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8/14/2019 Project Maagement
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Project Management A Managerial Prospective
PROJECT MANAGEMENT
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2Project Management A Managerial Prospective
Management
A process of working with people andresources to accomplish organizational
goals.
Getting things done through other people.
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3Project Management A Managerial Prospective
Management (Contd)
The process of achieving organizationalgoals through planning, organizing,
leading, and controlling the human,physical, financial and informational
resources of the organization.
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Managerial Functions
Planning
Organizing
Leading
Controlling
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5Project Management A Managerial Prospective
Manager as a.
Planner
Organizer
Leader
Controller
Motivator
Facilitator
Coordinator
Problem Solver
Decision Maker
Negotiator
Strategist
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What is a Problem.....
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7Project Management A Managerial Prospective
Decision:
The choice made from among alternatives.
Decision making:The process of organizing a problem,
generating and weighting alternativescoming to a decision and taking actionwith feedback.
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8Project Management A Managerial Prospective
Conditions of Decision making: Certainty
Risk
Uncertainty
Ambiguity
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9Project Management A Managerial Prospective
Project
Culture of a Project- Norms of an Organization
- Conflicts
Importance of Human Factor in Projects
Project
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Project Management
The process of controlling of a project from
beginning to an end to achieve projectobjectives in a given time.
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11Project Management A Managerial Prospective
Project Management (Contd)A project is a well-defined set of tasks/activities that must all
be completed in order to meet the projects goals.
Each task may be started/stoppedindependently
Tasks must be performed in a givensequence
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12Project Management A Managerial Prospective
Laws of Project Management
Projects progress quickly until they are 90% complete.Then they remain at 90% complete forever.
When things are going well, something will go wrong.
When things just cant get worse, they will. When thingsappear to be going better, you have overlookedsomething.
If project content is allowed to change freely, the rate of
change will exceed the rate of progress. Project teams detest progress reporting because it
manifests their lack of progress.
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Trade-offs in Project ManagementTrade-offs in Project Management
Performance
Cost Time
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Activity NetworksActivity Networks
Which tasks have to be completed first?
Which tasks rely on the results of othertasks?
Which tasks generate results forsubsequent tasks
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Work Breakdown Structure(WBS)Work Breakdown Structure(WBS)
A hierarchical decomposition of all the tasks to be
accomplished for a project to be completed.
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16Project Management A Managerial Prospective
A WBS is Not !!!A WBS is Not !!!
An Organizational chart
Not a flow chart showing temporal orlogical relationships among tasks
A listing of skills required to complete the
task
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Why do projects fail?Why do projects fail?
Reliance on project management softwarerather than an understanding of project
management principles Communication problems
Failure to adequately adjust for changes
during the course of the project
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Project Team and Its Required Area of Expertise
Project Management
1. Standard
Regulation2.Projec
t
Enviro
nment
3.Gen
eral
Mana
gement
Kno
wledg
e&
Sk
ills
A. Interpersonal
Skills
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Standard:Standard:
A document established by the consensusand approved by organized body.
Requirement imposed by the Government bodies.
Regulation:Regulation:
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Under Standing Project Environment
Cultural & Social Environment:
The teams need to understand how the project
affect the people and how the people affect the
project.
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21Project Management A Managerial Prospective
Under Standing Project Environment(Contd)
Physical Environment:
Project people norms
If the project will affect its physical surroundings, some team
members should be knowledgeable about the local ecology and
physical geography that could affect the project or be affected by
the project.
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22Project Management A Managerial Prospective
General Management Knowledge & Skill
Financial Management & Accounting
Purchasing & Procurement
Sales & Marketing
Contracts & Commercial Laws
Logistics & Supply Chain
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Interpersonal Skills
Communication
Leadership
Motivation
Negotiation & Conflict Management
Problem Solving
MBO
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Cost Estimation
Cost Budgeting
Cost Controlling
Project Cost Management
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Project Cost Management
Project Cost Management includes theprocesses involved in planning,
estimating, budgeting, and controllingcosts so that the project can be completed
within the approved budget.
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26Project Management A Managerial Prospective
Life Cycle Costing
Cost Management should also consider theeffect of project decisions on the cost ofusing, maintaining and supporting the
product, services or results. Life CycleCosting should improve decision makingand is used to reduce cost and execution
time and to improve the quality andperformance of the project deliverable.
