

(Build Burner)
ro ll
po nt

ls
m ld I

)
Co ui

H
Dummy
(B

1 6 7
E
Activity (Inspect/
Test)
Ro (M B G
of od l
/ F i fy t al n
s o
lo
or I( n luti e)
D o l ic
) 3 5 P ev
D
(Pour
Concrete/
Install Frame) Figure 3.9
3 - 35
Determining the Project Schedule

Perform a Critical Path Analysis

 The critical path is the longest path
through the network
 The critical path is the shortest time in
which the project can be completed
 Any delay in critical path activities
delays the project
 Critical path activities have no slack
time
3 - 36
Determining the Project Schedule

Perform a Critical Path Analysis

Activity Description Time (weeks)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total Time (weeks) 25
Table 3.2
3 - 37
Determining the Project Schedule

Perform a Critical Path Analysis

Earliest start (ES) =earliest time at
Activity Description
which an activity can start, Time (weeks)
assuming
A Build internal components
all predecessors 2
have been completed
B ModifyEarliest
roof and floor(EF) =earliest time at
finish 3
C which
Construct an activity
collection can be finished 2
stack
D Pour concrete and(LS)
Latest start install frame
=latest 4
time at which
E an activity can start
Build high-temperature so as to not delay
burner 4
F Install the completion
pollution control time of the entire 3
system
project
G Install air pollution device 5
Latest finish (LF) =latest time by which
H Inspect anand test has to be finished so as
activity 2 to
Total Time (weeks)
not delay the completion time of 25 the
entire project Table 3.2
3 - 38
Determining the Project Schedule

Perform a Critical Path Analysis

Activity Name
or Symbol
A Earliest
Earliest ES EF
Start Finish

Latest LS LF Latest
2 Finish
Start

Activity Duration
Figure 3.10
3 - 39
Forward Pass

Begin at starting event and work forward

Earliest Start Time Rule:

 If an activity has only a single immediate

predecessor, its ES equals the EF of the
predecessor
 If an activity has multiple immediate
predecessors, its ES is the maximum of
all the EF values of its predecessors

ES = Max {EF of all immediate predecessors}

3 - 40
Forward Pass

Begin at starting event and work forward

Earliest Finish Time Rule:

 The earliest finish time (EF) of an activity

is the sum of its earliest start time (ES)
and its activity time

EF = ES + Activity time

3 - 41
ES/EF Network for Cairo Finest Paper Mills

ES EF = ES + Activity time
Start
0 0

3 - 42
 ES/EF Network for Cairo Finest Paper Mills

EF of A =
ES ES of A + 2
of A
A
Start 0 2
0 0

3 - 43
 ES/EF Network for Cairo Finest Paper Mills

A
0 2

2 EF of B =
ES ES of B + 3
0
Start
0 of B B
0 0 3

3 - 44
 ES/EF Network for Cairo Finest Paper Mills

A C
0 2 2 4

2 2

Start
0 0

B
0 3

3 - 45
 ES/EF Network for Cairo Finest Paper Mills

A C
0 2 2 4

2 2

Start
0 0
= Max (2, 3) D
0
3 7
B
0 3

3
4
3 - 46
 ES/EF Network for Cairo Finest Paper Mills
Paper

A C
0 2 2 4

2 2

Start
0 0

B D
0 3 3 7

3 4

3 - 47
 ES/EF Network for Cairo Finest Paper Mills

A C F
0 2 2 4 4 7

2 2 3

Start E H
0 0 4 8 13 15

0 4 2

B D G
0 3 3 7 8 13

3 4 5
Figure 3.11

3 - 48
Backward Pass

Begin with the last event and work backwards

Latest Finish Time Rule:

 If an activity is an immediate predecessor
for just a single activity, its LF equals the
LS of the activity that immediately follows
it
 If an activity is an immediate predecessor
to more than one activity, its LF is the
minimum of all LS values of all activities
that immediately follow it
LF = Min {LS of all immediate following activities}

3 - 49
Backward Pass

Begin with the last event and work backwards

Latest Start Time Rule:

 The latest start time (LS) of an activity is

the difference of its latest finish time (LF)
and its activity time

LS = LF – Activity time

3 - 50
 LS/LF Times for
Cairo Finest Paper Mills

A C F
0 2 2 4 4 7

2 2 3

Start E H
0 0 4 8 13 15
13 15
0 4 2
LS = LF – Activity time
B D G
0 3 3 7 8 13
LF = EF
of Project
3 4 5

