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ProjectManagementChapterFourCopyright©2021byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/IrwinLearningObjectivesLO4–1:Explainwhatprojectsareandhowprojectsareorganized.LO4–2:Analyzeprojectsusingnetwork-planningmodels.LO4–3:Evaluateprojectsusingearnedvaluemanagement.LO4–4:Exemplifyhowthesetechniquesareimplementedincommercialsoftwarepackages.4-2ProjectManagementWhatisaproject?Aseriesofrelatedjobs,usuallydirectedtowardsomemajoroutputandrequiringasignificantperiodoftimetoperform.Whatisprojectmanagement?Planning,directing,andcontrollingresources(people,equipment,material,etc.)tomeetthetechnical,cost,andtimeconstraintsoftheproject.Whyisprojectmanagementimportant?Atthehighestlevelsofanorganization,managementofteninvolvesjugglingaportfolioofprojects.4-3TypesofDevelopmentProjectsTypeofProjectDegreeofChange4-4ProjectStructurePureProjectAself-containedteamworksfull-timeontheproject.FunctionalProjectResponsibilityfortheprojectlieswithinonefunctionalareaofthefirm.Employeesfromthatareaworkontheproject,usuallyonlypart-time.MatrixProjectAblendofpureandfunctionalprojectstructures–peoplefromdifferentfunctionalareasworkontheproject,possiblyonlypart-time.4-5PureProjectStructureAdvantagesTheprojectmanagerhasfullauthorityTeammembersreporttoonebossShortenedcommunicationlinesTeampride,motivation,andcommitmentarehighDisadvantagesDuplicationofresourcesOrganizationalgoalsandpoliciesareignoredLackoftechnologytransferTeammembershavenofunctionalarea"home"4-6FunctionalProjectStructureAdvantagesAteammembercanworkonseveralprojectsTechnicalexpertisemaintainedinfunctionalareaFunctionalareais“home”afterprojectcompletedCriticalmassofspecializedknowledgeDisadvantagesAspectsoftheprojectthatarenotdirectlyrelatedtothefunctionalareagetshort-changedMotivationofteammembersisoftenweakNeedsoftheclientaresecondaryandarerespondedtoslowly4-7MatrixProjectStructureAdvantagesBettercommunicationsbetweenfunctionalareasProjectmanagerheldresponsibleforsuccessDuplicationofresourcesisminimizedFunctional“home”forteammembersPoliciesoftheparentorganizationarefollowedDisadvantagesToomanybossesDependsonprojectmanager’snegotiatingskillsPotentialforsub-optimization4-8DefiningtheProjectStatementofWorkAwrittendescriptionoftheobjectivestobeachievedTaskAfurthersubdivisionofaproject–usuallyshorterthanseveralmonthsandperformedbyasinglegroupororganizationWorkPackageAgroupofactivitiescombinedtobeassignabletoasingleorganizationalunit4-9DefiningtheProject(continued)ProjectMilestoneSpecificeventsinthelifeoftheprojectWorkBreakdownStructureDefinesthehierarchyofprojecttasks,subtasks,andworkpackagesActivitiesPiecesofworkthatconsumetime4-10WorkBreakdownStructureExampleOverviewDetails4-11WorkBreakdownStructure–LargeOpticalScannerDesignOverviewDetails4-12Network-PlanningModelsAprojectismadeupofasequenceofactivitiesthatformanetworkrepresentingaproject.Thepathtakinglongesttimethroughthisnetworkofactivitiesiscalledthe“criticalpath.”Thecriticalpathprovidesawiderangeofschedulinginformationusefulinmanagingaproject.Criticalpathmethod(CPM)helpstoidentifythecriticalpath(s)intheprojectnetworks.4-13CriticalPathMethod(CPM)Identifyeachactivitytobedoneandestimatehowlongitwilltake.Determinetherequiredsequenceandconstructanetworkdiagram.Determinethecriticalpath.Determinetheearlystart/finishandlatestart/finishschedule.4-14Example4.1–IdentifyActivitiesandConstructNetworkA(21)C(7)B(5)D(2)F(8)E(5)G(2)4-15DetermineEarlyStart/EarlyFinishandLateStart/LateFinishScheduleA(21)C(7)B(5)D(2)F(8)E(5)G(2)021021212128282121262626262828282836362831333636363838CriticalPath1:ACFGCriticalPath2:ABDFGExcel:CriticalPaths4-16CPMwithActivityTimeEstimatesWhenactivitytimesvary,asingletimeestimatemaynotbereliable.Instead,estimatethreevaluesMinimumMaximumMostlikelyThisallowscalculationofaprobabilityestimateofcompletiontime.ThisisthedistinguishingcharacteristicofthePERTmethod.4-17PERTMethodCalculations
Excel:PERTCalculations4-18Example4.2-ThreeTimeEstimates
