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GBA 334 Chapter 11 Notes SP 2 2020

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37 views5 pages

GBA 334 Chapter 11 Notes SP 2 2020

Uploaded by

Shannon
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 11

 Project management can be used to manage complex projects


 Work Breakdown Structure (WBS) – A list of the activities that must be performed in a
project.
 Activity – A time-consuming job or task that is a key subpart of the total project.
 Event – A point in time that marks the beginning or ending of an activity.
 PERT is probabilistic, whereas CPM is deterministic.
 Program Evaluation and Review Technique (PERT) – A network technique that tallows
three time estimates for each activity in a project.
 Critical Path Method (CPM) – Critical path method. A deterministic network technique
that is similar to PERT but allows for project crashing.
 Six Steps of PERT/CPM:
o 1) Define the project and all of its significant activities or tasks
o 2)Develop the relationships among the activities. Decide which activities must
precede other.
o 3) Draw the network connecting all of the activities.
o 4) Assign time and/or cost estimates to each activity
o 5) Compute the longest time path through the network: this is called the critical
path
o 6) Use the network to help plan, schedule, monitor, and control the project
 Network – A graphical display of a project that contains both activities and events
 Critical Path – The series of activities that have zero slack. It is the longest time path
through the network. A delay for any activity that is on the critical path will delay the
completion of the entire project
 The critical path is important because activities on the critical path can delay the entire
project.
 Questions answered by PERT.
 When you recognize that projects can have thousands of specific activities, you see why
it is important to be able to answer questions such as the following:
o 1) When will the entire project be completed?
o 2) What are the critical activities or tasks in the project – that is, the ones that
will delay the entire project if they are late?
o 3) Which are the noncritical activities – that is, the ones that can run late without
delaying the entire project’s completion?
o 4) If there are three times estimates, what is the probability that the project will
be completed by a specific date?
o 5) At any particular date, is the project on schedule, behind schedule, or ahead
of schedule?
o 6) On any given date, is the money spent equal to, less than, or greater than the
budgeted amount?
o 7) Are there enough resources available to finish the project on time?
 The first step is to define the project and all project activities.
 Immediate predecessors are determined in the second step.
 Immediate predecessor – An activity that must be completed before another activity
can be started.
 Activities and events are drawn and connected in the third step.
 Activity-on-node (AON) – A network in which the activities are represented by nodes.
This is the model illustrated in our book.
 Activity-on-arc (AOA) – A network in which the activities are represented by arcs.
 Activity Time Estimates – Three time estimates that are used in determining the
expected completion time and variance for an activity in a PERT network.
 The fourth step is to assign activity times.
 Optimistic Time (a) – The shortest amount of time that could be required to complete
the activity.
 Pessimistic Time (b) – The greatest amount of time that could be required to complete
the activity.
 Most likely Time (m) – The amount of time that you would expect it would take to
complete the activity.
 Beta probability distribution – A probability distribution that is often used in computing
the expected activity completion times and variances in networks.
 The beta probability distribution is often used.
 Beta Probability Distribution with 3 Time Estimates

 Expected Activity Time (f) – The average time that it should take to complete an
activity.

o
 Variance of Activity Completion Time – A measure of dispersion of the activity
completion time.
o
 The fifth step is to compute the longest path through the network – the critical path.
 1) Earliest Start Time (ES) – The earliest time that an activity can start without violation
of precedence requirements

o
 2) Earliest Finish Time (EF) – The earliest Time that an activity can be finished without
violation of precedence requirements.

o
 3) Latest Start Time (LS) –The latest time that an activity can be started without
delaying the entire project

o
 4) Latest Finish Time (LF) – The latest time that an activity can be finished without
delaying the entire project.


 The ES is the largest EF of the immediate predecessors.
 The earliest times are found by beginning at the start of the project and making a
forward pass through the network
 Forward Pass – A procedure that moves from the beginning of a network to the end of
the network. It is used in determining the earliest activity start times and earliest finish
times.
 Backward Pass – A procedure that moves from the end of the network to the beginning
of the network. It is used in determining the latest finish and latest start times
 The latest times are found by beginning at the finish of the project and making a
backward pass through the network.
 The LF is the smallest LS of the activities that immediately follow.
 Stack time is free time for an activity.
 Slack Time – The amount of time that an activity can be delayed without delaying the
entire project. Slack is equal to either the latest start time minus the earliest start time
or the latest finish time minus the earliest finish time.

o
 Critical activities have no slack time.
 Critical Path Analysis – An analysis that determines the total project completion time,
critical path for the project, slack time, ES, EF, LS, and LF for every activity.
 Computing project variance is done by summing activity variance along the critical path.
 Project Variance:

o
 Project Standard Deviation:

o
 Computing the standard deviation.
 PERT has two assumptions.

 Computing the probability of project completion.


 The sixth and final step is to monitor and control the project using the information
provided by PERT.
 Gantt Chart – A bar chart indicating when the activities (represented by bars) in a
project will be performed.
 Using PERT/Cost to plan, schedule, monitor, and control project cost helps accomplish
the sixth and final step of PERT.
 PERT/Cost – A technique that allows a decision maker to plan, schedule, monitor, and
control project cost, as well as project time.
 Four Steps of the Budgeting Process:
o 1) Identify all costs associated with each of the activities. Then add these costs
together to get one estimated cost or budget for each activity.
o 2) If you are dealing with a large project, several activities can be combined into
larger work packages. A work package is simply a logical collection of activities.
o 3) Convert the budgeted cost per activity into a cost per time period. To do this,
we assume that the cost of completing any activity is spent at a uniform rate
overt time.
o 4) Using the earliest and latest start times, find out how much money should be
spent during each week or month to finish the project by the date desired.
 A budget is computed using ES.
 Another budget is computed using LS.
 Is the project on schedule and within its budget?
 Value of work complete:

o
 Activity difference:

o
 Compute the value of work completed by multiplying budgeted cost times percent of
completion.
 Crashing – The process of reducing the total time that it takes to complete a project by
expending additional funds.
 Shortening a project is called crashing.
 Four Steps of Project Crashing:
o 1) Find the normal critical path and identify the critical activities.
o 2) Compute the crash cost per week (or other time period) for all activities in the
network. This process uses the following formula:


o 3) Select the activity on the critical path with the smallest crash cost per week.
Crash this activity to the maximum extent possible or to the point at which your
desired deadline has been reached.
o 4) Check to be sure that the critical path you were crashing is still critical. Often,
a reduction in activity time along the critical path causes a noncritical path or
paths to become critical. If the critical path is still the longest path through the
network, return to Step 3. If not, find the new critical path and return to Step 3.
 There are not two critical paths.
 The first step is to define decision variables for the linear program.
 The next step is to determine the objective functions.
 Crash constraints are determined next.
 The final step is to determine event constraints.
 Milestones – A major event in a project
 Resource Leveling – The process of smoothing out and the utilization of resources in a
project.

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