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PROJECT MANAGEMENT

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Project:
A project is a collection of inter-related activities that
must be executed in a certain order before the entire
task can be completed.

Activity:
An activity can be viewed as a job which requires
resources (time and money) to complete it.

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Examples of Projects
• Construction of a building, plant, highway
• Construction of a shopping mall
• Development of a new product
• Development of new drug
• Design and installation of a new system
• Movie production
• Launching a satellite

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Scientific techniques
• To plan, schedule & control project
activities, use
– Program (or Project) Evaluation Review
Technique (PERT)
– Critical Path Method (CPM)
– Gantt chart or Bar chart

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Scientific techniques
• History
– PERT – 1957, M. R. Walker & J. E. Kelly of Du Pont
developed CPM to improve planning, scheduling &
controlling of Du Pont building & maintenance of
chemical plants
– CPM – US Navy research team developed PERT for
its Polaris Missile project
– Bar chart or Gantt chart – WW1, Henry Gantt
developed a chart to plan & schedule for the activities
of artillery ammunition shops at Frankford Arsenal

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Gantt Chart / Bar Chart
F

E
Activity

1 2 3 4 5 6 7 8
Time
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CPM & PERT
• CPM was developed for projects with
known activity times (deterministic activity
times)
• PERT was originally developed to handle
projects with uncertain activity times
(probabilistic activity times)
• CPM is a deterministic technique, and
PERT a probabilistic technique

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PERT/CPM
• PERT & CPM address the followings;
– Total time to complete the whole project
– When individual activities start & finish to meet the
completion time
– What are the critical activities
– What are the non-critical activities
• Can a project be completed at shorter
completion time if extra resources are deployed
or spent

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Common Steps in CPM/PERT
1. Define the project and identify all its activities.
2. Develop the precedence relationships among all
activities.
3. Draw the project network connecting all the activities.
4. Assign time (or resources) estimate to complete each
activity .
5. Compute the longest path through the network. This
path is called critical path. The activities on the path
are critical activities

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Example: (RI)
Step 1: There is a project which consists of the following activities:
A, B, C, D, E, F, G, H, I, and J.
Step 2:
(i) A and B are initial activities which can be started
simultaneously.
(ii) B precedes C
(iii) A precedes D and E.
(iv) C and E precede F and G.
(v) D and C precede I and H.
(vi) H and F precede J
(vii) I, J and G are the terminal activities.
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Project network

D I

A
E H
Start J Finish

F
B
C
G

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AOA /AON
Activity On Arc (AOA) Activity Completion
of activity
A B
arc arc
node node

Activity On Node (AON)


Precedence Activity
relationship
A B
arc
node
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Example: (RI)
United College (U.C.) has planned to build a
new multipurpose athletic complex on its
sprawling campus. The complex would provide
a stadium for intercollegiate soccer games, a
badminton court, expanded office space and
classrooms. The following activities would
have to be undertaken before construction can
begin.

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Activity Description Immediate Time
Predecessor (weeks)
A Survey building site — 7
B Develop initial design — 10
C Obtain approval from A, B 15
college management
D Select architect C 3
E Prepare budget C 5
F Finalize design D, E 15
G Obtain financing E 11
H Hire contractor F, G 7

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Network Path Representation

A D
Start C F
B E H Finish

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All possible paths in UC
project
Path Length (weeks)
Start→A →C →D →F →H →Finish 7+15+3+15+7=47
Start→A →C →E →F →H →Finish 7+15+5+15+7=49
Start→A →C →E →G →H →Finish 7+15+5+11+7=45
Start→B →C →D →F →H →Finish 10+15+3+15+5=50
Start→B →C →E →G →H →Finish 10+15+5+11+7=48
Start→B →C →E →F →H →Finish 10+15+5+15+7=52

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Network Node

EARLY EARLY
ACTIVITY
START FINISH

DURATION LATE LATE


(TIME) START FINISH

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Early Start - Early Finish &
Late Start - Late Finish
Forward Pass
Early Finish: EF = ES + t
t = activity duration

Backward Pass
Late Start: LS = LF – t

Slack, s = LS – ES or LF – EF
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Critical path:
s=3 s=2 Start-B-C-E-F-H-Finish
A 0 7 D 25 28 Completion time = 52 weeks
7 3 10 3 27 30
s=0 s=0
C 10 25 F 30 45
Start
15 10 25 15 30 45
s=0 s=0 s=0
B 0 10 E 25 30 H 45 52
Finish
10 0 10 5 25 30 7 45 52
s=4
G 30 41
52 weeks 11 34 45

A D F
H ES - EF
C
B E G Forward
Start Finish
0 10 20 30 40 50
A D F LS - LF
C H
B E G Backward
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Activity Duration ES EF LS LF Slack, s Critical
(LS-ES) activity?

