Project Management

Source : OSCM - Chase and Jacobs,

Mc Grawhill Education, -Chapter-4
What is Project Management?
• What is a project?
• A series of related jobs, usually directed toward some major output and
requiring a significant period of time to perform
• What is project management?
• Planning, directing, and controlling resources (people, equipment, material)
to meet the technical, cost, and time constraints of the project
• Why is project management important?
• At the highest levels of an organization, management often involves juggling a
portfolio of projects

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 Project life cycle

• The concept phase

During this phase, the organization realizes that the project may be needed or the
organization is requested to propose a plan to perform a project for some customer

• Initial planning or feasibility stage

During this phase the project manager plans the project to a level of detail , sufficient
for initial scheduling and budgeting

• Detailed planning phase

If the project gets approval ,detailed scheduling and budgeting is done in his phase
• Organization phase

During this phase , a detailed project definition such as the work break down
structure is examined and resources necessary to accomplish the project are
made available

• Execution phase
During this phase the various activities planned are completed as per the
schedule, utilizing allotted resources

• Termination phase
The project is terminated after completion. The personnel who were working in
the project are assigned back to their regular jobs or to other jobs in the
organization or to the other projects
Project Structure
Pure Project

• A self-contained team works full-time on the project

Functional Project

• Responsibility for the project lies within one functional area of the
firm
• Employees from that area work on the project, usually only part-time

Matrix Project

• A blend of pure and functional project structures – people from

different functional areas work on the project, possibly only part-
time
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Source: OSCM , Chase and Jacobs, Chapter -4
Pure Project Structure
• The project manager has full authority
• Team members report to one boss
Advantages • Shortened communication lines
• Team pride, motivation, and commitment are
high

• Duplication of resources
• Organizational goals and policies are ignored
Disadvantages • Lack of technology transfer
• Team members have no functional area
"home"

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Source: OSCM , Chase and Jacobs, Chapter -4
Functional Project Structure
•A team member can work on several projects
•Technical expertise maintained in functional area
Advantages •Functional area is “home” after project completed
•Critical mass of specialized knowledge

•Aspects of the project that are not directly related to the

functional area get short-changed
Disadvantages •Motivation of team members is often weak
•Needs of the client are secondary and are responded to slowly

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Source: OSCM , Chase and Jacobs, Chapter -4
Matrix Project Structure
•Better communications between functional areas
•Project manager held responsible for success
Advantages •Duplication of resources is minimized
•Functional “home” for team members
•Policies of the parent organization are followed

•Too many bosses

Disadvantages •Depends on project manager’s negotiating skills
•Potential for sub-optimization

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Source: OSCM , Chase and Jacobs, Chapter -4
Project Matrix Structure

A typical matrix organisation

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Defining the Project
• Statement of Work
• A written description of the objectives to be achieved
• Task
• A further subdivision of a project – usually shorter than several months and performed by a
single group or organization
• Work Package
• A group of activities combined to be assignable to a single organizational unit
• Project Milestone
• Specific events in the life of the project
• Work Breakdown Structure
• Defines the hierarchy of project tasks, subtasks, and work packages
• Activities
• Pieces of work that consume time

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 Work Breakdown Structure

A work breakdown structure defines the hierarchy of project tasks, subtasks,

and work packages

Level
Program

1 Project 1 Project 2

2 Task 1.1 Task 1.2

3 Subtask 1.1.1 Subtask 1.1.2

4 Work Package 1.1.1.1 Work Package 1.1.1.2

Source: OSCM , Chase and Jacobs, Chapter -4

Graphic project reports
Gantt chart
 Network Planning CPM / PERT
CPM

• Developed by Du Pont & Remington-Rand (1956)

• CPM was developed for scheduling maintenance shutdowns at chemical processing plants owned
by Du Pont

• CPM was developed on the assumption that project activity times can be estimated accurately
and that they do not vary

• Thus with CPM a single estimate for activity time was used that did not allow for any variation in
activity times –activity times were treated as if they were known for “certain” or “deterministic“
• If any one of the activity is delayed in the critical path , the entire project is delayed
• CPM –used for construction projects such as bridges, buildings etc.
PERT
• Developed by US Navy, Booz, Allen & Hamilton in 1958

