Project Management, What are the Key Metrics

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1. McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
1717
Project
Management

2. 17-2
Learning ObjectivesLearning Objectives
Discuss the behavioral aspects of projects
in terms of project personnel and the
project manager.
Discuss the nature and importance of a
work breakdown structure in project
management.
Give a general description of PERT/CPM
techniques.
Construct simple network diagrams.

3. 17-3
Learning ObjectivesLearning Objectives
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.

4. 17-4
Unique, one-time operations designed to Unique, one-time operations designed to
accomplish a specific set of objectives in a limited accomplish a specific set of objectives in a limited
time frame.time frame.
Build A
A Done
Build B
B Done
Build C
C Done
Build D
Ship
JANFEBMAR APRMAY JUN
On time!
ProjectsProjects

5. 17-5
Project ManagementProject 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

6. 17-6
Project ManagementProject 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

7. 17-7
Project ManagementProject 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

8. 17-8
Project ManagementProject Management
What are the tools?
Work breakdown structure
Network diagram
Gantt charts
Risk management

9. 17-9
Planning and SchedulingPlanning and Scheduling
MARAPRMAYJUNJULAUGSEPOCTNOVDEC
Locate new
facilities
Interview staff
Hire and train staff
Select and order
furniture
Remodel and install
phones
Move in/startup
Gantt Chart

10. 17-10
Deciding which projects to implement
Selecting a project manager
Selecting a project team
Planning and designing the project
Managing and controlling project resources
Deciding if and when a project should be
terminated
Key DecisionsKey Decisions

11. 17-11
Project ManagerProject Manager
Responsible for:
Work Quality
Human Resources Time
Communications Costs

12. 17-12
Temptation to understate costs
Withhold information
Misleading status reports
Falsifying records
Comprising workers’ safety
Approving substandard work
Ethical IssuesEthical Issues

13. 17-13
Project Life CycleProject Life Cycle
Concept
Feasibility
Planning
Execution
Termination
M
a
n
a
g
e
m
e
n
t

14. 17-14
Work Breakdown StructureWork Breakdown Structure
Project X
Level 1
Level 2
Level 3
Level 4
Figure 17.2

15. 17-15
PERT and CPMPERT and CPM
PERT: Program Evaluation and
Review Technique
CPM: Critical Path Method
Graphically displays project activities
Estimates how long the project will take
Indicates most critical activities
Show where delays will not affect project

16. 17-16
The Network DiagramThe Network Diagram
Network (precedence) diagram – diagram of
project activities that shows sequential
relationships by the use of arrows and nodes.
Activity-on-arrow (AOA) – a network diagram
convention in which arrows designate activities.
Activity-on-node (AON) – a network diagram
convention in which nodes designate activities.
Activities – steps in the project that consume
resources and/or time.
Events – the starting and finishing of activities,
designated by nodes in the AOA convention.

17. 17-17
The Network Diagram (cont’d)The Network Diagram (cont’d)
Path
Sequence of activities that leads from the starting
node to the finishing node
Critical path
The longest path; determines expected project
duration
Critical activities
Activities on the critical path
Slack
Allowable slippage for path; the difference the
length of path and the length of critical path

18. 17-18
Project Network – Activity on Project Network – Activity on
ArrowArrow
1
2
3
4
5 6
Locate
facilities
Order
furniture
Furniture
setup
Interview
Hire and
train
Remodel
Move
in
Figure 17.4
AOA

19. 17-19
Project Network – Activity on Project Network – Activity on
NodeNode
1
2
3
5
6
Locate
facilities
Order
furniture
Furniture
setup
Interview
Remodel
Move
in
4
Hire and
train
7S
Figure 17.4
AON

20. 17-20
Network ConventionsNetwork Conventions
a
b
c a
b
c
a
b
c
d
a
b
c
Dummy
activity

21. 17-21
Time EstimatesTime Estimates
Deterministic
Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation

22. 17-22
Example 1Example 1
1
2
3
4
5 6
8 weeks
6 weeks
3 weeks
4 weeks
9 weeks
11 weeks
1 week
Locate
facilities
Order
furniture
F
u
r
n
i
t
u
r
e
s
e
t
u
p
I
n
t
e
r
v
i
e
w
H
ire and train
R
e
m
o
d
e
l
Move
in
DeterministicDeterministic
time estimatestime estimates
Figure 17.5

23. 17-23
Example 1 SolutionExample 1 Solution
P a t h L e n g t h
( w e e k s )
S l a c k
1 - 2 - 3 - 4 - 5 - 6
1 - 2 - 5 - 6
1 - 3 - 5 - 6
1 8
2 0
1 4
2
0
6
Critical Path

