Chapter 9: Project Management

Qualities of a Project
-has unique purpose
-not repetitive
-relatively short period of time
-one-time operational activity or effort
-draws resources from multiple departments
Elements of a Project Plan
-Contract requirements
-Risk and problem analysis
Project Return
-Requires positive gain or benefit
-ROI is one measure, but not always applicable
-“Soft” returns — Projects for public good
ROI Return on Investment
(Gain from project – cost of project) / (cost of project)
Project Team
made up of individuals from various areas and departments within a company
Matrix organization
a team structure with members from functional areas, depending on skills required
Project manager
most important member of project team
Scope Statement
a document that provides an understanding, justification, and expected result of a project
Statement of work
written description of objectives of a project
Work Breakdown Structure
-Organizes the work in a project
-Breaks project into components, subcomponents, activities, and tasks (Start at the top and work down; Brainstorm project activities)
Responsibility Assignment Matrix
-Organizational Breakdown Structure (OBS)
-Responsibility Assignment Matrix (RAM)
Organizational Breakdown Structure (OBS)
a chart that shows which organizational units are responsible for work items
Responsibility Assignment Matrix (RAM)
shows who is responsible for the work in a project
Global Cultural and Diversity Issues in Project Management
-Global project teams are formed from different genders, cultures, ethnicities, etc.
-Diversity among team members can add an extra dimension to project planning
-Cultural research and communication are important elements in the planning process
Project Scheduling Steps
1.) Define activities
2.) Sequence activities
3.) Estimate time
4.) Develop schedule
Project Scheduling Techniques
Gantt Chart or CPM/PERT
Project Schedule Software
Microsoft Project
Gantt Chart
-Graph or bar chart
-Bars represent the time for each task
-Bars also indicate status of tasks
-Provides visual display of project schedule
-Shows precedence – sequence of tasks
-Slack: amount of time an activity can be delayed without delaying the project
Project Control (6 Factors)
-Time management
-Cost management
-Quality management
-Performance management
-Enterprise project management
Critical Path Method (CPM): DuPont & Remington-Rang
-Deterministic task times
-Activity-on-node network construction

Project Evaluation and Review Technique (PERT): US Navy and Booz Allen & Hamilton
-Probabilistic task time estimates
-Activity-on-arrow network construction

Project Network
-Activity on Node (AON)
-Activity on Arrow (AOA)
Activity-on-node (AON)
-nodes represent activities
-arrows show precedence relationships
Activity-on-arrow (AOA)
-arrows represent activities
-nodes are events for points in time
-completion or beginning of an activity in a project
Concurrent Activities
Dummy activity: two or more activities cannot share same start and end nodes; add dummy activity to show correct precedence
Critical path
-Longest path through a network
-Minimum project completion time
Activity Scheduling
-Earliest State Time (ES)
-Forward Pass
-Earliest Finish Time (EF)
-Latest start time (LS)
-Latest finish time (LF)
-Backward Pass
Earliest start time (ES)
-earliest time an activity can start
-ES = maximum EF of immediate predecessors
Forward pass
starts at beginning of CPM/PERT network to determine earliest activity times
Earliest finish time (EF)
-earliest time an activity can finish
-earliest start time plus activity time
EF= ES + t
Latest start time (LS)
-Latest time an activity can start without delaying critical path time
LS= LF – t
Latest finish time (LF)
-latest time an activity can be completed without delaying critical path time
LF = minimum LS of immediate predecessors
Backward pass
-Determines latest activity times by starting at the end of CPM/PERT network and working forward
Probabilistic Activity Times
Beta distribution: probability distribution traditionally used in CPM/PERT

Mean: t= (a+4m+b)/6
Variance: std^2 = ((b-a)/6)^2

a= optimistic estimate
m= most likely time estimate
b= pessimistic time estimate

Probabilistic Network Analysis
Determine probability that project is completed within specified time

Z = (x- u)/std

u = t(p) = project mean time
std = project standard deviation
x = proposed project time
Z = number of standard deviations that x is from the mean

Microsoft Project
-Popular software package for project management and CPM/PERT analysis
-Relatively easy to use
-House-building example
Project Crashing (4 Items)
-Crashing: Reducing project time by expending additional resources
-Crash Time: An amount of time an activity is reduced
-Crash Cost: Cost of reducing activity time
-Goal: Reduce project duration at minimum cost
Time-Cost Relationship
-Crashing costs increase as project duration decreases
-Indirect costs increase as project duration increases
-Reduce project length as long as crashing costs are less than indirect costs