DIRE DAWA UNIVERSITY

COLLEDGE OF ELECTRICAL & COMPUTER

ENGINEERING

IEng 5382 - Industrial Management

& Engineering Economy

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 Chapter Four

Project Management &

Resource Allocation
Chapter Contents
 Project management & Organization
 Work Breakdown Structure
 Network Scheduling
 Project Crashing
 Resource Allocation

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 Project Management
Introduction

 Organizations perform work – either be operations or

projects.
 Shared characteristics of projects and operations:
 Performed by people
 Uses & constrained by limited resources
 Planned, executed and controlled
 Operations and projects differ primarily in that:
 Operations are ongoing and repetitive
 Projects are temporary and unique
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 Project Vs. Operations

Projects Operations

 Non-routine one time  Ongoing activities

activities of an organization

 Set of interrelated jobs  Use existing

 Usually specified in terms systems, properties,

of cost, schedule, & and capabilities

performance requirements  Repetitive in Nature

E.g.: Developing a payroll software Vs. Running the app every month
 Features of a Project

 Temporary Endeavor:- defined beginning and end

 Unique Deliverable: the process to produce the deliverable as

well as the deliverable itself is unique

 Progressive Elaboration: revealing and focusing of details

through time

 Needs resources

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 Types of Projects

 Projects at personal Level (Preparing for exam)

 Projects in Local neighborhood (School function, Fundraising
campaign)
 Organizational Project (Building Construction, Launching a
new product)
 National Project (launching new satellite, literacy campaign,
Building the renaissance dam)
 Global Projects (UN peace mission)

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 A project is a series of interrelated activities that are performed
with in time frames and resource constraints to create a unique
product or service.

 Generally project can be defined in terms of its distinguished

characteristics as “project is a temporary endeavor duty
undertaken to create a unique product or service.” Examples of
projects are:
 Developing a new product
 Change in organizational structure
 Designing a new product or system
 Constructing a building or new facility
 Running a campaign for political election
 Implementing a new business process
 Building a ship…etc
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Project Management:- is generally perceived to be concerned
with planning, organization, coordinate and control of an ongoing
process or activity.

 Project Management reflects a commitment of resources and

people to a typically important activity for a relatively short time
frame, after which the management effort is dissolved.
 Project management is the application of knowledge, skills,
tools, and techniques to the project activities in order to meet or
exceed stakeholder needs and expectations from a project.
 Project management has been defined as:-
 The process of managing, allocating, and timing resources to achieve a
specific goal in an efficient and expedient manner.
 The systematic integration of technical, human, and financial resources to
achieve goals and objectives of an ongoing activity.

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 Project Management Process/steps
1. Problem Identification:- is the stage where a need for a
proposed project is identified, defined, and justified.
 A project may be concerned with the development of new
products, implementation of new processes, or improvement of
existing facilities.
 “What?”
2. Project Definition:- is the phase at which the purpose of the
project is clarified. A mission statement is the major output of this
stage.
 In general, the definition should specify how project management
may be used to avoid missed deadlines, poor scheduling, inadequate
resource allocation, lack of coordination, poor quality, and
conflicting priorities.
 “Why?”
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Three different elements to define project:-
 Objective: The end state the project management is trying to achieve
can be used to monitor progress and identify when success is achieved.
 Scope: The scope of the project identifies its work content and its
product or outcomes. It is essentially a boundary setting exercise which
attempt to define the dividing line between what each part of the project
will do and what it will not do.
 Strategy: How project management is going to meet its objectives
defines the strategy to follow.
3. Project Planning:- A plan represents the outline of the series of actions
needed to accomplish a goal. Project planning determines how to initiate a
project and execute its objectives.
 The planning phase is started by splitting the total project into small projects.
 It may be a simple statement of a project goal or it may be a detailed account of
procedures to be followed during the project.
 “How?”
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Scheduling techniques:- critical path method (CPM), Program evaluation
and review technique (PERT) and Gantt charts.

5. Resource Allocation:- Project goals and objectives are

accomplished by allocating resources to functional requirements.
 Resources can consist of money, people, equipment, tools,
facilities, information, skills, and so on. These are usually
in short supply. “where”?
6. Project Control:- Project control requires that appropriate
actions be taken to correct unacceptable deviations from expected
performance.
 Control is actuated through measurement, evaluation, and
corrective action. Measurement is the process of
measuring the relationship between planned performance
and actual performance with respect to project objectives.
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 Corrective actions may involve rescheduling, reallocation of resources, or
expedition of task performance.
Control involves:
 Tracking and reporting
 Measurement and evaluation
 Corrective action (plan revision, rescheduling, updating)

7. Project Termination:- Termination is the last stage of a project. The

phase out of a project is as important as its initiation. The termination of a
project should be implemented expeditiously. A project should not be allowed
to drag on after the expected completion time.
 A terminal activity should be defined for a project during the
planning phase. An example of a terminal activity may be the
submission of a final report, the power-on of new equipment, or the
signing of a release order.
 The conclusion of such an activity should be viewed as the
completion of the project.

