Managing Projects Chapter 14. Copyright © 2013 Pearson Education, Inc. publishing as Prentice...

Managing Projects

Chapter 14

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 14 - 2

14 Chapter ObjectivesBe able to:• Explain the difference between routine business activities and

projects. • Describe the five major phases of a project. • Construct a Gantt chart and interpret the results. • Construct a project network diagram and calculate the earliest

and latest start and finish times for all activities. • Identify the critical activities and paths in a network. • Crash a project.


14 Project

Project – A temporary endeavor undertaken to create a unique product, service, or result.

Projects have clear starting and ending points after which the people and resources dedicated to the project are reassigned.

Projects are non-routine, can be large or small, and may be difficult to manage.

Projects typically require significant levels of cross-functional and interorganizational coordination.

© 2008 Project Management Institute


14 Project Management

Project Management – The application of knowledge, skills, tools, and techniques to project activities to meet project requirements. © 2008 Project Management Institute


14 Project Management Trends

The faster pace of strategic change New product lines are introduced more often to fight off

competitors. Information technology solutions become quickly out-of-

date. Customer and supplier networks quickly change.

The changing role of middle management The role has decreased due to more advanced information

systems handling many of the tasks. Responsibilities given to middle managers have been

pushed down to supervisors and employees.


14 Project Phases Concept phase Project definition phase Planning phase Performance phase Postcompletion phase

Figure 14.1


14 Project Phases

Concept Phase Broad definition and scope Budget estimates within 30%

Project definition Phase Tentative schedules and budgets, organization, key

personnel and resource requirements Budget estimates refined within 5% to 10%


14 Project Phases

Planning phase Detailed plans, timing, budgets and resources Milestones Project management tools and techniques

Performance phase Execution and control

Postcompletion phase “Wrap-up” Reassignment of project resources


14 Project Management Tools

Gantt charts – Graphical tools used to show expected start and end times for project activities and to track actual progress against these time targets.

Network diagrams – Graphical tools that show the logical linkages between activities in a project.


14 Gantt Charts

Activities can occur simultaneously and some have predecessors that must be completed beforehand.

Table 14.2


14 Gantt Charts

Shows that the project should be completed by the end of Week 18 and when specific activities should

start and finish.

Figure 14.2


14 Network Diagrams

Critical-path method – A network-based technique in which there is a single time estimate for each activity.

Program evaluation and review technique (PERT) – A network-based technique in which there are multiple time estimates for each activity.


14 Constructing a Network Diagram

Identify each unique activity in a project by a capital letter that corresponds only to that activity.

Represent each activity in the project by a node that shows the estimate length. (Activity on node (AON) diagram.)

If an activity has an immediate predecessor(s), show the relationship by connecting the two activities with an arrow.

Determine the earliest start time (ES) and earliest finish time (EF) for each activity by performing a forward pass.

Determine the latest finish time (LF) and latest starting time (LS) for each activity by doing a backward pass.

Determine the critical activities and path(s) in the project.


14 Network Diagrams Critical path – A network path that has the longest, or is tied

for the longest, linked sequence of activities. Project duration – The duration of a project is equal to the

duration of the critical path.

Network path – A logically linked sequence of activities in a network diagram.

Critical activities – Project activities for which the earliest start time and latest start time are equal.


14 AON Example – Gina3000

Use the following data to develop a network diagram:



Network Diagram

Figure 14.4



Identify the Paths: ACFGJ ACDEGJ ACDEHJ ACDEIJ BCFGJ BCDEGJ BCDEHJ BCDEIJ


14 AON Times and Slack Earliest Start Time (ES)

= Latest EF for all immediate predecessors Earliest Finish Time (EF)

= ES + activity’s duration Latest Start Time (LS)

= LF – activity’s duration Latest Finish Time (LF)

= Earliest LS for all immediate successors Slack = amount of allowable delay in an activity

= Equal to LS – ES or LF – EF for an activity


14 AON Example – Gina 3000

Calculate Earliest Start and Earliest Finish TimesTable 14.3



Calculate Latest Start and Latest Finish TimesTable 14.4



Identify the Critical Path(s) ACFGJ = 13 weeks ACDEGJ = 17 weeks ACDEHJ = 17 weeks ACDEIJ = 17 weeks BCFGJ = 14 weeks BCDEGJ = 18 weeks BCDEHJ = 18 weeks BCDEIJ = 18 weeks

The activities in these critical paths have no slack.

The project should be completed in 18 weeks.


14 Crashing a Project

Crashing a Project – Shortening the overall duration of a project by reducing the time it takes to perform certain activities. List all network paths and their current lengths and mark all activities

that can be crashed. Focus on the critical path or paths. Working one period at a time,

choose the activity or activities that will shorten all critical paths at the least cost. The one rule is this: Never shorten an activity that is not on a critical path, regardless of the cost. Doing so will not shorten the project; it will only add costs.

Recalculate the lengths of all paths and repeat step 2 until the target project completion is reached or until all options have been exhausted.


14 Crashing Example 14.3 Courter Corporation

Use the following data to develop a schedule to complete the project within 23 weeks:

Table 14.5



Network Diagram:

Figure 14.6



Calculate ES, EF, LS, and LF for each activity

* Critical Activity Note: Critical Activities have a Slack = 0Table 14.6



Network Paths for the Project ABEFGK – 25 weeks ACDFGK – 24 weeks AHIJ – 19 weeks



Choose the activity(s) that will shorten all critical path(s) at the least cost: ABEFGK – 25 weeks• Activity B - shorten 1 week at a cost of $500



Updated Network Paths for the Project ABEFGK – 24 weeks ACDFGK – 24 weeks AHIJ – 19 weeks

Crashing cost: $500



Choose the activity(s) that will shorten all critical path(s) at the least cost: ABEFGK – 24 weeks ACDFGK – 24 weeks• Activity G - shorten 1 week at a cost of $700



Updated Network Paths for the Project ABEFGK – 23 weeks ACDFGK – 23 weeks AHIJ – 19 weeks

Crashing Cost = $500 + $700 = $1200


14 Project Management Resources

Project Management Software Microsoft Project

PMI (Project Management Institute) Sponsors education and certification Sponsors conferences, research, user groups Publishes Guide to the Project Management Body of

Knowledge (PMBOK®)

PMBOK® Part I: Various business processes for projects Part II: Nine project management knowledge areas


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