Project management techniques.

Methods for successfully planning, scheduling, and controlling complex tasks are used for situations such as large one-off projects like airports, buildings, or large manufactured items such as ships or airplanes, short lots of manufactured items, and for developing new products.

Characteristics of a project

.

A one time focus

2. A specific purpose and desired results

A start and finish

4. A time frame for completion

The involvement of many types of expertise

6. A limited set of resources

A logical set of interdependent activities

8. A clear user of the results.

A project is successful if it meets performance objectives, is completed on time and within budget. Time, cost, and performance are conflicting goals. The completion date can often be moved forward at the expense of overtime or more hired equipment. In general, any of the three can be sacrificed for the benefit of the others, or any can be benefitted by short-changing the other two.

The design of a new computer can be used as an example project.

Algonquin Manufacturing Inc.(Rideau Division) wants to enter a new computer into the market. This will be a high-end machine having more capability than anything on the market at one hundred dollars less cost.

First a market survey is done to find what customers want in a high-end machine. Simultaneously, the competition is reviewed. We want to see what they offer and at what price. The results of these efforts are discussed by product and manufacturing design and design teams are set up to simultaneously produce a preliminary design of the product and manufacturing processes. The company reviews suggested designs to see that they meet product requirements and a design is chosen. A final design is next completed and a prototype is built. The prototype is tested and manufacturing plans are finalized. Finally, production parts and manufacturing equipment are purchased and installed, and the project is turned over for new product introduction. The turnover is the end of the project, though product introduction may well be a new one.



A cursory look at this project reveals the following.

There are a number of individual tasks to be completed

Some tasks can be performed simultaneously with some other tasks

Some tasks cannot begin until certain others are completed

Each task requires some time and manpower to complete.

Here we identify each activity and estimate a time required for its completion.

The market survey, 2 weeks

Competition survey, 1 week

Review to produce design objectives, 1 week

Preliminary product design, 2 weeks

Preliminary manufacturing process design, 3 weeks

Preliminary design review, 1 week

Final design, 1 week

Builds prototype, 1 week

Final manufacturing design, 2 weeks

Test prototype, 1 week

Order parts, 1 week

Ordering equipment, 2 weeks

Install equipment, 1 week

We will examine three different methods of controlling a project. First is the Gantt chart, then we will look at PERT and CPM.

The example figure shows a Gantt chart for the above project. The Gantt chart is simple enough to make and clearly shows targets such as when each activity is to start and finish. The final completion date is also easy to see in the example. An example spreadsheet template may be found in the Corel Office Suite 7 template library, though its output did not fit well in this document, so I have used a drawing prepared in AutoCAD.



. The figure above, (Figure 1) shows visually when each activity is to start and end. The fact that some activities cannot start until certain others are finished is implicit in the drawing. Such relationships must be considered on setting up the graph. Also, activities that have some leeway in completion can be identified, they are parallel with other activities that end after they do.



PERT and CPM.

PERT stands for program evaluation and review technique and CPM for critical path methods. Both are project management methods developed in the 1950's. In use these methods are quite similar. Both are used to develop a network representing the project; the network uses nodes and arrows, usually called arcs. Two systems are in use: First, the activities maybe on the node, with arrows showing the connections between various activities. Secondly, the activity can be represented by an arrow, and the nodes then represent an event. The events are the beginning or end of some activity. We will use the activity on arrow (arc) system. This means that each node represents the end or beginning of a task. Arrow lengths are immaterial, but logic demands that some tasks must be completed before others are started. Each activity must begin and end on a unique pair of nodes. This means that occasionally "dummy" activities, activities having no time or resources requirements, need to be inserted. A couple of examples are shown below. By convention, each project network begins with a "Start" node, and ends with an "End", or "Finish" node. Figure 4 shows the example of providing each activity with a unique pair of end nodes. In large projects it is simpler to identify activities by a unique number pair than to use letters or names. Nodes in this case are numbered, beginning at 1 for the node following Start, and increasing through the project network to the end node.

Constructing a network is done by trial and error. There are probably pieces of software now available to assist this. Activities are placed in order, making sure all preceding activities are completed before the activity beginning node. It is thus necessary to have a list of precedents to work from. Several redraws of the network are generally necessary to provide a neat and coherent one. As is often the case, the act of constructing the network can be very valuable to the project manager. It forces the consideration of each activity to be performed. It forces a review of time estimated for completion and what must be finished before other things can start. For small projects this may be all that is required to allow complete familiarity with the work, so that other formal controls are unnecessary.

