A B Raju, CEO

www.biztrans.in
Introduction
 Project
Introduction
 Project is a series of related jobs usually directed
towards some major output and requiring a
significant period of time to perform.

 Project Management are the management

activities of planning, directing, and controlling
resources (people, equipment, material) to meet
the technical, cost, and time constraints of a
project
Introduction
 A project is a special one time activity or effort

 Project management consists of

 Planning
 Controlling project activities
 Managing budget constraints and resources
 Timely completion
 What is a Project?
Characteristics
 An established objective

 A defined lifespan with a defined beginning and end

(temporary)

 Usually the involvement of several departments and/or

professionals

 Typically doing something that has never been done

before (unique)

 Specific time, cost and performance requirements

Project Structures
 Pure Projects (also known as
Project Structures
 Pure Projects (also known as Skunk works)
Pure Project
Defined

A pure project is where a self-contained team works full-time on

the project

Pure Project: Advantages

 The project manager has full authority over the project

 Team members report to one boss

 Shortened communication lines

 Team pride, motivation, and commitment are high

Pure Project: Disadvantages
 Duplication of resources

 Organizational goals and policies are ignored

 Lack of technology transfer

 Team members have no functional area "home"

Project Structures
 Pure Projects (also known as Skunk works)

 Functional project
Functional Project
A functional project is housed within a
functional division

President

Research and
Engineering Manufacturing
Development

Project Project Project Project Project Project Project Project Project

A B C D E F G H I

Example, Project “B” is in the functional

area of Research and Development.
 Functional Project: Advantages

 A team member can work on several projects

 Technical expertise is maintained within the

functional area

 The functional area is a “home” after the project is

completed

 Critical mass of specialized knowledge

 Functional Project: Disadvantages

 Aspects of the project that are not directly related to

the functional area get short-changed

 Motivation of team members is often weak

 Needs of the client are secondary and are responded

to slowly
Project Structures
 Pure Projects (also known as Skunk works)

 Functional project

 Matrix project
Matrix Project Organization Structure

President

Research and
Engineering Manufacturing Marketing
Development

Manager
Project A

Manager
Project B

Manager
Project C
Matrix: Advantages

 Enhanced communications between functional areas

 Pinpointed responsibility

 Duplication of resources is minimized

 Functional “home” for team members

 Policies of the parent organization are followed

 Matrix: Disadvantages

 Too many bosses

 Depends on project manager’s negotiating skills

 Potential for sub-optimization

Elements of PM
 Should broadly cover various major works and time
schedules

 Project should be divided into various activities which

demand various resources

 Typical steps in a Project Paln

 Define project objective
 Identify activities
 Establish precedence relationships
 Make time estimates
 Determine project completion times
 Compare project schedule activities
 Determine resource requirements to meet objectives
The Project Life Cycle
Elements of PM
 Work Breakdown structure (WBS):

 Is the method for PM to break down the project into

components, subcomponents, activities and tasks

 This helps in relating various modules and activities and

to avoid duplication

 Two standard approaches are: top down and brain

storming
Work Breakdown Structure

A work breakdown structure defines the

hierarchy of project tasks, subtasks, and
work packages
Level Program

1 Project 1 Project 2

2 Task 1.1 Task 1.2

3 Subtask 1.1.1 Subtask 1.1.2

4 Work Package 1.1.1.1 Work Package 1.1.1.2

Elements of PM
 Project Control:
 Once the project is planned , the next step is to
implement. Here control is the key element while
implementing to make sure all resources are arranged
and work is executed as per schedules.

 Design documents, budget and cost documents, plans,

status reports, schedules, schedule changes and their
timely availability to all concerned
Gantt Charts
 A Gantt chart is a graph or bar chart with a bar for each
project activity on a time scale

 Developed by Henry Gantt, an industrial engineer.

 We need various activities involved in a project, their

time schedules and predecessor activities to construct
Gantt charts
 Gantt Chart

Vertical Axis:
Always Activities Horizontal bars used to denote length
or Jobs of time for each activity or job.

Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6

Time Horizontal Axis: Always Time

CPM / PERT
 CPM – Critical Path Method
 In CPM , the activities are shown as a network of
precedence relationships using activity on node (AON)
network construction

 PERT – Project Evaluation and Review Technique

 In PERT network of precedence relationships are shown
with activity on arrow (AOA) network construction with
nodes representing the events
AON & AOA Networks
 While both the conventions of AOA and AON
accomplish the same, there are a few minor differences
 AON will have more nodes than AOA often
 AON network does not have dummy activities as there is
no start and end of activities.

Microsoft Project handles only AON networks

 Network-Planning Models

 A project is made up of a sequence of activities that

form a network representing a project

 The path taking longest time through this network of

activities is called the “critical path”

 The critical path provides a wide range of scheduling

information useful in managing a project

 Critical Path Method (CPM) helps to identify the

critical path(s) in the project networks
Prerequisites

A project must have:

well-defined jobs or tasks whose completion marks

the end of the project;

independent jobs or tasks;

and tasks that follow a given sequence.

