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Lecture Week 4: Project Management

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What is Project?
 It has a defined objective

 It has start and end dates given

 It has funding limits

 It utilises resources

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Project Examples
 Product Launch

 Refurbishing an office

 Expanding a factory

 Organising a conference

 Preparing a meal

 Doing an assignment

etc

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Why Study Project Management?
Whenever a large or complex project is undertaken, a great deal of planning is
necessary

You, as project manager, want to

 plan a schedule and keep to it

 maximise the use of resources (to avoid having labour/ machinery idle)

 deliver on time (avoiding any lateness penalty).

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Summary of Critical Path Method
• Break down the project into a list of activities and their duration

• Specify which activities must immediately precede other specified activities

• Construct a network diagram using the activity-on-node approach – each

box contains time information for that activity

• Deduce the earliest start times (EST) & earliest finish times (EFT) for each
activity in the network – forward pass

• Deduce the latest start times (LST) & latest finish times (LFT) for each
activity in the network – backward pass

• Deduce the critical path

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Lecture Structure
1. Scheduling (slides 7-11)

2. Drawing network diagrams (12-19)

3. Using network diagrams (20-30)

4. Critical activities/path and floats (31-41)

5. Gantt Charts (42-46)

6. Reducing project time (crashing) (47-52)

7. Project Evaluation Review Technique (PERT) (53-56)

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1. Scheduling
Within a project many smaller activities/tasks have to be completed

 some activities cannot start until certain other activities have finished

 other activities may take place at the same time as one another

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Example of Scheduling
 A manager needs new office equipment.

 In a very simple model we have three activities:

 Purchase

 Installation

 Use

 These activities are sequential

Purchase Installation Use

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Example of Scheduling (with Parallel Activities)
 A manager is setting up a new factory.
 In a very simple model we have four activities:
 Obtain buildings
 Purchase materials
 Hire staff
 Start production
 The activities purchase materials and hire staff may be carried out at the same
time.
 Materials
 Buildings Production
 Staff

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Precedents (or Predecessors)
 In the last slide i.e. precedes

Buildings had to come before Materials

Buildings had to come before Staff

and Materials had to come before Production

Staff had to come before Production

 This leads us to the idea of a table showing activities and the ones that are
immediate precedents

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Precedent Tables
 Here is the table of activities and precedents for setting up a new factory

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2 Drawing Network Diagram
 On slides 8 and 9 we see the idea of a network diagram.

 Advice: get a clear structure before adding detail to your diagram.

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Example 1
A project consists of the following five activities

Draw a network diagram

Solution

We (i) include a start and finish point

(ii) just use the labels A, B, ... until the structure is clear

(continued)

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Solution (Continued)
A has no precedents so follows Start.

B follows A.

C follows B.

D follows A.

E follows C and D.

An activity, like E, with no arrow from it joins the Finish.

B C

Start A E Finish

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Example 2

Construct a network diagram

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Solution
Our first attempt might look like this

A
F
Start D
E
Finish
B
G

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Improved Solution
We should try to avoid “crossovers”

We can improve our diagram by placing D above C

Advice: Start wit a clear diagram

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Exercise 1
Draw a network diagram for the project of installing a new office telephone
system. The duration is in days.

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Exercise 1: Answer
Note: D and E had no arrows leading
away from them so they are each
joined to the finish.

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3 Using Network Diagrams
Once we have a clear network structure we can draw the network diagram.

We will use the activity on nodes method.

First, we will have a brief look at timescale.

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Timescale

Time 0 1 2 3 4

Day 1 Day 2 Day 3 Day 4

Time 2 is: the end of Day 2, which is (from a work viewpoint) the start of Day
3

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Abbreviations

EST = Earliest Start Time

EFT = Earliest Finish Time

LST = Latest Start Time

LFT = Latest Finish Time

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Activity on Node

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Forward Pass
We obtain the EST and the EFT by making a forward pass through the network

The forward pass gives the earliest times.

● Activities with no predecessors start at time zero.

For these activities EST=0.

● For other activities the EST depends on the EFT of the

immediate preceding activity/activities.

● EFT = EST + duration

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Example 3
Make a forward pass through the network diagram
from slide 14.

Solution (see also next slide)

Start time is zero.

Activity A
EST of A is zero.

For A, EFT = EST + duration = 0 + 5 = 5

EFT for A = EST for B and D, so each are 5

etc

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Example 3: Solution

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Backward Pass
We obtain the LFT and the LST by making a backward pass through the
network.

The backward pass gives the latest times.

● The LFT of the last activities is the final time obtained

from the forward pass

● For other activities the LFT depends on the LST of the

activity/activities which follow.

● LST = LFT − Duration

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Example 3 (Continued)
Make a backward pass through the network diagram from slide 26

Solution (see also next slide)

From the forward pass the total time is 17

Activity E
LFT of E is 17

For E, LST = LFT − duration = 17 − 4 = 13

Then
LST for E = LFT for C and D, so each are 13

etc

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Example 3: Solution (Continued)
Work back from the finish

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Review – The complete network diagram

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4. Critical Activity / Path
For a critical activity, EST = LST and EFT = LFT.

= =

The set of critical activities form the critical path(s).

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Critical Path
Activities A, D and E are on the critical path (shown by ). The duration
of the critical path is 17 days.

If Activities A, D or E take longer then the project time takes longer.

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Float
Activities which are not on the critical path will have some flexibility as to
when they can start and finish. The amount of flexibility is called float (or
slack time).

e.g. Activity B could start as early as time 5,

or it could start as late as time 8,
or somewhere in between.

