7 - Project Management
7 - Project Management
7 - Project Management
Chapter 13
Learning Objectives
After completing this chapter, students will be able to: 1.! Understand how to plan, monitor, and control projects with the use of PERT and CPM 2.! Determine earliest start, earliest finish, latest start, latest finish, and slack times for each activity, along with the total project completion time 3.! Reduce total project time at the least total cost by crashing the network using manual or linear programming techniques 4.! Understand the important role of software in project management
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Project Management
To accompany Quantitative Analysis for Management, Tenth Edition, by Render, Stair, and Hanna Power Point slides created by Jeff Heyl
Chapter Outline
13.1 13.2 13.3 13.4 13.5 Introduction PERT/CPM PERT/Cost Project Crashing Other Topics in Project Management
Introduction
!! Most realistic projects are large and complex !! Tens of thousands of steps and millions of dollars
may be involved
effectively is a difficult problem and the stakes are high !! The first step in planning and scheduling a project is to develop the work breakdown structure !! Time, cost, resource requirements, predecessors, and people required are identified for each activity !! Then a schedule for the project can be developed
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Introduction
!! The program evaluation and review technique
!! !! !! !!
(PERT) and the critical path method (CPM) are two popular quantitative analysis techniques to help plan, schedule, monitor, and control projects Originally the approaches differed in how they estimated activity times PERT used three time estimates to develop a probabilistic estimate of completion time CPM was a more deterministic technique They have become so similar they are commonly considered one technique, PERT/CPM
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PERT/CPM
!! Given the large number of tasks in a project, it is
PERT/CPM
5.! At any particular date, is the project on schedule, behind schedule, or ahead of schedule? 6.! On any given date, is the money spent equal to, less than, or greater than the budgeted amount? 7.! Are there enough resources available to finish the project on time?
easy to see why the following questions are important When will the entire project be completed? What are the critical activities or tasks in the project, that is, the ones that will delay the entire project if they are late? Which are the non-critical activities, that is, the ones that can run late without delaying the entire projects completion? If there are three time estimates, what is the probability that the project will be completed by a specific date?
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avoid the expense of installing air pollution control equipment !! The local environmental protection group has recently given the foundry 16 weeks to install a complex air filter system on its main smokestack !! General Foundry was warned that it will be forced to close unless the device is installed in the allotted period !! They want to make sure that installation of the filtering system progresses smoothly and on time
General Foundry
ACTIVITY A B C D E F G H
DESCRIPTION Build internal components Modify roof and floor Construct collection stack Pour concrete and install frame Build high-temperature burner Install control system Install air pollution device Inspect and test
IMMEDIATE PREDECESSORS A B C C D, E F, G
Table 13.1
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!!
PERT networks Activity-on-node (AON) where the nodes represent activities Activity-on-arc (AOA) where the arcs are used to represent the activities The AON approach is easier and more commonly found in software packages One node represents the start of the project, one node for the end of the project, and nodes for each of the activities The arcs are used to show the predecessors for each activity
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Figure 13.1
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Activity Times
!! In some situations, activity times are known with !! !! !! !!
Activity Times
!! The time estimates in PERT are
certainty CPM assigns just one time estimate to each activity and this is used to find the critical path In many projects there is uncertainty about activity times PERT employs a probability distribution based on three time estimates for each activity A weighted average of these estimates is used for the time estimate and this is used to determine the critical path
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Activity Times
!! PERT often assumes time estimates follow a beta
Activity Times
!! To find the expected activity time (t), the beta
probability distribution
Probability of 1 in 100 of a Occurring
t=
Probability of 1 in 100 of b Occurring
Probability
a + 4m + b 6
Figure 13.2
( a)
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Activity Times
!! Time estimates (weeks) for General Foundry
OPTIMISTIC, a 1 2 1 2 1 1 3 1 MOST PROBABLE, m 2 3 2 4 4 2 4 2 PESSIMISTIC, b 3 4 3 6 7 9 11 3 EXPECTED TIME, 2 3 2 4 4 3 5 2 25 VARIANCE,
[(b a)/6]2
ACTIVITY A B C D E F G H
t = [(a + 4m + b)/6]
into account the obvious fact that some of the tasks could be taking place at the same time !! To find out how long the project will take we perform the critical path analysis for the network !! The critical path is the longest path through the network
Table 13.2
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times
A
E Start
2 Finish
Figure 13.3
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following quantities for each activity in the network 1.! Earliest start time (ES): the earliest time an activity can begin without violation of immediate predecessor requirements 2.! Earliest finish time (EF): the earliest time at which an activity can end 3.! Latest start time (LS): the latest time an activity can begin without delaying the entire project 4.! Latest finish time (LF): the latest time an activity can end without delaying the entire project
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late start and finish times are represented in the following manner
ACTIVITY ES LS t EF LF
A ES = 0 Start B ES = 0
t= 2 EF = 0 + 2 = 2
t= 3 EF = 0 + 3 = 3
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Start
E 4
4 8
Latest finish time = Smallest of latest start times for following activities LF = Smallest LS of following activities
!! For activity H
B 0
3 3
D 3
4 7
G 8
5 13
Figure 13.4
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LS = LF t = 15 2 = 13 weeks
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is a simple matter to find the amount of slack time that each activity has Slack = LS ES, or Slack = LF EF
Start
E 4 4
4 8 8
H 13 13
2 15 15
B 0 1
3 3 4
D 3 4
4 7 8
G 8 8
5 13 13
!! The total project completion time is 15 weeks !! Industrial managers call this a boundary
Figure 13.5
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timetable
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ACTIVITY
SLACK, LS ES
A B C D E F G H Table 13.3
0 0 2 3 4 4 8 13
2 3 4 7 8 7 13 15
0 1 2 4 4 10 8 13
2 4 4 8 8 13 13 15
0 1 0 1 0 6 0 0
E 4 4
4 8 8
H 13 13
2 15 15
Finish
B 0 1
3 3 4
D 3 4
4 7 8
G 8 8
5 13 13
Figure 13.6
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expected project completion time of 15 weeks !! But variation in activities on the critical path can affect overall project completion, and this is a major concern !! If the project is not complete in 16 weeks, the foundry will have to close !! PERT uses the variance of critical path activities to help determine the variance of the overall project Project variance = of activities ! variances on the critical path
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times
Figure 13.7
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follows
week deadline
Z=
!T
16 weeks ! 15 weeks = 0.57 1.76 weeks
15 Weeks
16 Weeks
Time
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!! !! !! !! !!
