Ch 5

1. Why are accurate estimates critical to effective project management?

Without accurate time and cost estimates project control is ineffective. Inaccurate estimates can
make the difference between profit or loss.

Time and cost estimates are major inputs to project planning.

Project control is completely dependent on accuracy of estimates.
Estimates are needed to support good decisions.
Estimates are used to determine project duration and cost.
Estimates are used to develop cash flow needs.
Estimates are used to develop time-phased budgets and establish the project baseline.
Absence of estimates results in inaccuracies which result in time and cost under/overruns.
The activity of estimating reduces error.
2. How does the culture of an organization influence the quality of estimates?
Organization culture can influence project estimates depending on the importance the
organization places on estimating.
Use of top-down versus bottom-up estimating can influence estimates. How padding is handled
strongly influences estimates. How organization politics is tolerated can severely influence
estimates.
3. What are the differences between bottom-up and top-down estimating approaches?
Under what conditions would you prefer one over the other?
Top-down estimates are:
1. typically used in the project conceptual phase, and depend on measures such as weight, square
feet, ratios. Top-down methods do not consider individual activity issues and problems.
2. good for rough estimates and can help select and prioritize projects.
Bottom-up time and cost estimates are
1. usually tied directly to the WBS and a work package.
2. made by people familiar with the task, which helps to gain buy-in on the validity of the
estimate. Use of several people should improve the accuracy of the estimate. Bottom-up

estimates should be preferred if time to estimate is available, estimating cost is reasonable, and
accuracy is important.
4. What are the major types of costs? Which costs are controllable by the project
manager?
the major types of costs:
1. Direct

: controllable by the project manager.

2. direct overhead
3. general and administrative costs.
Direct overhead and general and administrative costs are only controllable in the sense that if the
resource or project is finished early or late the costs will continue for the duration of the project.
Ch 6
1. How does the WBS differ from the project network?
a. The WBS is hierarchical while the project network is sequential.
b. The network provides a project schedule by identifying sequential dependencies and timing
of project activities. The network sets all project work, resource needs, and budgets into a
sequential time frame; the WBS does not provide this information.
c. The WBS is used to identify each project deliverable and the organization unit responsible for
its accomplishment within budget and within a time duration.
d. The WBS provides a framework for tracking costs to deliverables and organization units
responsible.
2. How are WBS and project networks linked?
The network uses the time estimates found in the work packages of the WBS to develop the
network. Remember, the time estimates, budgets, and resources required for a work package in
the WBS are set in time frames, butwithout dates. The dates are computed after the network is
developed.

3. Why bother creating a WBS? Why not go straight to a project network and forget the
WBS?
The WBS is designed to provide different information for decision making.
For example, this database provides information for the following types of decisions:
a. Link deliverables, organization units, and customer
b. Provide for control
c. Isolate problems to source
d. Track schedule and cost variance. Network doesnt.
e. Assign responsibility and budgets
f.

Focus attention on deliverables

g. Provide information for different levels in the organization.

4. Why is slack important to the project manager?
Slack is important to the project manager because it represents the degree of flexibility the
project manager will have in rearranging work and resources.
A project network with several near critical paths and hence, little slack, gives the project
manager little flexibility in changing resources or rearranging work.
5. What is the difference between free slack and total slack?
Free slack usually occurs at the end of an activity chainbefore a merge activity. It is the
amount of time the activity can be delayed without affecting the early start of the activity
immediately following it.
Since free slack can be delayed without delaying following activities, it gives some resource
flexibility to the project manager.Total slack is the amount of time an activity can be delayed
without delaying the completion date of the project. Use of total slack in one activity can
prevent its use on the following activity.

6. Why are lags used in developing project networks?

Two major reasons:
a. To closer represent real situations found in projects
b. To allow work to be accomplished in parallel when the finish-to-start relationship is too
restrictive.
7. What is a hammock activity, and when is it used?
A hammock activity is a special purpose activity that exists over a segment of the life of the
project.A hammock activity typically uses resources and is handled as an overhead coste.g.,
inspection.
Hammock activities are used to identify overhead resources or costs tied directly to the project.
The hammock duration is determined by the beginning of the first of a string of activities and the
ending of the last activity in the string.
Hammock activities are also used to aggregate sections of projects to avoid project detaile.g.,
covering a whole subnetwork within a project. This approach gives top management an
overview of the project by avoiding detail.
Ch 4
1. What are the six elements of a typical scope statement?
(Project Scope Checklist) :
a. Project objective
b. Deliverables
c. Milestones
d. Technical requirements
e. Limits and exclusions
f.

Reviews with customer.

Many companies engaged in contracted work refer to scope statements asstatement of work
(SOW)
Project Charter: document that authorizes the PM to initiate & lead the project.
Scope creep
: the tendency for the project scope to expand over time (usually by changing
requirements, specifications, and priorities).
2. What questions does a project objective answer? What would be an example of a good
project objective?
The project objectives answers what, when, and how much. To replace the Willamette bridge by
August 3rd at a cost not to exceed $1.5 million.
3. What does it mean if the priorities of a project include: Timeconstrain, Scope-accept,
and Costenhance?
The project must be completed on a specific date, the scope can be scaled back in order to meet
cost and time objectives, and when possible seek opportunities to reduce costs.
Causes of Project Trade-offs
Shifts in the relative importance of criterions related
to cost, time, and performance parameters
BudgetCost
ScheduleTime
PerformanceScope
One technique found in practice that is useful for this purpose is completing a
priority matrix for the project to identify which criterion is constrained, which
should be enhanced and can be accepted.

