McGraw-Hill/Irwin

Copyright © 2011 The McGraw-Hill Companies, All Copyright © 2011 The McGraw-Hill Companies, All Rights ReservedRights Reserved

Chapter 10

Projects

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Learning Objectives

1. Explain what project management is and why it is important.

2. Identify the different ways projects can be structured.

3. Describe how projects are organized into major subprojects.

4. Understand what a project milestone is.5. Determine the “critical path” for a project.6. Demonstrate how to “crash,” or reduce the

length, of a project.

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What is Project Management?

• Project: a series of related jobs usually directed toward some major output and requiring a significant period of time to perform

• Project management: the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project

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Types of Development Projects

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Structuring Projects

• Pure project• Functional project• Matrix project

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Pure Project

• Advantages– The project manager has full authority– Team members report to one boss– Shortened communication lines– Team pride, motivation, and commitment are high

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

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Functional Project

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Functional Project Continued

• Advantages– A team member can work on several projects– Technical expertise maintained in functional area– Functional area is “home” after project completed– Critical mass of specialized knowledge

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

the functional area get short-changed– Motivation of team members is often weak– Needs of the client are secondary and are

responded to slowly

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Matrix Project

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Matrix Project Continued

• Advantages– Better communications between functional areas– Project manager held responsible for success– Duplication of resources is minimized– Functional “home” for team members– Policies of the parent organization are followed

• Disadvantages– Too many bosses– Depends on project manager’s negotiating skills– Potential for sub-optimization

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Work Breakdown Structure

• Statement of work (SOW): a written description of the objectives to be achieved

• Task: a further subdivision of a project– Usually shorter than several months– Performed by one group or organization

• Work package: a group of activities combined to be assignable to a single organizational unit

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Work Breakdown Structure Continued

• Project milestones: specific events on the project

• Work breakdown structure (WBS): defines the hierarchy of project tasks, subtasks, and work packages

• Activities: pieces of work that consume time– Defined within the context of the WBS

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An Example of a Work Breakdown Structure

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Work Breakdown Structure, Large Optical Scanner Design

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Project Control Charts

• Charts are useful because their visual presentation is easily understood

• Software is available to create the charts

• Gantt chart: a bar chart showing both the amount of time involved and the sequence in which activities can be performed

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Sample of Graphic Project Reports

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Earned Value Management (EVM)

• A technique for measuring project progress in an objective manner

• Has the ability to combine measurements of scope, schedule, and cost in a project

• Provides a method for evaluating the relative success of a project at a point in time

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Essential Features of any EVM Implementation

1. A project plan that identifies the activities to be accomplished

2. A valuation of each activity work3. Predefined earning or costing rules to

quantify the accomplishment of work

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Earned Value Management Charts

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Project Tracking Without EVM

• Chart A shows the cumulative cost budget for the project as a function of time– Blue line, labeled BCWS

• Also shows the cumulative actual cost of the project– Red line

• Appears project was over budget through week 4 and then under budget

• What is missing is any understanding of how much work has been accomplished

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Project Tracking With EVM

• Chart B shows the BCWS curve along with the BCWP curve from chart A

• Technical performance started more rapidly than planned but then slowed significantly and feel behind at week 7

• Chart illustrates the schedule performance aspect of EVM

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Project Tracking With EVM Continued

• Chart C shows the same BCWP curve with actual cost data

• Project is actually under budget, relative to the amount of work accomplished

• Chart D shows all three curves together– Typical for EVM line charts

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Example: Earned Value Management

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Example: Budgeted Cost of Work Scheduled (BCWS)

A. 100% of $18K = $18KB. 100% of $10K = $10KC. 80% of $20K = $16KD. 15% of $40K = $6K

BCWS = $18K+$10K+$16K+$6K = $50K

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Example: Budgeted Cost of Work Performed (BCWP)

A. 100% of $18K = $18KB. 80% of $10K = $8KC. 70% of $20K = $14KD. 0% of $40K = $0

BCWP = $18K+$8K+$14K+$0 = $40K

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Example: Performance Measures

89.045$40$

5$45$40$

8.050$40$

10$50$40$

KK

ACBCWPCPI

KKACBCWPCV

KK

BCWSBCWPSPI

KKKBCWSBCWPSV

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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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Critical Path Method (CPM)

1. Identify each activity to be done and estimate how long it will take

2. Determine the requires sequence and construct a network diagram

3. Determine the critical path4. Determine the early start/finish and

late start/finish schedule

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Example: Critical Path Method

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Example: Activity Sequencing and Network Construction

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Example: Finished Schedule

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CPM with Three Activity Time Estimates

• If a single time estimate is not reliable, then use three time estimates– Minimum– Maximum– Most like

• Allows us to obtain a probability estimate for completion time for the project

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Finding Activity Time and Variance

timeexpectedETmaximumb

likelymost mminimum

6

64

22

a

ab

bmaET

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Example: Activity Expected Times and Variances

2

22

6

64

cp

ETDZ

ab

bmaET

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Example: Network with Three Time Estimates

87.089.113835

Weeks35in Finishing ofy Probabilit

2

cp

ETDZ

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Time-Cost Models and Project Crashing

• Basic assumption: Relationship between activity completion time and project costTime cost models: Determine the optimum point in time-cost tradeoffs– Activity direct costs– Project indirect costs– Activity completion times

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Procedure for Project Crashing

1. Prepare a CPM-type network diagram2. Determine the cost per unit of time to

expedite each activity3. Compute the critical path4. Shorten the critical path at the least

cost5. Plot project direct, indirect, and total-

cost curves and find the minimum-cost schedule

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Managing Resources

• In addition to scheduling each task, must assign resources

• Software can spot over-allocation– Allocations exceed resources

• Must either add resources or reschedule– Moving a task within slack can free up

resources

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Tracking Progress

• Actual progress on a project will be different from the planned progress– Planned progress is called the baseline

• A tracking Gantt chart superimposes the current schedule onto a baseline so deviations are visible

• Project manager can then manage the deviations

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