 Types of Networks

 CPM/PERT with a Single Time Estimate

 Used when activity times are known with certainty
 Used to determine timing estimates for the project, each activity in the
project, and slack time for activities

 CPM/PERT with Three Activity Time Estimates

 Used when activity times are uncertain
 Used to obtain the same information as the Single Time Estimate model
and probability information

 Time-Cost Models
 Used when cost trade-off information is a major consideration in
planning
 Used to determine the least cost in reducing total project time
Steps in the CPM/PERT with Single Time Estimate

 Activity Identification

 Activity Sequencing and

Network Construction

 Determine the critical path

 From the critical path all of the project and activity
timing information can be obtained
CPM/PERT
 Activity scheduling:

• ES : Earliest start
• EF : Earliest finish
EF = ES + activity time

• LS : Latest start
• LF : Latest finish
LS = LF – activity time

• S: Slack
S=LS-ES or LF-EF
 CPM with Single Time Estimate

Consider the following consulting project:

Activity Designation Immed. Pred. Time (Weeks)
Assess customer's needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 5
Quality improvement pilot groups F D, E 5
Write assessment report G F 1

Develop a critical path diagram and determine the duration of

the critical path and slack times for all activities.
First draw the network – CPM or AON network

Act. Imed. Pred. Time

A None 2
B A 1
C B 1
D C 2
E C 5
F D,E 5
D(2)
G F 1

A(2) B(1) C(1) F(5) G(1)

E(5)
Determine early starts and early finish times

ES=4
EF=6

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 EF=14 EF=15

A(2) B(1) C(1) F(5) G(1)

ES=4
EF=9
Hint: Start with ES=0
and go forward in the E(5)
network from A to G.
Determine late starts and late Hint: Start with LF=15
finish times or the total time of the
ES=4 project and go
EF=6 backward in the
network from G to A.
ES=0 ES=2 ES=3 D(2)
ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4
LF=9
Critical Path & Slack
ES=4
Slack=(7-4)=(9-6)= 3 Wks
EF=6

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4 Duration=15 weeks

LF=9
CPM/PERT
 Probabilistic times: Often we can not estimate the
exact time taken to complete an activity as
uncertainties are part of life and hence probabilistic
times.

 A beta distribution is a probability distribution – with

3 time estimates: optimistic (a), most likely (m) and
pessimistic (b)

 Mean expected time t = (a+4m+b)/6

 Variance σ2 = [(b-a)/6]2
Activity Preceding activity a m b
1-2 - 6 8 10
1-3 - 3 6 9
1-4 - 1 3 5
2-5 1-2 0 0 0
2-6 1-2 2 4 12
3-5 1-3 2 3 4
4-5 1-4 3 4 5
4-8 1-4 2 2 2
5-7 3-5 3 7 11
5-8 3-5 2 4 6
8-7 4-8, 5-8 0 0 0
6-9 2-6 1 4 7
7-9 5-7 1 10 13
PERT or AOA diagram

5
2 6
4
8

6 3 7 9
1 3 5 7 9

4 4
3

2
4 8
Activity a m b t σ2
1-2 6 8 10 8 .44
1-3 3 6 9 6 1
1-4 1 3 5 3 .44
2-5 0 0 0 0 0
2-6 2 4 12 5 2.78
3-5 2 3 4 3 .11
4-5 3 4 5 4 .11
4-8 2 2 2 2 0
5-7 3 7 11 7 1.78
5-8 2 4 6 4 .44
8-7 0 0 0 0 0
6-9 1 4 7 4 1
7-9 1 10 13 9 4
Activity t σ2 ES EF LS LF S
1-2 8 .44 0 8 1 9 1
1-3 6 1 0 6 0 6 0
1-4 3 .44 0 3 2 5 2
2-5 0 0 8 8 9 9 1
2-6 5 2.78 8 13 16 21 8
3-5 3 .11 6 9 6 9 0
4-5 4 .11 3 7 5 9 2
4-8 2 0 3 5 14 16 11
5-7 7 1.78 9 16 9 16 0
5-8 4 .44 9 13 12 16 3
8-7 0 0 13 13 16 16 3
6-9 4 1 13 17 21 25 8
7-9 9 4 16 25 16 25 0
Computerisation of order processing system
Project variance: It’s the sum of variances on the critical
path
σ2=σ213+σ235+σ257+σ279
=1+.11+1.78+4
= 6.89 weeks
Probabilistic Network analysis
Basic assumptions in network analysis:
- activity times are statistically independent
- network mean and variance are normally distributed

Ideally if no. of activities are large enough, the above

assumptions can hold true.

Normal distribution of project analysis

Probabilistic analysis
σ2=6.89 σ = 2.62 weeks

Mean value of project completion time = 25 weeks

(value from critical path)

Proposed project completion time = 30 weeks

Z = x-µ/σ
= 30-25/2.62 = 1.91

The z value of 1.91 corresponds to a probability of

0.4719. So the probability of completing the project
before 30 weeks is 0.5+0.4717 = 97.17%
Probabilistic analysis
If we take another scenario of expecting the system
to be implemented within 22 weeks, what would
be the probability of completing the project

Z = 22-25/2.62
= -1.14

For the z value of 1.14, the probability is 0.3729. So

the probability of project completion is 0.5-0.3729
= 12.71%
Project Crashing
 Crashing is reducing project time by spending
additional resources

 Crash time is the amount of time reduced for an

activity

 Crash cost is the cost of reducing activity time

Activity Predecessor Time (Days) Cost ($)
Normal Crash Normal Crash
A None 9 7 4800 6300
B None 11 9 9100 15500
C A 7 5 3000 4000
D A 10 8 3600 5000
E B,C 1 1 1000 1000
F B,C 5 3 1500 2000
G D,E 6 5 1800 2000
H D,E 3 3 2000 2000
I H 1 1 2000 2000
J F,G 2 2 2000 2000
K G,I 8 6 5000 7000

1. Find out the cost of crashing the maximum period possible and the total
project cost after crashing