CHAPTER 6

Project Management
 1. Definition of Project Management
Project management is the science (and art) of organizing the
components of a project, whether the project is development of a
new product, the launch of a new service, a marketing campaign,
or a wedding.
A project is not something that's part of normal business
operations. It's typically created once, it's temporary, and it's
specific. As one expert notes, "It has a beginning and an end." A
project consumes resources (whether people, cash, materials, or
time), and it has funding limits.
 Network Diagram Representation

In a network representation of a project certain definitions are

used. These are;
1. Activity
Any individual operation which utilizes resources and has an end
and a beginning is called activity.
An arrow is commonly used to represent an activity with its head
indicating the direction of progress in the project.
These are classified into four categories
Classification of Activities
I. Predecessor activity – Activities that must be completed
immediately prior to the start of another activity are called
predecessor activities.
II. Successor activity – Activities that cannot be started until one
or more of other activities are completed but immediately
succeed them are called successor activities.
 Concurrent activity – Activities which can be accomplished
concurrently are known as concurrent activities.
Classification of Activities
 Dummy activity – An activity which does not
consume any kind of resource but merely
depicts the technological dependence is called
a dummy activity
 2. Event

An event represents a point in time signifying the

completion of some activities and the beginning of new
ones.
This is usually represented by a circle in a network which
is also called a node or connector.
I. Merge event – When more than one activity comes and joins an
event such an event is known as merge event.
II. Burst event – When more than one activity leaves an event such an
event is known as burst event.
III. Merge and Burst event – An activity may be merge and burst event
at the same time.
3. Sequencing
The first prerequisite in the development of network is to
maintain the precedence relationships. In order to make a
network, the following points should be taken into
considerations
o What job or jobs precede it?
o What job or jobs could run concurrently?
o What job or jobs follow it?
o What controls the start and finish of a job?
.
Rule 1
Each activity is represented by one and only
one arrow in the network
Rule 2

No two activities can be identified by the same

end events
 Rule 3

In order to ensure the correct precedence relationship in

the arrow diagram, following questions must be checked
whenever any activity is added to the network
o What activity must be completed immediately before
this activity can start?
o What activities must follow this activity?
o What activities must occur simultaneously with this
activity?
• Three types of errors are most commonly observed in
drawing network diagrams

1. Dangling:-To disconnect an activity before

the completion of all activities in a network
diagram is known as dangling.
2. Looping or Cycling

 Looping error is also known as cycling error

in a network diagram. Drawing an endless
loop in a network is known as error of
looping
3. Redundancy

Unnecessarily inserting the dummy activity in network

logic is known as the error of redundancy as shown in
the following diagram
Program Evaluation Review Techniques and Critical
Path Method

o In CPM activities are o In PERT activities are

shown as a network of shown as a network of
precedence relationships precedence relationships
using activity-on-node using activity-on-arrow
network construction network construction
 Single estimate of activity  Multiple time estimates
time  Probabilistic activity times
 Deterministic activity times
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Project Management

Work
Work Breakdown
Breakdown Structure
Structure for
for Computer
Computer
Order Processing System Project
Order Processing System Project

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 Project Management
• Organizational Breakdown Structure
– a chart that shows which organizational units are
responsible for work items
• Responsibility Assignment Matrix
– shows who is responsible for work in a project

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 Project Management
Project Scheduling

• Steps • Techniques
– Define activities – Gantt chart
– Sequence – PERT/CPM
activities • Software
– Estimate time
packages
– Develop schedule – MS- Project
– Surtruck, etc..

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 Project Management
• Gantt Chart

– Initially, Bar & Gantt Chart were used for

scheduling (1900)
– Graph or bar chart with a bar for each project
activity that shows passage of time
– Provides visual display of project schedule
• Draw Back
– Failed to show the interrelationships &
interdependencies between activities.

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 Project Management
Example of Gantt Chart
Month
0 | 2 |4 6 | 8 | 10
Activity |
Design house
and obtain
financing
Lay foundation
Order and
receive
materials

Build house

Select paint

Select carpet

Finish work

1 3 5 7 9
Months

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 Project Management
Project Control
• Time management
• Cost management
• Quality management
• Performance management
– Earned Value Analysis
• a standard procedure for numerically measuring a project’s
progress, forecasting its completion date and cost and
measuring schedule and budget variation
• Communication
• Enterprise project management

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 Project Management
CPM/PERT network analysis
• Critical Path Method (CPM)
– Deterministic task times
– Activity-on-node network construction
• Project/Program Evaluation and Review
Technique (PERT)
– Multiple task time estimates
– Activity-on-arrow network construction
– Probabilistic in nature

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 Project Management
Objectives of network analysis
1. Powerful tools for Planning, Scheduling &
Controlling
2. Shows interrelationships in simple way
3. Minimization of total cost
4. Minimization of total time
5. Minimization of cost for a given time
6. Minimization of time for a given cost
7. Minimization of idle resources
8. To minimize production delays, interruptions &
conflicts.

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 Project Management
Project Crashing
• Crashing
– reducing project time by expending additional resources
• Crash time
– an amount of time an activity is reduced
• Crash cost
– cost of reducing activity time
• Goal
– reduce project duration at minimum cost

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 Project Management

Time-Cost Relationship

 Crashing costs increase as project

duration decreases
 Indirect costs increase as project duration
increases
 Reduce project length as long as crashing
costs are less than indirect costs

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 Project Management
Time-Cost Tradeoff
• 4
Minimum cost = optimal project time
Total project cost

Indirect cost
Cost ($)

Direct cost

Crashing Time
Project duration

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