01. Project Management Trade-offs

Constrain: a parameter is a fixed requirement.
The project must meet the completion date, specifications and scope of the project, or budget
Enhance: optimizing a criterion over others.Accept: reducing (or not meeting) a criterion
requirement.

Fig 2. Project Priorities Matrix

Work Breakdown Structure (WBS)
Defines the relationship of the final deliverable (the project) to its subdeliverables, and in
turn, their relationships to work packages.
Best suited for design and build projects that have tangible outcomes rather than processoriented projects.
The benefits of WBS:
Facilitates evaluation of cost, time, and technical performance of the organization on a
project.
Provides management with information appropriate
to each organizational level.
Helps in the development of the organization breakdown structure (OBS). which assigns
project responsibilities to organizational units and individuals
Helps to plan schedule, and budget.
Defines communication channels and assists
in coordinating the various project elements.
4. What kinds of information are included in a work package?
Work packages include the following types of information:
1.

Work to accomplish a segment of the project

2.
3.
4.
5.
6.
7.

Time to accomplish the work package

Time-phased budget for the work package and total cost to complete the work package
Resources needed to complete the work package
Single person responsible for accomplishment of the work package
Monitoring points for measuring progress during implementation of the work package
Any specifications critical to the work package.
Organizational Breakdown Structure (OBS)
Depicts how the firm is organized to discharge its work responsibility for a project.
5. When would it be appropriate to create a responsibility matrix rather than a full-blown
WBS?
On smaller projects where verbal, face-to-face communication is possible, a responsibility matrix
should be adequate. Sometimes a responsibility matrix is used for a segment of a project or one
in which a team wishes to stress responsibility.
6. How does a communication plan benefit management of projects?
The advantage of establishing a communication plan is that instead of responding to information
requests you are controlling the flow of information. Keeping stakeholders informed with timely
information reduces confusion, unnecessary interruptions, and can provide project managers
greater autonomy.Why? Because by reporting on a regular basis how things are going and what
is happening, you allow senior management to feel more comfortable about letting the team
complete the project without interference.
Chapter 5: Exercise 1

1. Mrs. Tolstoy and her husband, Serge, are planning their dream house. The lot for the
house sits high on a hill with a beautiful view of the Appalachian Mountains. The plans
for the house show the size of the house to be 2,900 square feet. The average price for a
lot and house similar to this one has been $120 per square foot. Fortunately, Serge is a
retired plumber and feels he can save money by installing the plumbing himself. Mrs.
Tolstoy feels she can take care of the interior decorating.
The following average cost information is available from a local bank that makes loans to
local contractors and disperses progress payments to contractors when specific tasks are
verified as complete.
24 %
8%
3%
6%

Excavation and framing complete

Roof and fireplace complete
Wiring roughed in
Plumbing roughed in

5%
17 %
9%
4%
10 %
6%
4%
4%

Siding on
Windows, insulation, walks, plaster, and garage complete
Furnace installed
Plumbing fixtures installed
Exterior paint, light fixtures installed, finish hardware installed
Carpet and trim installed
Interior decorating
Floors laid and finished

a. What is the estimated cost for the Tolstoys house if they use contractors to complete
all of the house?
Estimated total cost for the house is $348,000 (2,900 sq. ft. x $120 per foot).
b. Estimate what the cost of the house would be if the Tolstoys use their talents to do
some of the work themselves.
Estimated savings of Serges plumbing work and Mrs. Tolstoys interior decorating:
Plumbing roughed in
Plumbing fixtures installed
Interior decorating

6% x $348,000
4% x $348,000
4% x $348,000
Total saving

Estimated total cost for the completed house using their talents is $299,280 ($348,000 $48,720).
Chapter 6: Exercise 19

=
=
=
=

$20,880
$13,920
$13,920
$48,720

CH 4:
1.You are in charge of organizing a dinner-dance concert for a local charity. You have reserved a
hall that will seat 30 couples and have hired a jazz combo.
Project Objective: Organize a dinner dance for 30 couples by March xx at a cost not greater than
yy to raise money for a local charity.
Deliverables: 60 catered dinners Jazz combo Rented hall Tickets
Milestones: Rent hall by x Sell 30 tickets by y Arrange caterer by z
Technical Requirements: Hall has sufficient space for tables and dance floor Convenient
parking available Hall has infrastructure to support catered dinner and jazz combo Meals
include vegetarian option
Limits and Exclusions: Caterer responsible for preparing, serving, and clean-up Ticket price
set to generate at least $50 profit per couple Jazz combo responsible for sound system Event
transpires between 7 12 a.m
Customer Review: Charity official