3 - 51
 LS/LF Times for
Cairo Finest Paper Mills

A C F
0 2 2 4 4 7

10 13
2 2 3

Start E H
0 0 4 8 13 15
LF = Min(LS of following activity)
13 15
0 4 2

B D G
0 3 3 7 8 13

3 4 5

3 - 52
LS/LF Times for
Milwaukee Paper LF = Min(4,
10)

A C F
0 2 2 4 4 7
2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
8 13
3 4 5

3 - 53
 LS/LF Times for
Cairo Finest

A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5

3 - 54
 Critical Path for
Cairo Finest

A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5

3 - 55
Computing Slack Time

After computing the ES, EF, LS, and LF times

for all activities, compute the slack or free
time for each activity

 Slack is the length of time an activity can

be delayed without delaying the entire
project

Slack = LS – ES or Slack = LF – EF

3 - 56
Computing Slack Time

Earliest Earliest Latest Latest On

Start Finish Start Finish Slack Critical
Activity ES EF LS LF LS – ES Path

A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes

Table 3.3

3 - 57
 ES – EF Gantt Chart
for Cairo Finest

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-
temperature burner
F Install pollution
control system
G Install air pollution
device
H Inspect and test

3 - 58
 LS – LF Gantt Chart
for Cairo Finest

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-
temperature burner
F Install pollution
control system
G Install air pollution
device
H Inspect and test

3 - 59
Variability in Activity Times

 CPM assumes we know a fixed time

estimate for each activity and there
is no variability in activity times
 PERT uses a probability distribution
for activity times to allow for
variability

3 - 60
Variability in Activity Times

 Three time estimates are required

 Optimistic time (a) – if everything
goes according to plan
 Pessimistic time (b) – assuming
very unfavorable conditions
 Most likely time (m) – most
realistic estimate

3 - 61
Variability in Activity Times

Estimate follows beta distribution

Expected time:
t = (a + 4m + b)/6
Variance of times:
v = [(b – a)/6]2

3 - 62
Variability in Activity Times

Estimate follows beta distribution

Expected time: Figure 3.12

t = (a + 4m + b)/6
Probability of
Variance of times:
1 in 100 of Probability
Probability

< a occurring of 1 in 100 of

v = [(b − a)/6]2 > b occurring

Activity
Time

Optimistic Most Likely Pessimistic

Time (a) Time (m) Time (b)

3 - 63
Computing Variance

Most Expected
Optimistic Likely Pessimistic Time Variance
Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 1 2 3 2 .11
B 2 3 4 3 .11
C 1 2 3 2 .11
D 2 4 6 4 .44
E 1 4 7 4 1.00
F 1 2 9 3 1.78
G 3 4 11 5 1.78
H 1 2 3 2 .11

Table 3.4

3 - 64
Probability of Project Completion

Project variance is computed by

summing the variances of critical
activities
2 =pProject variance

= (variances of activities
on critical path)

3 - 65
Probability of Project Completion

Project variance is computed by

summing the variances of critical
activities
Project variance
2p = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

p = Project variance
= 3.11 = 1.76 weeks
3 - 66
 Probability of Project Completion

PERT makes two more assumptions:

 Total project
completion times
follow a normal
probability
distribution
 Activity times are
statistically
independent

3 - 67
Probability of Project Completion

Standard deviation = 1.76 weeks

15 Weeks
(Expected Completion Time)
Figure 3.13

3 - 68
Probability of Project Completion

What is the probability this project can

be completed on or before the 16 week
deadline?

due expected date

Z = date – of completion /p

= (16 wks – 15 wks)/1.76

= 0.57 Where Z is the number of

standard deviations the due
date or target date lies from
the mean or expected date

3 - 69
 Probability of Project Completion
What is the probability this project can be
completed on or before the 16 week deadline?
From Appendix I

.00 .01 .07 .08

.1 .50000 .50399 .52790 .53188
.2 .53983 .54380 .56749 .57142

due expected date

.5 Z.69146
= date .69497
− of completion
.71566 /
.71904
p
.6 .72575 .72907 .74857 .75175
= (16 wks − 15 wks)/1.76
Where Z is the number of
= 0.57 standard deviations the due
date or target date lies from
the mean or expected date
© 2013 Pearson Education 3 - 70
Probability of Project Completion

