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Project Management Managing the Transformation Process. What is a project ?. A project is a series of tasks (jobs) performed sequentially or in parallel aiming to achieve an important goal, and requiring a significant amount of resources and time. Some examples of projects …. - PowerPoint PPT Presentation
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Project ManagementProject Management
Managing the Transformation ProcessManaging the Transformation Process
What is a project ?What is a project ?
A project is a series of tasks (jobs) performed sequentially or in parallel aiming to achieve an important goal, and requiring a significant amount of resources and time
Some examples of projects …Some examples of projects …
• The adoption of an ERP system by a manufacturer (new process)
• The construction of the new management building at Tech Square (new product)
• The group assignment that you have to write for this course (new product)
• The development of an Unmanned Aerial Vehicle - UAV (new product)
What is project management about ?What is project management about ?
Project management is about the administrative tasks that determine the planning, directing, and controlling of resources in order to meet the technical, cost, and time constraints of the project
Project ManagementProject Management
• Project-Based
• Functional-Based
• Matrix Organization
A Project can be organized in different ways (based on who is managing the project) …
Project-Based OrganizationProject-Based Organization
Marketing R&D Operations
Project Manager
Project Manager
Project Managers have
more power
“Heavy Weight” Project Manager
Project 1
Project 2
Functional-Based OrganizationFunctional-Based Organization
Marketing manager R&D manager
Functional managers have more power
Operations manager
Project 1
Project 2
Project 3
Project 1
Project 2
Project 1
Project 2
Project 3
Project 4
Matrix OrganizationMatrix Organization
Marketing manager R&D manager
Project 1
Project 2
Operations manager
Proj
ect M
anag
erPr
ojec
t Man
ager
Project Control ToolsProject Control Tools
1. Gantt charts
2. Overall cost breakdown
3. Divisional cost breakdown
4. Stage-Gate (milestone chart)
5. Cost-Performance tracking schedule
Gantt ChartGantt Chart
0 5 10 15 20 25 30 35 40 45 50 55 60Time (Days)
A10
A9
A8
A7
A6
A5
A4
A3
A2
A1
Activ
ity
A Gantt chart shows each activity with time lengths and precedence relationships.
Overall Cost BreakdownOverall Cost Breakdown
Time
Cost ($)
Labor cost
Material cost
Overall cost Overall cost breakdown can be used to control which resources are being used effectively
Stage-Gate (Milestones)Stage-Gate (Milestones)
Phase 0
Planning
Phase 1Concept Development
Phase 2System-level Design
Phase 3Detail Design
G1 G2 G3 …
In every development process formal stage-gates (milestones) contribute to the timely completion of the project.
Project ManagementProject Management
How can we plan the evolution of a project ?
• Activity-on-arrow diagrams (AOA)
• Activity-on-node diagrams (AON)
We need to represent precedence relationships, showing the sequence
and interdependence of activities!
Project ManagementProject Management
EXAMPLE: Planning for a vacation…
Activity Description Dependence
A1 Determine continent -
A2 Check for possible spots within continent A1
A3 Find out how many days can take off A1
A4 Submit request for vacation permission A1, A3
A5 Approval of request A2, A4
A6 Comparison for tickets and lodging A2, A4
A7 Final choice of destination A6
A8 Final confirmation for all checks A5, A7
Project ManagementProject Management
The activity-on-arrow diagram
A1A2
A3A4
A5
A6A7
A8
Project ManagementProject Management
The activity-on-node diagram
A1
A3
A2
A4
A5
A6
A8
A7
Project ManagementProject Management
Activity Description Dependence
A1 Ground studies -
A2 Do a geological analysis for a bridge A1
A3 Study the required traffic changes A1
A4 Subcontractor conducts the bridge plans A1, A2
A5 Auction for main constructing company A1, A2
A6 Construction company presents full plan A1, A2, A5
A7 Capital raising activity A1, A2, A4
A8 Auction for subcontracting roads company A1, A3
A9 Presentation for new traffic arrangements A1, A3, A8
A10 Finalization of funding percentages A1, A2, A4, A5, A6, A7
A11 Construction approval A9, A10
EXAMPLE: Bridge Construction…
Project ManagementProject Management
The activity-on-arrow diagram
A1A2
A3
A4
A5
A8
A7
A6
A10
A9
A11
Project ManagementProject Management
1. They show precedence relationships among activities
2. They can be solved in order to identify the key steps for the completion of the project…
Why are project networks useful?
The Critical Path
Critical PathCritical Path
What is a critical path?
The critical path of a project is a series of tasks that determine the amount of time it will take to
complete the project. The critical path of activities forms the longest chain of tasks in order
to complete the project.
Critical PathCritical Path
Example…
What is the longest path to get from the starting node…
… to the completion node?