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27Project Management A Managerial Prospective
Accounting Terminologies
Opportunity Cost
Sunk Cost
Direct vs Indirect Project Cost
Variable and Fixed Project Cost
Controllable and Non-Controllable Project Cost
Depreciation
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Cost Management Plan
Process Description
Reporting Formats
Precision Levels
Units of Measure
Organizational Procedures LinksControl Thresholds
Earned Value Rules
Cost Management Plan
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Cost Estimating
Developing an approximation of the costs
of the resources needed to complete the
project activities
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Cost Estimating (Contd)
Input Tools & Techniques Output
1. Enterprise Environmentalfactors
2. Organizational ProcessAssets
3. Project Scope Statement4. Work Breakdown Structure5. Project Management Plan
Schedule managementplan
Staffing management plan Risk register
1. Analogous estimating2. Determine resource cost
rates3. Bottom up estimating
4. Project Managementsoftware5. Vendor bid Analysis6. Reserve Analysis7. Cost of Quality
Activity cost estimates
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Reserve Analysis
An analytical technique to determine theessential features and relationships of
components in the project managementplan to establish a reserve for the
schedule duration, budget, estimated cost
or funds for a project.
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32Project Management A Managerial Prospective
Activity Cost Estimate
An activity cost estimate is a quantitativeassessment of the likely costs of the
resources required to complete schedule
activities.This includes but not limited to labor, materials,
equipment, services, facilities, information
technology and special category such as aninflation allowance or cost contingency reserve.
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Cost Budgeting
Aggregating the estimated costs of
individual activities or work packages to
establish a cost baseline.
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Cost Budgeting
Input Tools & Techniques Output
1. Preliminary Scope Statement
2. Work break down structure
3. WBS dictionary
4. Activity cost estimates
5. Project Schedule
6. Resource Calendar
7. Contract
8. Cost Management Plan
1. Cost Aggregation
2. Reserve Analysis
3. Parametric
Estimating
4. Funding Limit
Reconciliation
1. Cost Baseline
2. Project Funding Requirement
3. Cost Management Plan (Up dates)
4. Requested Changes
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Fund Limit Reconciliation
Large variations in the periodic expenditure of
funds are usually undesirable for organizational
operations. Therefore the expenditure of funds is
reconciled with the funding limits set by the
customer or performing organization on the
disbursement of the funds for the project.
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36Project Management A Managerial Prospective
Budget
The approval estimate for the project or any work breakdown
structure component or any schedule activity.
Cost BaselineThe cost base line is a time phased budget that is used as a basis
against which to measure, monitor and control overall cost
performance on the project. The cost baseline is the component
of the project management plan.
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Project Funding Requirements
Funding requirements, total and periodic (e.g. annual
or quarterly) are derived from the cost baseline and
can be established to exceed. Usually by a margin
to allow for either early performance/progress or
cost overruns. The total funds required are those
included in the cost baseline plus the management
contingencies reserve account.
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Cost Control
Influencing the factor that create cost
variances and controlling changes to the
project budget.
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Cost Controls
Budget at Completion (The amount youbudgeted for the entire project)
Estimate at Completion (The amount that you
expect that the total project to cost) Estimate to Complete (From the point on, how
much more we expect the project to cost to finish theproject)
Variance at Completion (How much over orunder budget we expect to have)
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40Project Management A Managerial Prospective
Project Risk Management
Project Risk Management includes the processes
concerned with conducting risk management planning,
identification, analysis, responses and monitoring and
control on a project.
The objective of the risk management is to increase the
probability and impact of positive events and decreasethe probability and impact of events adverse to project
objectives.
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Risk
An uncertain event or condition that if it occurs has apositive or negative effect on a projects objectives.
Triggers
Indications that a risk has occurred or is about o occur. Triggers may be discovered in the risk identifications process
and watched in the risk monitoring and control process. Triggers are some time called risk symptoms or warning signs.
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Project Risk Management
Risk Management Planning
Risk Identification
Quantitative Risk Analysis Qualitative Risk Analysis
Risk Response Planning
Risk Monitoring & Controls
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Project Procurement ManagementProject Procurement Management Includes the
process to purchase or acquire the products,services, or results needed from outside the
project team to perform the work.
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44Project Management A Managerial Prospective
Project Procurement Management
1. Plan
Purchase or
Acquisition
2. Make or Buy
3. Plan
Contracting
1. Floatrequest/
Tendering
2. Receive Bid
or Quote
3. Selection ofvendor
4. Contract
awarding
1. Contract
Administratio
n
2. Managing
Interfaceamong
various
providers
1. Contract
Closure
2. Post
procurement
Audit
3. Post
performance
evaluation
Project ProcurementManagement
Planning Executing Monitoring &
Controlling
Closing
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Plan Purchase or Acquisition
Determination of What to purchase, why and
when to purchase.
