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Project Management,Chapter Four,Copyright 2014 by The McGraw-Hill Companies, Inc. All rights reserved.,McGraw-Hill/Irwin,Learning Objectives,LO41: Explain what projects are and how projects are organized. LO42: Analyze projects using network-planning models. LO43: Evaluate projects using earned value management. LO44: Exemplify how these techniques are implemented in commercial software packages.,4-2,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, etc.) 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.,4-3,Types of Development Projects,Type of Project,Degree of Change,4-4,Project Structure,4-5,Pure Project Structure,4-6,Functional Project Structure,4-7,Matrix Project Structure,4-8,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,4-9,Defining the Project (continued),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,4-10,Work Breakdown Structure Example,Overview,Details,4-11,Work Breakdown Structure Large Optical Scanner Design,Overview,Details,4-12,Network-Planning Models,4-13,Critical Path Method (CPM),4-14,Example 4.1 Identify Activities and Construct Network,A(21),C(7),B(5),D(2),F(8),E(5),G(2),4-15,Determine Early Start/Early Finish and Late Start/Late Finish Schedule,A(21),C(7),B(5),D(2),F(8),E(5),G(2),0,21,0,21,21,21,28,28,21,21,26,26,26,26,28,28,28,28,36,36,28,31,33,36,36,36,38,38,Critical Path 1: ACFG,Critical Path 2: ABDFG,Excel: Critical Paths,4-16,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.,4-17,PERT Method Calculations,Excel: PERT Calculations,4-18,Example 4.2 - Three Time Estimates,4-19,Example 4.2 - Network with Time Estimates,A(21),C(7),B(5),D(2),F(8),E(5),G(2),21,21,21,21,28,28,21,21,26,26,26,26,28,28,28,28,36,36,28,31,33,36,36,36,38,38,0,0,4-20,Example 4.2 Three Time Estimates,Probability of finishing in 35 weeks (or less),4-21,Example 4.2 Three Time Estimates,Probability of finishing in 35 weeks (or less) is about 19%,4-22,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.,4-23,Project Crashing,4-24,Example 4.3 Project Crashing,Excel: Project Crashing,4-25,Example 4.3 Project Crashing,Activity D cannot be reduced any further at this point,Activity A cannot be reduced any further at this point,Project has reached minimum duration,4-26,Managing Resources,In addition to scheduling tasks, resources must also be assigned to specific tasks. Software can be used to spot over-allocation. Planned use exceeds available supply When resources are over-allocated, either more resources are required or rescheduling is necessary. Taking advantage of task slack can free resources,4-27,Project Control Charts,Charts provide an easily understood visual presentation. Software can be used to create the charts. Gantt charts show, in a graphic manner, the amount of time involved and the sequence of activities. Often referred to as a bar chart.,4-28,Project Report Samples,4-29,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,4-30,Earned Value Management Essential Features,4-31,Earned Value Management Charts,Budgeted costs (scheduled) and actual costs,Costs of scheduled and performed work,Budgeted cost (work performed) and actual costs,Budgeted costs (scheduled and performed work) and actual costs,4-32,Project Tracking without EVM,A simple comparison of just costs versus budget does not tell the whole story.,Project appears to be over budget in weeks 1 4. Actual costs exceed budget.,After week 5, the project appears to be under budget.,Without a means of quantifying how much work has been accomplished, this is the only available information.,4-33,Project Tracking with EVM,With predefined methods of quantifying the quantity of work accomplished, EVM provides much more information.,Project is ahead of schedule in weeks 1 5.,After week 6, the project has fallen behind schedule.,EVM provides information about performance according to the schedule.,4-34,Project Tracking with EVM,With predefined methods of quantifying the quantity of work accomplished, EVM provides much more information.,Project is under budget in terms of actual work performed,4-35,Project Tracking with EVM,A combined view gives an overview of project performance in terms of the original plan.,4-36,Example 4.4 Earned Value Management,At time “X”, Activity A is 100% complete (budgeted cost was $18K).,At time “X”, Activity B is 80% complete (budgeted cost was $10K).,At time “X”, Activity C is 70% complete (budgeted cost was $20K). 80% of this activity should be complete by now.,At time “X”, Activity D is 0% complete (budgeted cost was $40K). 15% of this activity should be complete by now.,4-37,Example 4.4 Budgeted Cost of Work Scheduled (BCWS),Activity A 100% of $18K = $18K Activity B 100% of $10K = $10K Activity C 80% of $20K = $16K Activity D 15% of $40K = $6K BCWS = $18K + $10K + $16K + $6K = $50K,4-38,Example 4.4 Budgeted Cost of Work Performed (BCWP),Activity A 100% of $18K = $18K Activity B 80% of $10K = $8K Activity C 70% of $20K = $14K Activity D 0% of $40K = $0K BCWP = $18K + $8K + $14K + $0K = $40K,4-39,Example 4.4 Performance Measures,Actual cost of $45K obtained from accounting records,For performance indices: PI 1 means costs are lower than planned,4-40,Project Management: Information Systems,4-41,Check out the website of the Project Management Institute (). Two of the leading companies are Microsoft, with Microsoft Project, and Primavera, with Primavera Project Planner. The Microsoft Project program comes with an excellent online tutorial, which is one reason for its overwhelming popularity with project managers tracking midsized projects. For managing very large projects or programs having s
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