PROJECT

MANAGEMENT

Venesa, Nesyra Angela M.

PROBABILISTIC TIME ESTIMATES

OPTIMISTIC The length of time required

TIME under optimal conditions 𝑡𝑜

PESSIMISTIC The length of time required

TIME under the worst conditions 𝑡𝑝

MOST LIKELY The most probable length

TIME of time that will be required 𝑡𝑚
BETA DISTRIBUTION – used to described the
inherent variability in activity time estimates

EXPECTED TIME OF AN ACTIVITY

 EXPECTED DURATION OF A PATH

VARIANCE OF EACH ACTIVITY

STANDARD DEVIATION OF EACH PATH

ILLUSTRATION:
The network diagram for a project is shown in the accompanying figure, with three time estimates for
each activity. Activity times are in weeks. Do the following:
a. Compute the expected time for each activity and expected duration for each path.
b. Identify the critical path.
c. Compute the variance of each activity and the variance and standard deviation of each path.

A.
B. The path has the longest expected duration is the critical path. Because path d-e-f has the
largest path total, it is the critical path.

C.
Knowledge of the expected path times and their standard deviations enables a manager to
compute probabilistic estimates of the project completion time, such as these:
1. The probability that the project will be completed by a specified time
2. The probability that the project will take longer than its scheduled completion time

ACTIVITY DISTRIBUTIONS AND THE PATH DISTRIBUTION

The rationale for using a normal distribution is that sums of random variables (activity times
or means) will tend to be normally distributed, regardless of the distributions of the variables.
DETERMINING PATH PROBABILITIES

▪ The more positive the value, the

better.
▪ A negative value of z indicates
that the specified time is earlier
than the expected path duration.
NOTE: The probability is equal to the area
under the normal curve to the left of z.
RULE OF THUMB: If the value of z is
+3.00 or more, treat the probability
of path completion by the specified
times as 100 percent.
INDEPENDENCE – assumption that path duration times are independent of each other;
requiring that activity times be independent, and that each activity is on only one path.

ILLUSTRATION:

Answer the following questions:

a. Can the paths be considered independent?
Why?
b. What is the probability that the project can be
completed within 17 weeks of its start?
c. What is the probability that the project will be
completed within 15 weeks of its start?
d. What is the probability that the project will not
be completed within 15 weeks of its start?
B.
 C.

From the table

the area to the left of z = -1.00 is .1587
the area to the left of z = +1.40 is .9192.

The joint probability of all finishing before week 15 is the product of their probabilities:
1.00 (.1587) (.9192) = .1459
D.

The probability of not

finishing before week 15
is the complement of the
probability obtained in
part c: 1 - .1459 = .8541.
 BUDGET CONTROL
❑ OVERLY OPTIMISTIC
❑ UNFORESEEN EVENTS

PROJECT COST STATUS FOR A HYPOTHETICAL PROJECT

 TIME-COST TRADE OFFS: CRASHING
CRASH – shortening activity durations
▪ shortening may lead to a strategic benefit: beating the competition to the market
▪ reflects an attempt to reduce the costs associated with running the project

A project manager may be able to shorten a project by increasing direct expenses

to speed up the project, thereby realizing savings on indirect project costs.

The GOAL in evaluating time-cost trade offs is to identify activities that will reduce
the sum of the project cost.
In order to make a rational decision on which activities, if any, to crash and on the
extent of crashing desirable, a manager needs certain information:
• Regular time and crash time estimates for each activity
• Regular cost and crash cost estimates for each activity
• A list of activities that are on the critical path
General Procedure:
1. Crash the project one period at a time.
2. Crash the least expensive activity that is
on the critical path.
3. When there are multiple critical paths,
find the sum of crashing the least
expensive activity on each critical path.
If two or more critical paths share
common activities, compare the least
expensive cost of crashing a common
activity shared by critical paths with the
sum for the separate critical paths.
 ADVANTAGES OF USING PERT

1. Use of these techniques forces the manager to organize and quantify available
information and to recognize where additional information ins needed.
2. The techniques provide a graphic display of the project and its major activities.
3. They identify
a. activities that should be closely watched because of the potential for delaying
the project and
b. other activities that have slack time and so can be delayed without affecting
project completion time
This raises the possibility of reallocating resources to shorten the project.
 POTENTIAL SOURCES OF ERROR

1. When developing the project network, managers may unwittingly omit one or more
important activities.
2. Precedence relationships may not all be correct as shown.
3. Time estimates may include a fudge factor; managers may feel uncomfortable
about making time estimates because they appear to commit themselves to
completion within a certain time period.
4. There may be a tendency to focus solely on activities that are on the critical path.
As the project progresses, other paths may become critical. Furthermore, major
risk events may not be on the critical path.
 CRITICAL CHAIN PROJECT MANAGEMENT
Critical chain project management (CCPM) is an approach to project management that
includes an emphasis on the resources required to execute project tasks.

Aspects of projects that managers need to be aware of to

better manage projects:
1. Time estimates are often pessimistic and with attention can
be made more realistic (i.e., shortened)
2. When activities are finished ahead of schedule, that fact
may go unreported, so managers may be unaware of
resources that could potentially be used to shorten the
critical path.

ELI GOLDRATT
KEY FEATURE OF CCPM

▪ Feeding (time) buffers are positioned at points in the network where noncritical
sections of the network feed into the critical chain path to reduce the risk of delaying
critical chain activities.

▪ Project (time) buffer at the end of the project is used to reduce the risk that time
variations on the critical chain will interfere with timely project completion.

▪ Capacity (resource) buffers are used when multiple projects are ongoing to help
manage the impact of variation of resource requirements among projects.
 OTHER TOPICS
VIRTUAL PROJECT TEAMS MULTIPLE PROJECTS
All the basic elements of a project are The existence of multiple projects can
present, but some or all of the team create added layers of pressure and
members are geographically complexity to project management.
separated.

BENEFIT: Ability to tap into human talents Project management software can help
and perspectives that would otherwise be avoid conflicts when there are shared
difficult or impossible to use. resources.

DISADVANTAGE: Inability to realize Project slippage can occur as a project

synergies that can arise from closer contact nears completion if resources are
among team members. transferred to new projects too quickly.
 PROJECT MANAGEMENT SOFTWARE

MICROSOFT PROJECT
It can be used to effectively create schedules, estimate costs, and track progress.

Users can:
✓ Assign resources
✓ Compare project plan versions
✓ Evaluate changes
✓ Track performance
Advantages of using Project Management Software
✓ It imposes a methodology ad a common project management terminology

✓ It provides a logical planning structure

✓ It can enhance communication among team members

✓ It can flag the occurrence of constraint violations

✓ It automatically format reports

✓ It can generate multiple levels of summary reports and detailed reports

✓ It enables what-if scenarios

✓ It can generate various chart types, including basic Gantt Charts

 OPERATIONS STRATEGY

To minimize the impact of these possibilities, management must ensure that careful
planning, wise selection of project managers and team members, and monitoring of the
project occur.

It is not uncommon for project to fail, either completely or partially. When that happens, it
can be beneficial to examine the probable reasons for the failure, and decide what
possible decisions or actions, if any, might have contributed to the failure. These become
“lesson learned” that may be applicable to future projects to decrease the likelihood of
failure.
 RISK MANAGEMENT
Risks are inherent in projects. They relate to the occurrence of events that can have
undesirable consequences, such as delays, increased costs, and an inability to meet
technical specifications.
RISK MANAGEMENT