Make or Buy Analysis
It is a general management technique that can be used to determine
whether a particular product or service can be produced by the project
team or buy from the market.
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46Project Management A Managerial Prospective
ContractA contract is normally binding agreement that obliges the seller to
provide the specified product and obligates the buyer to pay for it.
Contract Fundamentals
A contract may be written or oral and is both a legal
document and a relationship between the parties
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47Project Management A Managerial Prospective
Type of Contract
Fixed Price of
Lump-Sum ContractsCost Reimbursable
Contracts
Time & Material
Contract
Contracts
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Fixed Price or Lump-Sum Contract
A type of contract involving a fixed total price for a well definedproduct.
Fixed price contracts may also include incentives for meeting orexceeding project objective such as schedule targets.
Cost Reimbursable Contracts
A type of contract involving payment by the buyer to the seller for the sellersactual cost plus a fee typically representing sellers profit. These type ofcontracts often includes some incentive clauses.
Time & Material Contract
A type of contract that is a hybrid contractual agreement containingaspects of both i.e. Fixed price & Cost Reimbursable Contracts
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Contract Type Selection
What Contract type might best suit the project?
Degree of Cost and Schedule Risk
How Complex is the requirement Cost & Price Analysis
Urgency of the Deliverables
Frequency of Changes
Degree of definition of the statement of the work
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Project Evaluation and Review Technique(PERT) /Critical Path Method (CPM)
Graphical display of interrelationships amongactivities and the order of project activities
Allows estimates of completion time and cost
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PERT / CPM
1. List activities and duration; develop WBS.
2. Order activities through use of Gannt chart.
3. Develop immediate precedent activities.
4. Draw project graph.
5. Calculate early start / early finish.
6. Calculate late start / late finish.
7. Determine critical path using slack time.8. Crash project
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Example(Build a new mountain bike)
A major manufacturer of bicycles is planning to enter the
high-end market for mountain bikes by designing a new,
state-of-the-art mountain bike. The bicycle is to be a
completely new design, and management has directed
the design team to incorporate the latest technology in
every facet of the productframe, gears, wheels,brakes, and so onyet keep the price of the bike within
$100 of leading competitors prices.
A ti iti & D ti Ti
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Activities & Duration Times
Activity Expected Duration(months)
A Do preliminary market analysis 1.0
B Develop preliminary market designs 3.0
C Do preliminary manufacturing study 1.0
D Evaluate and select best product design 1.0
E Develop detailed marketing plans 1.0
F Design manufacturing process 3.0
G Develop detailed product design 3.0
H Build and test prototype 1.0
I Finalize product design 1.5
J Order components 1.0
K Order production equipment 3.0
L Install production equipment 2.0
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Work Breakdown Structure (WBS)
The set of independent tasks or work packagesthat constitute a project
Hierarchy of sub-projects that make of the totalproject
Useful for controlling costs, time, and resourceallocation
Partial Work Breakdown Structure
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56Project Management A Managerial Prospective
Partial Work Breakdown Structure(for step G)
Mountain
Bike
WheelSystems
GearingSystems
FrameSystems
Seat SystemsBrake
Systems
Hubs
Rims &Spokes
Gears &Chains
Derailleur &Shifters
Fork SystemFrame
Structure
BearingSystems
TubingStructure
JoiningSystems
Tubing
Cover &Padding
SeatStructure
Calipers
Levers &Cables
G tt Ch t
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Gantt Chart(for mountain bike development project)
A Do preliminary market analysis
B Develop preliminary market designs
C Do preliminary manufacturing study
D Evaluate and select best product design
E Develop detailed marketing plans
F Design manufacturing process
G Develop detailed product design
H Build and test prototype
I Finalize product design
J Order components
K Order production equipment
L Install production equipment
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Time in Months
Precedence Relationships
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Precedence Relationships