manager with several valuable pieces of information The projects expected completion date is 15 weeks There is a 71.6% chance that the equipment will be in place within the 16-week deadline Five activities (A, C, E, G, H) are on the critical path Three activities (B, D, F) are not critical but have some slack time built in A detailed schedule of activity starting and ending dates has been made available
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completion time of the project will change LF times for other activities
!! This will also have an impact on ES, EF, LS, and !! The exact impact depends on the relationship
accomplished before the given activity can be started !! A successor activity is one that can be started only after the given activity is finished
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PERT/COST
!! Although PERT is an excellent method of
ACTIVITY TIME Earliest start Earliest finish Latest start Latest finish Slack Table 13.4
PARALLEL ACTIVITY No change No change Increase (decrease) Increase (decrease) Increase (decrease)
monitoring and controlling project length, it does not consider the very important factor of project cost !! PERT/Cost is a modification of PERT that allows a manager to plan, schedule, monitor, and control cost as well as time !! Using PERT/Cost to plan, schedule, monitor, and control project cost helps accomplish the sixth and final step of PERT
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process of a project is to determine how much is to be spent every week or month !! This can be accomplished in four basic budgeting steps
project !! The horizontal bars shown when each activity will be performed based on its ES-EF times !! We determine how much will be spent on each activity during each week and fill these amounts into a chart in place of the bars !! The following two tables show the activity costs and budgeted cost for the General Foundry project
D E F G H 1 2 3 4 5 6 7 8 Week 9 10 11 12 13 14 15
Figure 13.9
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1
11 10
2
11 10
3
10 13
10
11
12
13
14
15
TOTAL
22 30
A B C D E F G H
0 0 2 3 4 4 8 13
0 1 2 4 4 10 8 13
2 3 2 4 4 3 5 2 Total
13 12 12 14 10 12 14 10 12 14 10 16 16 16 16 16 8 8 14
Table 13.5
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Table 13.6
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!!
the latest starting time This budget will delay the expenditure of funds until the last possible moment The following table shows the latest start budget for the General Foundry project The two tables form a budget range Any budget can be chosen between these two values depending on when the company wants to actually spend the money The budget ranges are plotted in Figure 13.10
1
11
2
11 10
3
10 13
4
10 13
10
11
12
13
14
15
TOTAL
22 30 26
12 14
12 14
12 14
12 14 10 16 10 16 10 16 8 8
Table 13.7
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!! Budget ranges
250,000
150,000
100,000
project is progressing on schedule and that cost overruns are kept to a minimum !! The status of the entire project should be checked periodically !! The following table shows the state of the project in the sixth week !! It can be used the answer questions about the schedule and costs so far
50,000
| | 2 | 3 | 4 | 5 | 6 | 7 | 8 | | | | | | | 9 10 11 12 13 14 15
Figure 13.10
Weeks
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ACTIVITY A B C D E F G H
ACTUAL COST ($) 20,000 36,000 26,000 6,000 20,000 4,000 0 0 112,000
Table 13.8
Overrun
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Project Crashing
!! Projects will sometimes have deadlines
Project Crashing
!! Crashing a project starts with using the normal
that are impossible to meet using normal procedures !! By using exceptional methods it may be possible to finish the project in less time than normally required !! However, this usually increases the cost of the project !! Reducing a projects completion time is called crashing
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time and will require additional resources activity in the earlier-than-normal time
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!! The critical path for the project is 15 weeks !! What options do they have? !! The normal and crash times and costs are shown
in Table 13.9 !! Crash costs are assumed to be linear and Figure 13.11 shows the crash cost for activity B !! Crashing activities B and A will shorten the completion time to 14 but it creates a second critical path !! Any further crashing must be done to both critical paths
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Crash Crash Cost Normal Cost Crash Cost/Week = Normal Time Crash Time = = $34,000 $30,000 31 $4,000 = $2,000/Week 2 Weeks
to finding the best project crashing schedule !! We can illustrate its use on General Foundrys network !! The data needed are derived from the normal and crash data for General Foundry and the project network with activity times
Time (Weeks)
Figure 13.11
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Start
Finish
Figure 13.12
XA = EF for activity A XB = EF for activity B XC = EF for activity C XD = EF for activity D XE = EF for activity E XF = EF for activity F XG = EF for activity G XH = EF for activity H Xstart = start time for project (usually 0) Xfinish = earliest finish time for the project
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Y = the number of weeks that each activity is crashed YA = the number of weeks activity A is crashed and so forth
!! The objective function is
ensure activities are not crashed more than is allowed YA " 1 YB " 2 YC " 1 YD " 1 YE " 2 YF " 1 YG " 3 YH " 1
!! This completion
constraint specifies that the last event must take place before the project deadline Xfinish " 12
!! This constraint
Minimize crash cost = 1,000YA + 2,000YB + 1,000YC + 1,000YD + 1,000YE + 500YF + 2,000YG + 3,000YH
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Program 13.1
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11