2
3
5
3
1
Critical PathCritical Path
Let’s work it out…
2
3
5
3
1
0 /
2 /
3/
7 / 8 /
Forward completion (early start/finish) analysis: find out how long will it take to complete the
project IF WE START TODAY
Critical PathCritical Path
… and …
Backward completion (late start/finish) analysis: find out when to start given that the project
must be done in 10 weeks!
2
3
5
3
1
/ 2
/ 4
/ 6
/ 9 / 10
Critical PathCritical Path
2
3
5
3
1
0 / 2
2 / 4
3 / 6
7 / 9 8 / 10
The difference between the two values at each node is called a slack time!
The critical path is the sequence of tasks with the SMALLEST slack time!!
Critical PathCritical Path
Another way to find it…
2
3
5
3
1
0 / 02 / 2
3 / 4
7 / 7 8 / 8
Set the early completion time as the available time for the project!
Critical PathCritical Path
The critical path is…
2
3
5
3
1
What does this actually mean?
One day of delay on the critical path is one day of delay for the entire project!
Critical PathCritical Path
1. The Critical Path Method (CPM) determines the set of activities that impact the project completion time.
2. CPM applies only in cases where times are deterministic.
3. Management should concentrate effort on monitoring activities on the critical path.
Back to the construction example…
33
4
5
4
6
6
5
2
3
1
What is the critical path?
Critical PathCritical Path
33
4
5
4
6
6
5
2
3
1
/
/
/
/
/
/
/ / / /
Critical PathCritical Path
33
4
5
4
6
6
5
2
3
1
0/
7/
3/
6/
13/
11/
10/ 17/ 19/ 20/
Critical PathCritical Path
33
4
5
4
6
6
5
2
3
1
0/0
7/10
3/3
6/6
13/16
11/11
10/12 17/17 19/19 20/20
Critical PathCritical Path
So, what is the critical path?…
The critical path is…
33
4
5
4
6
6
5
2
3
1
Critical PathCritical Path
Developing an Unmanned Aerial Vehicle (UAV)
Activity Description Duration Dependence
A1 Study aerodynamics of a small plane 2 -
A2 Identify the telecom guidance system 1 -
A3 Test on the reliability of Tele-guidance 3 A2
A4 Conduct air-tunnel dynamics test 4 A1
A5 Determine the base guidance installation 2 A2
A6 Construct phase I flying prototype 4 A2, A3
A7 Integrate guidance on phase I prototype 2 A1, A2, A3, A4, A6
A8 Determine ranges and location of base 2 A2, A5
A9 Phase II prototype flight 5 A1, A2, A3, A4, A6, A7
A10 Final prototype in coordination with base 2 A8, A9
Critical PathCritical Path
1 3
2
24
2
2
5
24
The project network is…
Critical PathCritical Path
What is the critical path ?…
1 3
2
24
2
2
5
24
The critical path is…
Critical PathCritical Path
Time-Cost Trade-offTime-Cost Trade-off
• Two concerns:– Time to complete the project– Cost to complete the project
• Costs:– Activity direct costs – costs directly associated with
activities– Project indirect costs – costs associated with sustaining the
project• We can shorten tasks (“crash” them). This would
– Increase activity direct costs– Decrease indirect costs if the project finishes earlier
Time/Cost Tradeoff DataTime/Cost Tradeoff Data
• Normal time: original time estimate for activity• Normal cost: cost to complete activity in normal time• Crash time: the shortest possible activity time• Crash cost: the cost to complete activity in crash time• Unit crash cost: cost to shorten activity time by one
time unit• Example:
– normal time = 5 days, normal cost =10– crash time = 2 days, crash cost = 16– Unit crash cost = (16-10)/(5-2) = 2/day
1. Prepare the CPM network diagram
2. Determine the cost per unit time to “crash” activities.
3. Compute the critical path
4. If possible, shorten the critical path at the least cost (one day at a time).
5. Repeat steps 3 and 4.
Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off
Consider the following project…
“Crashing” projects
Assume that it takes $1000 per day to crash A3, and $500 per day to crash A2. Total available budget to spend on crashing activities is $4000.
Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off
A1(2)
A2(3)
A3(5)
A4(3) A5(1)
Which activities would you “crash” to minimize the project duration with the
available budget?By how many days ?
Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off
Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off
Decision: Total $ Spent:
Crash A3 by 1 day $1000Crash A2 and A3 by 1 day $1000+$1500 = $2500Crash A2 and A3 by 1 day $2500+$1500 = $4000
Summary of steps:Crash A3 by 3 daysCrash A2 by 2 daysBefore: 8 daysAfter: 5 days (at a cost of $4000)
ExampleExample
A
B
C
D
Act. NT NC CT CC Max redn Unit crash costA 2 6 1 10 1 (10-6)/(2-1)=4 B 5 9 2 18 3 (18-9)/(5-2)=3 C 4 6 3 8 1 2D 3 5 1 9 2 2
Project indirect cost: $10 up to 8 days, $5 more per day beyond that