24. 17-24
Network activities
ES: early start
EF: early finish
LS: late start
LF: late finish
Used to determine
Expected project duration
Slack time
Critical path
Computing AlgorithmComputing Algorithm

25. 17-25
Probabilistic Time EstimatesProbabilistic Time Estimates
Optimistic time
Time required under optimal conditions
Pessimistic time
Time required under worst conditions
Most likely time
Most probable length of time that will be
required

26. 17-26
Probabilistic EstimatesProbabilistic Estimates
Activity
start
Optimistic
time
Most likely
time (mode)
Pessimistic
time
t
o t
pt
mt
e
Figure 17.8
Beta Distribution

27. 17-27
Expected TimeExpected Time
t
e =
t
o
+ 4t
m
+t
p
6
t
e = expected time
t
o = optimistic time
t
m = most likely time
t
p = pessimistic time

28. 17-28
VarianceVariance



(t
p – t
o)
2
36


= variance
t
o = optimistic time
t
p = pessimistic time

29. 17-29
Example 5Example 5
1-3-4
a
3-4-5
d
3-5-7
e
5-7-9
f
2-4-6
b
4-6-8
h
2
-
3
-
6
g 3 - 4 - 6
i
2
-
3
-
5
c
Optimistic
time
Most likely
time
Pessimistic
time

30. 17-30
Example 5 Time EstimatesExample 5 Time Estimates
2.83
a
4.00
d
5.0
e
7.0
f
4.00
b
6.0
h
3
.
3
3
g 4 . 1 7
i
3
.
1
7
c
T
abc
= 10.0
T
def
= 16.0
T
ghi
= 13.50

31. 17-31
Path ProbabilitiesPath Probabilities
Z =
Specified time – Path mean
Path standard deviation
Z indicates how many standard deviations
of the path distribution the specified tine
is beyond the expected path duration.

32. 17-32
17
Weeks
Weeks
Weeks
Weeks
10.0
16.0
13.5
1.00
1.00
a-b-c
d-e-f
g-h-i
Example 6Example 6

33. 17-33
Time-cost Trade-offs: CrashingTime-cost Trade-offs: Crashing
Crash – shortening activity duration
Procedure for crashing
Crash the project one period at a time
Only an activity on the critical path
Crash the least expensive activity
Multiple critical paths: find the sum of
crashing the least expensive activity on
each critical path

34. 17-34
Time-Cost Trade-Offs: CrashingTime-Cost Trade-Offs: Crashing
Total
cost
Shorten
Shorten
Cumulative
cost of
crashing
Expected indirect costs
Optimum
CRASH
Figure 17.11

35. 17-35
6
a
4
d
5
c
1
0
b
9
e
2
f
Example 7Example 7

36. 17-36
Advantages of PERTAdvantages of PERT
Forces managers to organize
Provides graphic display of activities
Identifies
Critical activities
Slack activities
1
2
3
4
5 6

37. 17-37
Limitations of PERTLimitations of PERT
Important activities may be omitted
Precedence relationships may not be
correct
Estimates may include
a fudge factor
May focus solely
on critical path
1
2
3
4
5 6
142 weeks

38. 17-38
Goldratt’s Critical ChainGoldratt’s Critical Chain
Goldratt’s insight on project management
Time estimates are often pessimistic
Activities finished ahead of schedule often go
unreported
With multiple projects, resources needed for one
project may be in use on another

39. 17-39
Computer aided design (CAD)
Groupware (Lotus Notes)
CA Super Project
Harvard Total Manager
MS Project
Sure Track Project Manager
Time Line
Project Management SoftwareProject Management Software

40. 17-40
Imposes a methodology
Provides logical planning structure
Enhances team communication
Flag constraint violations
Automatic report formats
Multiple levels of reports
Enables what-if scenarios
Generates various chart types
Advantages of PM SoftwareAdvantages of PM Software

41. 17-41
Risk: occurrence of events that have
undesirable consequences
Delays
Increased costs
Inability to meet specifications
Project termination
Project Risk ManagementProject Risk Management

42. 17-42
Identify potential risks
Analyze and assess risks
Work to minimize occurrence of risk
Establish contingency plans
Risk ManagementRisk Management

43. 17-43
SummarySummary
Projects are a unique set of activities
Projects go through life cycles
PERT and CPM are two common
techniques
Network diagrams
Project management software available

44. 17-44
Video: Work BreakdownVideo: Work Breakdown

45. 17-45
Video: Project Materials/DelaysVideo: Project Materials/Delays

46. 17-46
Video: Project SchedulingVideo: Project Scheduling

47. 17-47
Video: PERT/CPMVideo: PERT/CPM