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1.Project Work Breakdown Structure:- is a method of
breaking down a project into individual elements (components,
subcomponents, activities and tasks) in a hierarchical structure which can be
scheduled and estimated in least cost.

Advantages:-
 It defines tasks that can be completed independently of other tasks,
 facilitating resource allocation; assignment of responsibilities &
measurement; control of the project.
 avoid unnecessary duplication of activities.
 It is foundation of project planning.
 Helps to identify the relationships between modules and activities
 provides the basis for developing and managing the project schedule,
resources, and modifications.
 The end result is an organizational structure of the project made up of different
levels, with the overall project at the top level and the individual tasks at the
bottom.
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Example: work breakdown for painting a room
(list type WBS)
1. Room painting task
1.1. Prepare materials
1.1.1. Buy paint
1.1.2. Buy brushes/rollers
1.1.3. Buy wallpaper remover
1.2. Prepare room
1.2.1. Remove old wallpaper
1.2.2. Remove detachable decorations
1.2.3. Cover floor with old newspapers
1.2.4. Cover electrical outlets/switches with tape
1.2.5. Cover furniture with sheets
1.3. Paint the room
1.4. Clean up the room
1.4.1. Dispose or store left over paint
1.4.2. Clean brushes/rollers
1.4.3. Dispose of old newspapers
1.4.4. Remove covers
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Con…
WBS TECHNIQUES (Reading Assignment)

 Top-Down
 Bottom-Up
 Analogy
 Brainstorming
 Rolling wave

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t

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2.Gantt Charts
Con…
Con…
 3.Project Network Scheduling
Definition of terms of network

 Arrows: An arrow leads from tail to head

directionally – Indicate activity path
 Activity: is the smallest work element or any portions of
project (tasks) which required by project, uses up resource and
consumes time – may involve labor, paper work, contractual
negotiations, machinery operations. (Activity is a time consuming
effort that is required to perform a part of the work.)
 Requires time to complete
 Represented by an arrow

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 Predecessor activities: Activities that must
be completed immediately prior to the start of
another activity
 Successor activities: Activities that cannot
be started until one or more of other activities
are completed, but immediately succeed them.

 Concurrent activities: Activities which can be

accomplished concurrently or simultaneously.

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 Dummy Activities: Dummy activities is used to identify precedence
relationships correctly and to eliminate possible confusion of two or
more activities having the same starting and ending nodes. Dummy
activities have no resources (time, labor, machinery, etc).
 Indicates only precedence relationships
 Does not require any time or effort
 It is represented with:

Event:- beginning or ending points of one or more activities, instantaneous

point in time. Events are described by such words as completed, started, issued,
approved, tested etc. . . and is represented by Nodes.
 Merge event: when more than one activity comes and joins an event
 Burst event: When more than one activity leaves an event.
 Merge and burst event: an event may be both merge and burst at the
same time.
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 CPM and PERT method of scheduling
 With CPM, a single estimate for activity time is used
that do not allow for variation; activity times are treated
as if they are known with certainty.
 With PERT, multiple time estimates are used for each
activity that reflects variation; activity times are treated
as probabilistic.
 However, over time CPM and PERT have effectively
merged into a single technique conventionally known as
CPM/PERT.
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 Building the Network

 Define activities from WBS work packages

 Estimate duration and resources for each activity
 Define precedence relationships between activities

 Network Representation Schemes

 AON Network [Activity-on-Node]

 AOA Network [ Activity-on- Arrow]

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Con…
Con…
Con…
Con…
Con…
Rules of networking
Con…
EXAMPLE 1
Con…
 Example [AOA Network]
 A Sample Set of Project Activities, Precedence and Duration

Activity Predecessor Duration[days]

a -- 5
b -- 4
c a 3
d a 4
e a 6
f b, c 4
g d 5
h d, e 6
i f 6
j g, h 4
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 Example [Completed AOA Network]

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 Dummy Activities
 A dummy activity is used to illustrate precedence
relationships in AOA networks.
 It serves only as a “connector,” however, it is not a
“real” activity and represents neither work nor time.