0.57 Standard deviations

Probability
(T ≤ 16 weeks)
is 71.57%

15 16 Time
Weeks Weeks
Figure 3.14

3 - 71
Determining Project Completion Time

Probability
of 0.99

Probability
of 0.01

2.33 Standard Z
From Appendix I deviations
0 2.33
Figure 3.15

3 - 72
Variability of Completion Time for
Noncritical Paths

 Variability of times for activities

on noncritical paths must be
considered when finding the
probability of finishing in a
specified time
 Variation in noncritical activity
may cause change in critical path

3 - 73
 What Project Management Has Provided So
Far
1. The project’s expected completion time is 15
weeks
2. There is a 71.57% chance the equipment will
be in place by the 16 week deadline
3. Five activities (A, C, E, G, and H) are on the
critical path
4. Three activities (B, D, F) are not on the
critical path and have slack time
5. A detailed schedule is available

3 - 74
Trade-Offs and Project Crashing

It is not uncommon to face the

following situations:

 The project is behind schedule

 The completion time has been
moved forward

Shortening the duration of the

project is called ‘project crashing’
3 - 75
Factors to Consider When Crashing a
Project

 The amount by which an activity

is crashed is, in fact, possible
 Taken together, the shortened
activity durations will make it
possible to finish the project by
the due date
 The total cost of crashing is as
small as possible

3 - 76
Steps in Project Crashing

1. Compute the crash cost per time period.

If crash costs are linear over time:

Crash cost (Crash cost – Normal cost)

per period = (Normal time – Crash time)

2. Using current activity times, find the

critical path and identify the critical
activities

3 - 77
Steps in Project Crashing

3. If there is only one critical path, then

select the activity on this critical path that
(a) can still be crashed, and (b) has the
smallest crash cost per period. If there is
more than one critical path, then select
one activity from each critical path such
that (a) each selected activity can still be
crashed, and (b) the total crash cost of all
selected activities is the smallest. Note
that the same activity may be common to
more than one critical path.

3 - 78
Steps in Project Crashing

4. Update all activity times. If the desired

due date has been reached, stop. If not,
return to Step 2.

3 - 79
Crashing The Project

Time (Wks) Cost ($)

Crash Cost Critical
Activity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 Yes

B 3 1 30,000 34,000 2,000 No
C 2 1 26,000 27,000 1,000 Yes
D 4 2 48,000 49,000 1,000 No
E 4 2 56,000 58,000 1,000 Yes
F 3 2 30,000 30,500 500 No
G 5 2 80,000 84,500 1,500 Yes
H 2 1 16,000 19,000 3,000 Yes

Table 3.5

3 - 80
 Crash and Normal Times and Costs for
Activity B
Activity
Cost
Crash

Crash Cost – Normal Cost

$34,000 — Crash Cost/Wk =
Normal Time – Crash Time
Crash $33,000 — $34,000 – $30,000
Cost =
3–1
$32,000 — $4,000
= = $2,000/Wk
2 Wks
$31,000 —

$30,000 —
Normal
Normal —
Cost
| | |
1 2 3 Time (Weeks)
Figure 3.16
Crash Time Normal Time
© 2013 Pearson Education 3 - 81
Critical Path and Slack Times for Cairo Finest

A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start Slack = 0 Slack = 0 E Slack = 6 H

0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

B D Slack = 0 G Slack = 0
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5

Slack = 1 Slack = 1 Slack = 0

Figure 3.17
3 - 82
Advantages of PERT/CPM

1. Especially useful when scheduling

and controlling large projects
2. Straightforward concept and not
mathematically complex
3. Graphical networks help highlight
relationships among project activities
4. Critical path and slack time analyses
help pinpoint activities that need to
be closely watched

3 - 83
Advantages of PERT/CPM

5. Project documentation and graphics

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 as well

3 - 84
Limitations of PERT/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
4. There is an inherent danger of too much
emphasis being placed on the longest, or critical,
path

3 - 85
Project Management Software

 There are several popular packages for

managing projects
 Primavera
 MacProject
 Pertmaster
 VisiSchedule
 Time Line
 Microsoft Project

3 - 86