Week 4

Project Management

One of the Biggest

Construction Projects in China

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 What it takes:

• 400,000 relocated citizens.

• Diverts water from the Yangtzea southern
river known for its rising tides to the dry
rivers of the north.
• The projects cost US$62 billion. Three Gorges
Dam was $25 billion project that has forced
the relocation of more than 1 million people
• Estimate completion date: 2050

The Project Management Institute

• The Project Management Institute

(PMI) is an international professional
society for project managers founded in
1969
• PMI has continued to attract and retain
members, reporting more than 600,000
members worldwide (Wikipedia 2021)
• There are communities of practices in
many areas, like information systems,
financial services, and health care
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 Project Management Certification

• PMI provides certification as a Project

Management Professional (PMP®)
• A PMP® has documented sufficient
project experience, agreed to follow a
code of ethics, and passed the PMP®
exam
• The number of people earning PMP®
certification is increasing quickly

Project Management Certification

As of May 2024, there are 1,500,000 active PMP

certified individuals
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 May 2024

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How do you determine a project is

successfully executed?

• Schedule
• Scope
• Budget
• Team satisfaction
• Customer satisfaction
• Quality of work

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 Question
What is a Project ?

A project is
a temporary endeavor
undertaken to create
a unique product or service.

Project Management Institute

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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) to meet the
technical, cost, and time constraints of a project.
• Why is project management important?
– At the highest levels of an organization,
management often involves juggling a portfolio of
projects.
Jacobs, and Chase, Operations and Supply Management – The Core,
5th Edition, Irwin/McGraw Hill.

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 This endeavor can be managed as a project

"That's one sm allstep for m an,one giantleap for m ankind."

N eilArm strong said there w as a lostw ord in his fam ous one-liner from the m oon:
“That’s one sm allstep for 'a'm an.” It’s justthatpeople justdidn’thear it."

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This endeavor can be managed as a project

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 Project Management

The application of knowledge, skills, tools and techniques

to project activities in order to meet or exceed

stakeholder needs and expectations from a project.

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Project Management

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 Question
How to Define Project objectives

Project objectives define target status at the end of

the project, reaching of which is considered
necessary for the achievement of planned benefits.
They can be formulated as

S.M.A.R.T.S

• What is SMART?

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Question
How to Define Project objectives
Project objectives define target status at the end of the project,
reaching of which is considered necessary for the achievement
of planned benefits. They can be formulated as S.M.A.R.T.S

• Specific,
• Measurable (or at least evaluable) achievement,
• Achievable (recently Acceptable is used regularly as well),
• Realistic and
• Time terminated (bounded).

The evaluation (measurement) occurs at the project closure.

However a continuous guard on the project progress should be
kept by monitoring and evaluating.

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 A Balancing Act
Time - Scope - Cost

Risk Risk

Customer Business
Expectation Objective

Source: William Gendron, presentation at 1998 PMI Global Forum

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Question

Why there is an accelerating trends for

formal project management practices?

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 Accelerating Trends that Push for Formal PM
Practices
• Downsizing (i.e. fewer people to do more tasks)
• Projects and services have grown larger and more
complex
• Fierce global competition
• Multinational projects using decentralized knowledge &
resources
• More sophisticated customers demanding higher quality
goods and services
• Multinational organizations seeking to establish uniform
practices for managing projects
• Outsourcing and sub-contracting
• Lessons Learned

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Who is she?

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 Who is he？

Arvind
Krishna

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Best of the Breed Solution

Marketing Financials

Procurement

Sales

Order Mgmt

Web Store
Supply Chain

HR
Service

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 Complexity of Global Operations
Marketing
Financials

Procurement
USA
US Sales

Marketing
Financials
Order Mgmt

Web Store
Supply Chain
Procurement
France
Sales

Marketing HR
Order Mgmt
Financials Chin
U Service
Web Store
Procurement
a
K
Supply Chain
Sales

HR
Order Mgmt
Service

ny Taiwa Web Store

Supply Chain

n HR

Chin Service

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a

Marketing Financials

Procurement
Marketing Financials

Procurement

Sales Sales

Supply Chain
Supply Chain
Human
Human
Resources
Service Service Resources

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 Unmanageable IT Environment

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IBM 2023 Annual Report

25%

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 A Project
911- 2001

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911

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 Structuring Project

1. Pure Project
2. Functional Project
3. Matrix Project

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 What were the reasons behind?

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Pure Project

A pure project is where a self-

contained team works full-time on
the project

What are the advantages and

disadvantages of pure project
structure?

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 Pure Project

Advantages:

• The project manager has full authority

over the project
• Team members report to one boss
• Shortened communication lines
• Team pride, motivation, and
commitment are high

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Pure Project

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
A functional project is housed within
a functional division

President

Research and
Engineering Manufacturing
Development

Project Project Project Project Project Project Project Project Project

A B C D E F G H I

Example, Project “B” is in the functional

area of Research and Development.

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Question
What are the advantages and
disadvantages

President

Research and
Engineering Manufacturing
Development

Project Project Project Project Project Project Project Project Project

A B C D E F G H I

Example, Project “B” is in the functional

area of Research and Development.