Activity Predecessor A dummy Activity

A -

B - D

C - A

D A,B B
E
E B,C C

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Example 2:
Con…
 AON Network [Activity-on-Node]
 The node (the block in the figure) is the activity;
inside the node is information about the activity,
such as its duration, start time, and finish time .
 Requires no dummy nodes

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 Previous Example [Completed AON Network]

Activity Predecessor Duration[days]

a -- 5
b -- 4
c a 3
d a 4
e a 6
f b, c 4
g d 5
h d, e 6
i f 6
j g, h 4

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CPM example:
Computing forward & backward
passes (ES, EF, LS & LF)
Con…
 Example [ Earliest Times]

 Forward Pass [ ES and EF]

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 EXAMPLE [Latest Times]
 Backward Pass [LS and LF]

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 Earliest and Latest Schedule
Activity Duration Earliest Earliest Latest Latest Total
[days] Start Finish Start Finish Float
a 5 0 5 0 5 0
b 4 0 4 7 11 7
c 3 5 8 8 11 3
d 4 5 9 7 11 2
e 6 5 11 5 11 0
f 4 8 12 11 15 3
g 5 9 14 12 17 3
h 6 11 17 11 17 0
i 6 12 18 15 21 3
j 4 17 21 17 21 0

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 Critical path, Activity Float
Total float
• It is the amount of time that the completion time of an
activity can be delayed without affecting the project
completion time.
Free float
• It is the amount of time that the activity completion
time can be delayed without affecting the earliest
start time of immediate successor activity in the
network

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 Program Evaluation and Review Technique
(PERT)
 PERT is a network analysis technique used to estimate
project duration when there is a high degree of uncertainty
about the individual activity duration estimates.

 PERT uses probabilistic

time estimates
 Optimistic (a)
 Most likely (m)
 Pessimistic (b)

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 PERT Formula
 Based on the distribution of the three time
estimates [Beta-distribution], the mean or expected
time, te, and the variance, V, of each activity are
computed as:

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Example -1 [PERT]

Time Estimates
Task Predecessor
a m b
A - 2 4 8
B - 4 6 10
C A 6 6 6
D A 2 8 14
E A 6 8 12
F B,C 9 3 15
G D,F 8 16 20
H D,F 4 4 4
I E.H 4 8 10
 Example -1 [PERT]
Time Estimates Mean Variance
Task Predecessor
a m b
A - 2 4 8 4.33 1
B - 4 6 10 6.33 1
C A 6 6 6 6.00 0
D A 2 8 14 8.00 4
E A 6 8 12 8.33 1
F B,C 9 3 15 6.00 1
G D,F 8 16 20 15.33 4
H D,F 4 4 4 4.00 0
I
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E.H 4 8 10 7.66 1 72
 Forward and Backward Pass

2 E 5
8.33 I
A 7.66
D
4.33 C 4.33 H 6
1 16.33
10.33
B
6.33 F 6 G
3 4 15.33

 Critical Path = A-C-F-G

 Project Duration (Mean) = 31.66
 Variance = 6 σ = 2.45

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 Probability Computations
 E.g Probability of meeting a Target of 36 days
 Z (Standard normal deviate) =
=(36-31.66)/2.45=4.34/2.45=1.77
 Area from ‘Normal distribution table’ corresponding to
1.77 = 0.9616
 Probability of
meeting a Target of
36 days=96.16%

0 1.77
 Probability that the project duration exceeds 28
days? Lying in the interval [28,36] days?
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Probability Statements
Probability project will be completed by day 150 is
given by:

 T   150  140 
Pr T  150  Pr     Pr  z  .95  .829
  10.5 

Probability project will be completed after day 130

is given by:

 T   130  140 
Pr T  130  Pr     Pr  z  .95  .171
  10.5 

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Project Crashing
 Project crashing is the process of
reducing the duration of project.
 Reasons for Crashing
 To address the urgency of the project
 To finish project in scheduled time (For
example: The project's progress is behind
the schedule. But the project must be
completed in given time. So then it needs
to crash the remaining activities to be in
schedule).
 Completing earlier than scheduled time will
be some times beneficial for the
organization
Crashing Project : Estimating
Crash Cost
 The crash time of each activity can be
estimated to reduce the completion
time of project.
 Crash cost is the cost associated with
doing the job on crash basis
 The formula for calculation of crash cost
is: Slope = crash cost –normal cost
normal time – crash time
Option for accelerating
activities
 Improve the productivity of the
existing resources
 Changing the working methods
 Increasing project resources which is
most common
 Crashing Example
 The network and durations given below shows the
normal schedule for a project. You can decrease
(crash) the durations at an additional expense. The
Table given below summarizes the time-cost
information for the activities. The owner wants you
to you to finish the project in 110 days. Find the
minimum possible cost for the project if you want to
finish it on 110 days. (Assume that for each activity
there is a single linear, continuous function between
the crash duration and normal duration points).

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 Activity A ($100) + activity B ($200) then finally
Activity A ($100) + activity C ($600) +
activity F ($300)

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Activity A ($100) + activity B ($200)

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