Activity ImmediatePredecessor
A Do preliminary market analysis --
B Develop preliminary market designs A
C Do preliminary manufacturing study A
D Evaluate and select best product design B, C
E Develop detailed marketing plans D
F Design manufacturing process D
G Develop detailed product design D
H Build and test prototype G
I Finalize product design F, H
J Order components I
K Order production equipment I
L Install production equipment E, J, K
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59Project Management A Managerial Prospective
A
C
B
D
ES EF
LS LF
(Duration)
ES = Early Start
EF = Early Finish
LS = Late Start
LF = Late Finish
PERT / CPM Chart Structure
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Project Management A Managerial Prospective
A
C
B
D
E
F
G H
I J
K
L
PERT / CPM Chart
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Project Management A Managerial Prospective
A(1)
C(1)
B(3)
D(1)
E(1)
F(3)
G(3) H(1)
I(1.5) J(1)
K(3)
L(2)
0 1
1 4
1 2
5 6
5 8
5 8
9 10.5
8 9
10.5 11.5
10.5 13.5
13.5 15.5
4?Or2?4 5
Early Start / Early Finish(start with A)
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Project Management A Managerial Prospective
0 1
1 4
1 2
5 6
5 8
5 8
9 10.5
8 9
10.5 11.5
10.5 13.5
13.5 15.5
4 5
Late Start / Late Finish(start with L)
A(1)
C(1)
B(3)
D(1)
E(1)
F(3)
G(3) H(1)
I(1.5) J(1)
K(3)
L(2)
13.5 15.5
12.5 13.5
10.5 13.5
9 10.5
8 95 8
6 9
12.5 13.5
4 5
3 4
1 4
0 1
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Calculating Slack Time to Find the Critical Path
Slack time tells us how long a particular activity can bedelayed without delaying the entire project
Assumption: All preceding activities completed as early
as possible
Slack = LS ES or Slack = LF-EF
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Calculating Slack Time
Activity Duration ES EF LS LF SlackA 1 0 1 0 1 0
B 3 1 4 1 4 0
C 1 1 2 3 4 2
D 1 4 5 4 5 0
E 1 5 6 12.5 13.5 7.5
F 3 5 8 6 9 1G 3 5 8 5 8 0
H 1 8 9 8 9 0
I 1.5 9 10.5 9 10.5 0
J 1 10.5 11.5 12.5 13.5 2
K 3 10.5 13.5 10.5 13.5 0
L 2 13.5 15.5 13.5 15.5 0
The critical path lies through those activities with no slack time.
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Project Management A Managerial Prospective
Critical Path
1 2
5 6
5 8 10.5 11.5
C(1)
E(1)
F(3) J(1)
12.5 13.56 9
12.5 13.5
3 4
9 10.5
0 1
1 4
5 8
9 10.5
8 9 10.5 13.5
13.5 15.5
4 5
A(1)
B(3)
D(1)
G(3) H(1)
I(1.5)
K(3)
L(2)
13.5 15.5
10.5 13.58 95 8
4 5
1 4
0 1
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Project Crashing
(Accounting for the Time/ Cost Trade-off)
What if the project cant be completed within thetargeted time?
Can the project be shortened by adding moreresources?
If so, do the necessary resources exist?
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Project Crashing (Crunching)
1. Determine if critical path (CP) falls withintargeted time. If yes, stop.
2. If no, compute crash cost per time period foreach activity.
3. Select activity on CP with lowest crash costand crash.
4. Re-compute CP and check to see if within
targeted time.5. Repeat as necessary.
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Critical Path Enumeration
A-B-D-E-L 8A-B-D-F-I-J-L 12.5A-B-D-F-I-K-L 14.5A-B-D-G-H-I-J-L 13.5A-B-D-G-H-I-K-L 15.5
A-C-D-E-L 6A-C-D-F-I-J-L 10.5A-C-D-F-I-K-L 12.5A-C-D-G-H-I-J-L 11.5A-C-D-G-H-I-K-L 13.5
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Critical Path CrashingA-B-D-E-L 8A-B-D-F-I-J-L 12.5A-B-D-F-I-K-L 14.5
A-B-D-G-H-I-J-L 13.513A-B-D-G-H-I-K-L 15.515A-C-D-E-L 6A-C-D-F-I-J-L 10.5A-C-D-F-I-K-L 12.5
A-C-D-G-H-I-J-L 11.511A-C-D-G-H-I-K-L 13.513
Spent $20 to shorten0.5 months
Critical Path Crashing
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70Project Management A Managerial Prospective
Critical Path Crashing
A-B-D-E-L 8A-B-D-F-I-J-L 12.5A-B-D-F-I-K-L 14.5
A-B-D-G-H-I-J-L 1311A-B-D-G-H-I-K-L 1513A-C-D-E-L 6A-C-D-F-I-J-L 10.5A-C-D-F-I-K-L 12.5
A-C-D-G-H-I-J-L 119A-C-D-G-H-I-K-L 1311
New CP
(1)
(2)
(2)
(2)
(3)
Critical Path Crashing
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71Project Management A Managerial Prospective
Critical Path Crashing
A-B-D-E-L 86A-B-D-F-I-J-L 12.510.5A-B-D-F-I-K-L 14.512.5
A-B-D-G-H-I-J-L 119A-B-D-G-H-I-K-L 11A-C-D-E-L 6A-C-D-F-I-J-L 10.5
A-C-D-F-I-K-L 12.5A-C-D-G-H-I-J-L 9A-C-D-G-H-I-K-L 11
B and I can both be crashed for$60pick one
(I picked B)
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72Project Management A Managerial Prospective
Critical Path crashingA-B-D-E-L 6
A-B-D-F-I-J-L 10.59.5A-B-D-F-I-K-L 12.511.5A-B-D-G-H-I-J-L 98
A-B-D-G-H-I-K-L 11 10A-C-D-E-L 6
A-C-D-F-I-J-L 10.59.5A-C-D-F-I-K-L 12.511.5
A-C-D-G-H-I-J-L 98A-C-D-G-H-I-K-L 1110
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Treating Time as Probabilistic
What if the time estimates for completion ofproject activities arent certain?
