Chapter 17 Project Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc All rights reserved Chapter 17: Learning Objectives You should be able to: Discuss the behavioral aspects of projects in terms of project personnel and the project manager Explain the nature and importance of a work breakdown structure in project management Give a general description of PERT/CPM techniques Construct simple network diagrams List the kinds of information that a PERT or CPM analysis can provide Analyze networks with deterministic times Analyze networks with probabilistic times Describe activity ‘crashing’ and solve typical problems Instructor Slides 17-2 Projects Projects Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame Examples: The Olympic Games Producing a movie Software development Product development ERP implementation Instructor Slides 17-3 Project Life Cycle Instructor Slides 17-4 The Nature of Projects Projects go through a series of stages– a life cycle Projects bring together people with a diversity of knowledge and skills, most of whom remain associated with the project for less than its full life Organizational structure affects how projects are managed Instructor Slides 17-5 Project Management What are the Major Administrative Issues? Executive responsibilities Project selection Project manager selection Organizational structure Organizational alternatives Manage within functional unit Assign a coordinator Use a matrix organization with a project leader The Nature of Projects Projects go through a series of stages– a life cycle Projects bring together people with a diversity of knowledge and skills, most of whom remain associated with the project for less than its full life Organizational structure affects how projects are managed Project Management How is it different? Limited time frame Narrow focus, specific objectives Less bureaucratic Why is it used? Special needs Pressures for new or improves products or services What are the Key Metrics Time Cost Performance objectives Project Management What are the tools? Work breakdown structure Network diagram Gantt charts Project Management software Risk management Project Management What are the Key Metrics Time Cost Performance objectives What are the Key Success Factors? Top-down commitment Having a capable project manager Having time to plan Careful tracking and control Good communications Simulation When activity times cannot be assumed to be independent, simulation is often used Repeated sampling is used Many paths are made through the project network In each pass, a random value for each activity time is selected based on the activity time’s probability distribution After each pass, the project’s duration is determined After a large number of passes, there are enough data points to prepare a frequency distribution of the project duration Probabilistic estimates of completion times are made based on this frequency distribution Instructor Slides 17-65 Budget Control Budget control is an important aspect of project management Costs can exceed budget Overly optimistic time estimates Unforeseen events Unless corrective action is taken, serious cost overruns can occur Instructor Slides 17-66 Time-Cost Trade-Offs Activity time estimates are made for some given level of resources It may be possible to reduce the duration of a project by injecting additional resources Motivations: To avoid late penalties Monetary incentives Free resources for use on other projects Instructor Slides 17-67 Time-Cost Trade-Offs: Crashing Crashing Shortening activity durations Typically, involves the use of additional funds to support additional personnel or more efficient equipment, and the relaxing of some work specifications The project duration may be shortened by increasing direct expenses, thereby realizing savings in indirect project costs Instructor Slides 17-68 Crashing Decisions To make decisions concerning crashing requires information about: Regular time and crash time estimates for each activity Regular cost and crash cost estimates for each activity A list of activities that are on the critical path Critical path activities are potential candidates for crashing Crashing non-critical path activities would not have an impact on overall project duration Instructor Slides 17-69 Crashing: Procedure General procedure: Crash the project one period at a time Crash the least expensive activity that is on the critical path When there are multiple critical paths, find the sum of crashing the least expensive activity on each critical path If two or more critical paths share common activities, compare the least expensive cost of crashing a common activity shared by critical paths with the sum for the separate critical paths Instructor Slides 17-70 Crashing Activities Instructor Slides 17-71 PERT: Advantages Among the most useful features of PERT: 1.It forces the manager to organize and quantify available information and to identify where additional information is needed 2.It provides the a graphic display of the project and its major activities 3.It identifies a Activities that should be closely watched b Activities that have slack time Instructor Slides 17-72 Sources of Error Potential sources of error: The project network may be incomplete Precedence relationships may not be correctly expressed Time estimates may be inaccurate There may be a tendency to focus on critical path activities to the exclusion of other important project activities Major risk events may not be on the critical path Instructor Slides 17-73 Critical Chain Project Management To better manage projects, managers need to be aware of certain aspects of the project: Time estimates are often pessimistic and with attention can be made more realistic When activities are finished ahead of schedule, that fact may go unreported, so managers may be unaware of resources that could potentially be used to shorten the critical path The critical chain is analogous to the critical path of a network A key feature of the critical chain approach is the use of various buffers Feeding Project Capacity Instructor Slides 17-74 Project Management Software Technology has benefited project management CAD To produce updated prototypes on construction and productdevelopment projects Communication software Helps to keep project members in close contact Facilitates remote viewing of projects Project management software Specialized software used to help manage projects Assign resources Compare project plan versions Evaluate changes Track performance Instructor Slides 17-75 Project Management Software Advantages Advantages include: Imposes a methodology and common project management terminology Provides a logical planning structure May enhance communication among team members Can flag the occurrence of constraint violations Automatically formats reports Can generate multiple levels of summary and detail reports Enables “what if” scenarios Can generate a variety of chart types Instructor Slides 17-76 Risk Management Risks are an inherent part of project management Risks relate to occurrence of events that have undesirable consequences such as Delays Increased costs Inability to meet technical specifications Good risk management involves Identifying as many risks as possible Analyzing and assessing those risks Working to minimize the probability of their occurrence Establishing contingency plans and budgets for dealing with any that occur Instructor Slides 17-77 Project Life Cycle Operations Strategy Projects present both strategic opportunities and risks It is critical to devote sufficient resources and attention to projects Projects are often employed in situations that are characterized by significant uncertainties that demand Careful planning Wise selection of project manager and team Monitoring of the project Project software can facilitate successful project completion Be careful to not focus on critical path activities to the exclusion of other activities that may become critical It is not uncommon for projects to fail When that happens, it can be beneficial to examine the probable reasons for failure Instructor Slides 17-79 ... Performance objectives Project Management What are the tools? Work breakdown structure Network diagram Gantt charts Project Management software Risk management Project Management What are... projects to implement Selecting the project manager Selecting the project team Planning and designing the project Managing and controlling project resources Deciding if and when a project. .. the behavioral aspects of projects in terms of project personnel and the project manager Explain the nature and importance of a work breakdown structure in project management Give a general description