A 7 0 7 3 10 3 No
B 10 0 10 0 10 0 Yes
C 15 10 25 10 25 0 Yes
D 3 25 28 27 30 2 No
E 5 25 30 25 30 0 Yes
F 15 30 45 30 45 0 Yes
G 11 30 41 34 45 4 No
H 7 45 52 45 52 0 Yes
Critical path:
Start-B-C-E-F-H-Finish
Completion time = 52 weeks
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PERT: Project Scheduling with
Uncertain Activity Times
• Arise when embarking on new project
– Difficulty to specify the estimation of time to complete
each activities
– No prior experience in carrying out these activities
• Customary to specify completion time based on
– Optimistic time (a) = minimum time an activity
can be completed
– Most probable time (m) = normal time after taking
into account the
possibility of things goes
fine or wrong
– Pessimistic time (b) = time taken for an activity
if everything goes wrong
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Beta probability distribution
Probability

Expected
Time
t = (a + 4m + b)/6
(t )

σ2 = ((b - a)/6)2

Time

Optimistic Most likely Pessimistic


or most probable
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(m)
Beta probability distribution
• t = mean probability distribution or
expected completion time
• t = (a + 4m + b)/6
• σ2 = variance of probability distribution or
amount of variation in activity
completion time
• σ2 = ((b - a)/6)2

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PERT
Example: (RI)
You have been assigned as a project manager for a
project in your company. This type of project was not
carried out before in your company. You have identified
eleven activities for the whole project. Furthermore, there
are uncertainties in completion times for all the activities.
The following table shows all the activities, their completion
times (in terms of optimistic, pessimistic and most likely)
and the immediate predecessors.

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Activity Time estimates Immediate
Optimistic Most Likely Pessimistic predecessor

A 8 10 12 —
B 5 8 17 —
C 7 8 9 —
D 1 2 3 B
E 8 10 12 A, C
F 5 6 7 D
G 1 3 5 D, E
H 2 5 8 F, G
I 2 4 6 G
J 4 5 6 H
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Activity Time estimates Expected Variance
a m b time (t) (σ2)

A 8 10 12 10 0.44
B 5 8 17 9 4
C 7 8 9 8 0.11
D 1 2 3 2 0.11
E 8 10 12 10 0.44
F 5 6 7 6 0.11
G 1 3 5 3 0.44
H 2 5 8 5 1
I 2 4 6 4 0.44
J
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Network Diagram
s=0 s=6 s=3
A 0 10 s=6 F 11 17 J 28 33
10 0 10 D 9 11 6 17 23 5 31 36
σ2 = 0.44
2 15 17
s=6 s=0
B 0 9 H 23 28
9 6 15 5 23 28 Finish
σ = 1.00
2
s=0 s=0
Start G 20 23 K 28 36
s=0
E 10 20 3 20 23 8 28 36
s=2
C 0 8 10 10 20 σ2 = 0.44 s=9 σ2 = 2.78
σ2 = 0.44 I 23 27
8 2 10
4 32 36

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Activity Expected time ES EF LS LF LS-ES Critical
(t) (s) activity?

A 10 0 10 0 10 0 Yes
B 9 0 9 6 15 6 No
C 8 0 8 2 10 2 No
D 2 9 11 15 17 6 No
E 10 10 20 10 20 0 Yes
F 6 11 17 17 23 6 No
G 3 20 23 20 23 0 Yes
H 5 23 28 23 28 0 Yes
I 4 23 27 32 36 9 No
J 5 28 33 31 36 3 No
K 8 28 36 28 36 0 Yes

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• Critical activities: Start-A-E-G-H-K-Finish
• Expected completion time: 36 wks
• Variance of completion time: 5.1

• What is the probability of completing the project


in 40 wks? (96.16%)
• What is the probability of completing the project
in 35 wks? (33%)
• With 98% chance of completion, what is the
project completion time? (41 wks)
Normal tables p773

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Project Crashing and Time-Cost
Trade-off
• A method for shortening project duration by
reducing the time of one or more of the critical
project activities to a time that is less than the
normal activity time
– Referred to as crashing
• Keywords
– Normal activity time
– Normal activity cost
– Crash time
– Crash cost
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• Crash cost per week
= total crash cost/total crash time
• Total crash time
= normal time – crash time
• Total crash cost
= crash cost – normal cost
• See eg. Pg 352 RI
• Marginal Analysis of Project Crashing (Pg 353)

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Time-cost relationship for crashing activity
Eg house construction (activity 1)
$
(000) Crash cost per week
7 = $2000/5wks
= $400 per week
6

Crash cost 5 Crash activity

4 $2,000
Normal cost 3 Normal activity
2
1 5 wks

2 4 6 8 10 12 14 16 18 Weeks
Crash Normal
time time
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Project Crashing and Time-Cost
Trade-off

• Project Crashing by Linear Programming


(Pg 357 RI)

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