Within these constraints the duration of the critical path is not affected.

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Calculation of Float
Float = LFT − EFT

or Float = LST − EST

Activity B has float = LFT − EFT = 10 − 7 = 3

(= LST − EST = 8 − 5 = 3)

Exercise

What is the float for Activity C?

Answer 3

N.B. In this case the float is shared between B and C.

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How should we utilise extra resources?
Suppose extra resources are available.

● If the times of A, D or E are reduced then

the whole project is finished more quickly.
(This is because A, D and E are on the critical path)

● If the times of B and C are reduced then

the overall project time is unaffected.
(This is because B and C are not on the critical path)

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Example 4
The network diagram from slide 16
is shown. Make a forward and
backward pass and find the critical
path and its duration.

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Example 4: Answer
The critical path is BEF and its duration is 8 days

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Exercise 2
Complete a forward pass for the network diagram for the project of installing
a new office telephone system. The duration is in days.

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Exercise 2: Answer
Complete a forward pass for the network diagram for the project of installing
a new office telephone system. The duration is in days.

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Exercise 2: Answer (Continued)
Complete a backward pass for the network diagram for the project of
installing a new office telephone system. The duration is in days.

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Exercise 2: Final Answer
Complete a backward pass for the network diagram for the project of
installing a new office telephone system. The duration is in days.

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5. Gantt Chart
A Gantt chart is often used to highlight flexibility (or lack of it).

In the chart below represents one day of the activity

and represents float.

In more sophisticated charts, colour coding is used to identify

(i) activities on the critical path and (ii) shared floats. If known,
the title of the resource is also added in “bar”.

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Example 4
Draw a Gantt Chart for this network (slide 32). Floats have been added. Here
we can see most activities occur between days 4 and 12.

Solution:

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Example 5
Draw a Gantt Chart for this network (slide 37). Floats have been added

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Example 5: Answer

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Gantt Chart (Resources)
Sometimes it is helpful to produce a Gantt Chart showing
how resources are allocated to activities.

This can be used to ensure that employees are fully occupied,

and neither doing too little or too much.

So in the Gantt Chart below we would be concerned if the resource

doing activity C was also doing either activity B or D as they overlap.

For Resource Gantts activities are grouped by resource rather than activity.

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6. Reducing the time of a project
It is often desirable to reduce the time of a project.

Time reductions may be achieved by

● using a different machine,
● adopting a new method of working,
● allocating extra personnel to the task or
● buying in a part or a service.
etc.

All these come at extra cost.

The technique of reducing the time of a project is called crashing.

The objective of crashing is to reduce the project duration at minimum extra

cost.

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Example 6
A task can be done in 7 days at a total cost of £1500.

If necessary, it could be done in 4 days at a total cost of £2400.

Calculate the crash cost per day.

Solution

The task can be done in 3 days less by paying an extra £900.

£900
For each day saved the extra cost is giving £300.
3

We say that the crash cost per day is £300.

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Exercise 4
A task can be done in 5 days at a total cost of £900.

If necessary, it could be done in 3 days at a total cost of £1300.

Calculate the crash cost per day.

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Exercise 4
A task can be done in 5 days at a total cost of £900.

If necessary, it could be done in 3 days at a total cost of £1300.

Calculate the crash cost per day.

Answer £200.

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Exercise 5
(i) Activity D can be done in 4 days at a total cost of £800.
If necessary, it could be done in 2 days at a total cost of £1300.

Activity E can be done in 8 days at a total cost of £3400.

If necessary, it could be done in 5 days at a total cost of £4000.

Calculate the crash cost per day for each activity.

(ii) Activity E follows D and the total time of 12 days has to be reduced
to 10 days.

What decision would you take and what is the total cost of doing these two
activities in 10 days

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Exercise 5
(i) Activity D can be done in 4 days at a total cost of £800.
If necessary, it could be done in 2 days at a total cost of £1300.

Activity E can be done in 8 days at a total cost of £3400.

If necessary, it could be done in 5 days at a total cost of £4000.

Calculate the crash cost per day for each activity.

(ii) Activity E follows D and the total time of 12 days has to be reduced
to 10 days.

What decision would you take and what is the total cost of doing these two
activities in 10 days

Answer (i) D: £250. E: £200 (ii) £4600

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7. Project Evaluation and Review Technique (PERT)
Many activities, such as ‘acquire new premises’, are of uncertain duration.

One method of dealing with this uncertainty is to use PERT.

We consider three durations ● the most optimistic

● the most likely
● the most pessimistic

A weighted average is used to define the expected duration.

Expected duration = Optimistic + 4(Most likely) + Pessimistic

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This expected duration is then used in critical path analysis.

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Example 7
The activity ‘acquire building’ has

a most optimistic time of 20 weeks,

a most likely time of 30 weeks and
a most pessimistic time of 52 weeks.

Calculate the expected duration.

Solution

Expected duration = Optimistic + 4(Most likely) + Pessimistic

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= 20 + 4(30) + 52
6
= 32 weeks

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Exercise 6
The activities ‘refurbish a workshop’ and ‘install machinery’ are each of
uncertain duration. The estimated times in the table are in weeks.

Calculate the expected duration of each activity.

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Exercise 6
The activities ‘refurbish a workshop’ and ‘install machinery’ are each of
uncertain duration. The estimated times in the table are in weeks.

Calculate the expected duration of each activity.

Answer Refurbish a workshop 22 weeks

Install machinery 13 weeks

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Summary
We have studied ● network diagrams
● critical path method
● Gantt charts
● project time reduction by crashing
● PERT

Seminar

You can start work on Seminar 4.

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