4-19Example4.2-NetworkwithTimeEstimatesA(21)C(7)B(5)D(2)F(8)E(5)G(2)212121212828212126262626282828283636283133363636383800
4-20Example4.2–ThreeTimeEstimatesProbabilityoffinishingin35weeks(orless)
4-21Example4.2–ThreeTimeEstimatesProbabilityoffinishingin35weeks(orless)isabout19%4-22Time-CostModelsandProjectCrashingAtime-costmodelextendstheCPMmodeltoconsiderthetrade-offbetweentimerequiredtocompleteanactivityandtotalprojectcost.Considersdirectactivitycosts,indirectcostsofproject,andactivitycompletiontimesItisoftenreferredtoas“crashing〞theprojecttoreduceoverallduration.4-23ProjectCrashingPrepareaCPM-typenetworkdiagram. Determinethecostperunitoftimetoexpediteeachactivity.Computethecriticalpath.Shortenthecriticalpathatthepointwherecostsarelowest.Plotproject,indirect,andtotalcostcurvestofindtheminimum-costschedule.4-24Example4.3–ProjectCrashing
Excel:ProjectCrashing4-25Example4.3–ProjectCrashingActivityDcannotbereducedanyfurtheratthispointActivityAcannotbereducedanyfurtheratthispointProjecthasreachedminimumduration4-26ManagingResourcesInadditiontoschedulingtasks,resourcesmustalsobeassignedtospecifictasks.Softwarecanbeusedtospotover-allocation.PlanneduseexceedsavailablesupplyWhenresourcesareover-allocated,eithermoreresourcesarerequiredorreschedulingisnecessary.Takingadvantageoftaskslackcanfreeresources4-27ProjectControlChartsChartsprovideaneasilyunderstoodvisualpresentation.Softwarecanbeusedtocreatethecharts.Ganttchartsshow,inagraphicmanner,theamountoftimeinvolvedandthesequenceofactivities.Oftenreferredtoasabarchart.4-28ProjectReportSamples4-29EarnedValueManagement(EVM)AtechniqueformeasuringprojectprogressinanobjectivemannerHastheabilitytocombinemeasurementsofscope,schedule,andcostinaprojectProvidesamethodforevaluatingtherelativesuccessofaprojectatapointintime4-30EarnedValueManagement–EssentialFeaturesAprojectplanthatidentifiestheactivitiestobeaccomplishedAvaluationofeachactivityworkPredefinedearningorcostingrulestoquantifytheaccomplishmentofwork4-31EarnedValueManagementChartsBudgetedcosts(scheduled)andactualcostsCostsofscheduledandperformedworkBudgetedcost(workperformed)andactualcostsBudgetedcosts(scheduledandperformedwork)andactualcosts4-32ProjectTrackingwithoutEVMAsimplecomparisonofjustcostsversusbudgetdoesnottellthewholestory.Projectappearstobeoverbudgetinweeks1–4.Actualcostsexceedbudget.Afterweek5,theprojectappearstobeunderbudget.Withoutameansofquantifyinghowmuchworkhasbeenaccomplished,thisistheonlyavailableinformation.4-33ProjectTrackingwithEVMWithpredefinedmethodsofquantifyingthequantityofworkaccomplished,EVMprovidesmuchmoreinformation.Projectisaheadofscheduleinweeks1–5.Afterweek6,theprojecthasfallenbehindschedule.EVMprovidesinformationaboutperformanceaccordingtotheschedule.4-34ProjectTrackingwithEVMWithpredefinedmethodsofquantifyingthequantityofworkaccomplished,EVMprovidesmuchmoreinformation.Projectisunderbudgetintermsofactualworkperformed4-35ProjectTrackingwithEVMAcombinedviewgivesanoverviewofprojectperformanceintermsoftheoriginalplan.4-36Example4.4–EarnedValueManagementAttime“X〞,ActivityAis100%complete(budgetedcostwas$18K).Attime“X〞,ActivityBis80%complete(budgetedcostwas$10K).Attime“X〞,ActivityCis70%complete(budgetedcostwas$20K).80%ofthisactivityshouldbecompletebynow.Attime“X〞,ActivityDis0%complete(budgetedcostwas$40K).15%ofthisactivityshouldbecompletebynow.4-37Example4.4–BudgetedCostofWorkScheduled(BCWS)ActivityA–100%of$18K=$18KActivityB–100%of$10K=$10KActivityC–80%of$20K=$16KActivityD–15%of$40K=$6KBCWS=$18K+$10K+$16K+$6K=$50K4-38Example4.4–BudgetedCostofWorkPerformed(BCWP)ActivityA–100%of$18K=$18KActivityB–80%of$10K=$8KActivityC–70%of$20K=$14KActivityD–0%of$40K=$0KBCWP=$18K+$8K+$14K+$0K=$40K4-39Example4.4–PerformanceMeasures
Actualcostof$45KobtainedfromaccountingrecordsForperformanceindices:PI<1meanscostsarehigherthanplannedPI=1meanscostsareexactlyasplannedPI>1meanscostsarelowerthanplanned4-40ProjectManagement:InformationSystems4-41CheckoutthewebsiteoftheProjectManagementInstitute().TwooftheleadingcompaniesareMicrosoft,withMicrosoftProject,andPrimavera,
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