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 Functional Project:
Advantages

• A team member can work on several

projects
• Technical expertise is maintained
within the functional area
• The functional area is a “home” after
the project is completed
• Critical mass of specialized
knowledge

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Functional Project:
Disadvantages

• Aspects of the project that are not

directly related to the functional
area get less attention
• Motivation of team members is
often weak
• Needs of the client are secondary
and are responded to slowly

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 Matrix Project Organization
Structure

President

Research and
Engineering Manufacturing Marketing
Development

Manager
Project A

Manager
Project B

Manager
Project C

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What are the advantages and

disadvantages

President

Research and
Engineering Manufacturing Marketing
Development

Manager
Project A

Manager
Project B

Manager
Project C

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 Matrix: Advantages

• Enhanced communications between

functional areas
• Pinpointed responsibility
• Duplication of resources is minimized
• Functional “home” for team members
• Policies of the parent organization are
followed

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Matrix: Disadvantages

• Too many bosses

• Depends on project manager’s
negotiating skills
• Potential for sub-optimization

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 Work Breakdown Structure
A work breakdown structure defines the
hierarchy of project tasks, subtasks, and
work packages

Level Program

1 Project 1 Project 2

2 Task 1.1 Task 1.2

3 Subtask 1.1.1 Subtask 1.1.2

4 Work Package 1.1.1.1 Work Package 1.1.1.2

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Prerequisites for Critical Path

Methodology
A project must have:

well-defined jobs or tasks whose completion

marks the end of the project;

independent jobs or tasks;

and tasks that follow a given sequence.

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 Types of Critical Path Methods

• CPM with a Single Time Estimate

– Used when activity times are known with certainty.
– Used to determine timing estimates for the project, each activity in
the project, and slack time for activities.
• CPM with Three Activity Time Estimates
– Used when activity times are uncertain.
– Used to obtain the same information as the Single Time Estimate
model and probability information.
• Time-Cost Models
– Used when cost trade-off information is a major consideration in
planning.
– Used to determine the least cost in reducing total project time.

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Steps in the CPM with Single

Time Estimate

• 1. Activity Identification.
• 2. Activity Sequencing and Network
Construction.
• 3. Determine the critical path.
– From the critical path all of the project and
activity timing information can be obtained.

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 Example 1. CPM with Single
Time Estimate

Consider the following consulting project:

Activity Designation Immed. Pred. Time (Weeks)
Assess customer's needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 5
Quality improvement pilot groups F D, E 5
Write assessment report G F 1

Develop a critical path diagram and determine the duration of the

critical path and slack times for all activities

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PM Exercise

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 Act. Imed. Pred. Time
Example 1: Determine early/late start and
A None 2
early/late finish times
B A 1
C B 1
D C 2
E C 5
F D,E 5 ES=
G F 1 EF=

ES= ES= ES=

ES= ES=
EF= EF= EF=
LS= EF= EF=
LF=
A(2)
ES=
LS= LS= LS= EF= LS= LS=
LF= LF= LF= LF= LF=

LS=
LF=
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Example 1: Critical Path & Slack

ES=4
Slack=(7-4)=(9-6)= 3 Wks
EF=6

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4
LF=9
Duration = 15 weeks
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 Example 2. CPM with Three Activity
Time Estimates

Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
B None 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

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Example 2. Expected Time

Calculations
ET(A)= 3+4(6)+15
Immediate Expected 6
Task Predecesors Time
A None 7 ET(A)=42/6=7
B None 5.333
C A 14 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
D A 5 A None 3 6 15
E C 11 B
C
None
A
2
6
4
12
14
30
F D 7 D A 2 5 8
E C 5 11 17
G B 11 F D 3 6 15
H E,F 4 G B 3 9 27
H E,F 1 4 7
I G,H 18 I G,H 4 19 28

Opt. Time + 4(Most Likely Time) + Pess. Time

Expected Time =
6

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 Example 2. Expected Time
Calculations
Immediate Expected
ET(B)= 2+4(4)+14
Task Predecesors Time 6
A None 7
B None 5.333 ET(B)=32/6=5.333
C A 14
D A 5 Immediate
E C 11 Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
F D 7 B None 2 4 14
G B 11 C
D
A
A
6
2
12
5
30
8
H E,F 4 E C 5 11 17
F D 3 6 15
I G,H 18 G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

Opt. Time + 4(Most Likely Time) + Pess. Time

Expected Time =
6

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Example 2. Expected Time

Calculations
Immediate Expected ET(C)= 6+4(12)+30
Task Predecesors Time
A None 7 6
B None 5.333
C A 14 ET(C)=84/6=14
D A 5
E C 11 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
F D 7 A None 3 6 15
G B 11 B
C
None
A
2
6
4
12
14
30
H E,F 4 D A 2 5 8
E C 5 11 17
I G,H 18 F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28

Opt. Time + 4(Most Likely Time) + Pess. Time

Expected Time =
6

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 Example 2. Network

Duration = 54 Days
C(14) E(11)

A(7) H(4)
D(5) F(7)

I(18)

B G(11)
(5.333)

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Example 2. Probability Exercise

What is the probability of finishing this project in

less than 53 days?

p(t < D)
D=53
t
TE = 54
D - TE
Z =
 cp
2

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 P essim . - O p tim . 2
A ctiv ity v arian ce ,  2
= ( )
6

Task Optimistic Most Likely Pessimistic Variance

A 3 6 15 4
B 2 4 14
C 6 12 30 16
D 2 5 8
E 5 11 17 4
F 3 6 15
G 3 9 27
H 1 4 7 1
I 4 19 28 16

(Sum the variance along the critical path.)  2

= 41

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p(t < D)

t
TE = 54
D=53
D - TE 53 - 54
Z = = = -.156
 cp
2 41

p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)

There is a 43.8% probability that this project will be

completed in less than 53 weeks.

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 Example 2. Additional Probability
Exercise

• What is the probability that the

project duration will exceed 56
weeks?

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Example 2. Additional Exercise

Solution

p(t < D)

t
TE = 54
D=56
D - TE 56 - 54
Z = = = .312
 cp
2 41

p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312))

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 Time-Cost Models

• Basic Assumption: Relationship

between activity completion time
and project cost

• Time Cost Models: Determine the

optimum point in time-cost
tradeoffs

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Time-Cost Trade-Off Procedure

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 Thank You

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