optimistic time
most likely time
pessimistic time
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74Project Management A Managerial Prospective
Using Time Estimates
1. Calculate ET = Expected Time for eachactivity.
2. Use ET to determine CP and, if necessary, tocrash the project.
3. Determine variance of expected time for eachactivity.
4. Calculate Z and determine probability project
will be completed by a desired time.
Using Time Estimates
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Using Time Estimates
Variable definitionsa = optimistic time for activity
m = most likely time for activity
b = pessimistic time for activityET = expected time of each activity
2 = variance of ET for each activity
TE= expected project completion time (CP time)
D = desired project completion time
CP
2= sum of variances along CP
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Using Time Estimates
1. Calculate ET for each activity
2. Calculate TE = (ETs) along CP3. Determine variances
4. Calculate Z (use App. E (p. 742) or NORMSDIST in Excel)
a 4m bET
6
+ +=
2
2 b a
6
=
E
2
CP
D TZ
=
Using Time Estimates
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Using Time Estimates
Optimistic Most Likely Pessimistic Expected Time Variance of ETActivity a m b ET 2A 0.5 1 1.5 1 0.028
B 2.5 3 3.5 3 0.028
C 0.5 0.75 1 0.75 0.007
D 0.5 1 1.5 1 0.028
E 0.5 0.75 1 0.75 0.007
F 2 2.5 3 2.5 0.028G 2 4 6 4 0.444
H 1 2 3 2 0.111
I 0.5 1.5 2.5 1.5 0.111
J 0.5 1 1.5 1 0.028
K 1 2 3 2 0.111
L 1 1.5 2 1.5 0.028
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Project Management A Managerial Prospective
A(1)
C(.75)
B(3)
D(1)
E(.75)
F(2.5)
G(4) H(2)
I(1.5) J(1)
K(2)
L(1.5)
0 1
1 4
1 1.75
5 5.75
5 7.5
5 9
11 12.5
9 11
12.5 13.5
12.5 14.5
14.5 164 5
Early Start / Early FinishUsing ET
0 1
1 4
3.25 4
4 5
13.75 14.5
8.5 11
5 9
11 12.5
9 11 12.514.5
13.5 14.5
14.5 16
Using Time Estimates
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Using Time EstimatesCritical Path
Activity ET 2 ES EF LS LF SlackA 1 0.028 0 1 0 1 0
B 3 0.028 1 4 1 4 0
C 0.75 0.007 1 1.75 3.25 4 2.25
D 1 0.028 4 5 4 5 0
E 0.75 0.007 5 5.75 13.75 14.5 8.75
F 2.5 0.028 5 7.5 8.5 11 3.5
G 4 0.444 5 9 5 9 0
H 2 0.111 9 11 9 11 0I 1.5 0.111 11 12.5 11 12.5 0
J 1 0.028 12.5 13.5 13.5 14.5 1
K 2 0.111 12.5 14.5 12.5 14.5 0
L 1.5 0.028 14.5 16 14.5 16 0
Critical Path: A-B-D-G-H-I-K-L
TE = 1+3+1+4+2+1.5+2+1.5 = 16
CP = .028+.028+.028+.444+.111+.111+.111+.028 = .889
Note: individual variances contain rounding errorsee imbedded Excel worksheet above,double click and scroll down
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80Project Management A Managerial Prospective
Using Time Estimates
E
2
CP
T 16
.889
D 12
12 16Z 4.24 ~ 4.0
.889
=
=
=
= =
Using Appendix E, p. 742,probability project will be completed
in 12 months is .00003 or .003%
Using NORMSDIST(4.24) in Excel,probability project will be completedin 12 months is .0011%
See calculations in imbedded Excelfile on previous slide.
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The End
ANY QUESTIONS