• U.S. Navy established a research team led by D.G. Malcolm

• They developed similar network approach for the design of a management control system for the

development of Polaris Missile Project comprising of 23 project networks and 3000 activities

• This technique was named as PERT

• PERT is a technique for scheduling and controlling the projects where activities are subject to
considerable degree of uncertainty in the performance time for activities that had never been done

before and will not be done in the same manner

• With PERT multiple time estimates were used for each activity that allowed for variation in activity times

– activity times were treated “probabilistic”

• PERT – used in developing missiles, nuclear powered submarine etc.

CPM/PERT

As year passed , features that distinguished CPM from PERT have

diminished and CPM and PERT have been effectively merged into a
single technique called CPM/PERT
Network-Planning Models
A project is made up of a sequence of activities that
form a network representing a project

The path taking longest time through this network of

activities is called the “critical path”

The critical path provides a wide range of scheduling

information useful in managing a project

Critical path method (CPM) helps to identify the

critical path(s) in the project networks
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Source: OSCM , Chase and Jacobs, Chapter -4
Critical Path Method (CPM)
Identify each activity to be done
and estimate how long it will take

Determine the required sequence

and construct a network diagram

Determine the critical path

Determine the early start/finish

and late start/finish schedule
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Source: OSCM , Chase and Jacobs, Chapter -4
Symbols used in network designing
EST ,EFT ,LST ,LFT and Slack
• EST – Earliest start time = Total time of preceding activities of the
given activity
• EFT – Earliest finish time = EST + Time the given activity
• LST – Latest start time = Critical path – (Time of the given activity + all
successor activities of the given activity )
• LFT – Latest finish time = LST + Time of the given activity
• SLACK - Time that an activity can be delayed without delaying the
entire project = LST –EST
CPM with Activity Time Estimates

When activity times vary, a single time estimate may not be reliable

Instead, estimate three values

Minimum
Maximum
Most likely

This allows calculation of a probability estimate of completion time

This is the distinguishing characteristic of the PERT method
PERT Method Calculations

a = Optimistic time
m = Most likely time
b = Pessimistic time

𝑎+4𝑚+𝑏
ET = Expected time 𝐸𝑇 = 6
The 4 and 6 are constants
𝑏−𝑎 2
σ2 = Variance𝜎2 = 6
The 6 is a constant
Time-Cost Models and Project Crashing
• A time-cost model extends the CPM model to consider the trade-off
between time required to complete an activity and total project cost
• Considers direct activity costs, indirect costs of project, and activity completion times
• It is often referred to as “crashing” the project to reduce overall duration
• On the one hand, it costs money to expedite an activity
• On the other hand, it costs money to sustain (or lengthen) the project
• Costs associated with expediting activities are termed activity direct costs
• Costs associated with sustaining the project are termed project indirect
costs

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Time-Cost Models and Project Crashing
• A time-cost model extends the
CPM model to consider the
trade-off between time required
to complete an activity and total
project cost
• It is often referred to as
“crashing” the project to reduce
overall duration

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Project Crashing steps

Prepare a CPM-type network

diagram

Determine the cost per unit of

time to expedite each activity

Compute the critical path

Shorten the critical path at the

point where costs are lowest
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Sums covered in the class on CPM single time
estimate ,, Multi time estimates and project
crashing
Practice sums
Draw the network diagram
Time in weeks
Activity Immediate predecessor a m b
A - 10 22 28
B A 4 4 10
C A 4 6 14
D B 1 2 3
E C,D 1 5 9
F C,D 7 8 9
G E,F 2 2 2

Draw the network

Find the critical path
What is the probability of completing the project within 35 days
Project crashing

REDUCE THE PROJECT DURATION DOWN TO MINIMUM TIME POSSIBLE

Normal Crash Normal Crash

Activity Predecessor time time cost cost
A - 6 5 600 800
B - 4 2 400 600
C - 9 6 900 1200
D A 4 2 600 1200
E B 4 3 500 700