The next figure shows a complete network for the Algonquin Inc. project. It is based on the times and precedencies below. The figure shows various paths through the network. The longest path, based on the length of each activity in the path, is the critical path. This path controls the length of time required to complete the project. Any activity not on this path may have some slack, or extra time in which it could be completed. Activity B, for instance, requires only one week to complete, while activity A requires two. Since both must be completed before activity C can start, we can delay the start of B for one week and still have it finished in time, so that the total project is not delayed. The network is split in two only to fit in the space more easily.

Budgeting

The CPM network can be used as the basis for budgeting. In addition, a budget can be reworked to check the cost of speeding up the completion of the project. Speeding up project completion is done by speeding up one or more activities on the critical path. The name for this is crashing. To crash an activity is to complete it in a shorter than normal time, at an increased cost. To demonstrate this we will use a second example project. We will also need additional information for the activities. We will need normal time, and normal cost, and also crashed time and crashed cost. For budgeting purposes, we assume the cost of any activity is linear. Thus, an activity requiring six months to complete at a cost of $1800 is assumed to cost $1800/6months to complete. For budgeting, this activity will be costed at $300 per month. The cost of crashing is similarly calculated. If the above activity can be completed in four months at a cost of $2400, then it is costed as follows. The premium for crashing is $2400 - $1800, or $600, for a saving of six months minus four months, or two months. To crash this activity, then, costs $300 per month, and a maximum of two months is available. Below is a list of activities associated with developing a new exercise machine, but is could be applied to many similar projects.

We will use this list to develop the network, then add information to show how early and late start and finish times are calculated, shown and used To draw the network, draw a "Start" node, then connect to it all activities that have no immediate predecessors. (Only immediate predecessors are listed in the figure) End each of these activities with a node, then connect to each end node for an activity, all activities that have that activity as a predecessor. A dummy activity must be added when two activities beginning at a common node are both predecessors of a third activity.

Letter Activity name Preceded by Time
A Do preliminary market analysis - 1.0
B Develop preliminary product designs A 3.0
C Do preliminary manufacturing study A 1.0
D Evaluate and select best product design B,C 1.0
E Develop detailed marketing plans D 1.0
F Design manufacturing process D 3.0
G Develop detailed product design D 3.0
H Build and test prototype G 1.0
I Finalize product design F,H 1.5
J Order components I 1.0
K Order production equipment I 3.0
L Install production equipment K 2.0

Figure 6 There is enough data here to produce the network and critical path.

Thus a dummy activity is shown between the end of C and the end of B. Both must be complete before D can begin. Continue with this process until the end. When the last activity is brought to its termination at the "End" node, any activities not yet terminating on a node are ended at this node. Figure 7 shows the completed network. Each activity is labeled, and the time required for each activity is placed on the activity arc to the right of the name.















Critical Path

The critical path is the path of activities that will take the longest time to complete. The project cannot be completed in less time than the time taken for this path, so it is the "critical" one. List all paths through the network. In our example there are eleven. Calculate the length of each path by adding the time requirement for each of the activities. This is the number to the right of the name on the arc. Our paths range in length from four to fifteen and a half weeks. The longest is therefore path ABDGHIKL, requiring a time of 15.5 weeks. Mark the critical path in some way.

Early Start and Finish

We now establish earliest start and finish times for each activity. Activities on the critical path must be started and finished without any stoppages to complete the project in the time of 15.5 weeks. Activities not on the critical path have some leeway in their start times, as long as they are finished so as not to disrupt the activities on the critical path. If we set the "Start" node to be time 0, then activity A, on the critical path, must be started at 0 and will be finished at time 1. Time 1 is therefore the second node. Activity B will start at time 1 and finish at time 4. Activity C cannot start until A is finished, but it only need be finished by time 4, to not disrupt the critical path. Its earliest start time is 1, and its earliest finish time is time 2. These ES and EF times are placed above the arc, close to the nodes as shown in figure 7.

Slack

Latest start and finish are established in the same way, and placed on the network below the arc. This is shown in figure 8. This figure also shows the slack for activity C. The slack can be calculated from either latest start minus earliest start, or latest finish minus earliest finish. The slack is the amount of freedom we have in adjusting the timing of an activity. Figure 9 shows the complete network, with all ES, EF, LS, and LF times marked. We can now produce a budget.



Budget

For our budget, we need to know what each activity costs per time period, and what activities are under way during any given time period. The activities list can be obtained from the network, but we must assume a start time for any activity with slack time. For convenience' sake, we assume all activities start on their earliest start (ES) times. We can prepare another budget for the latest start (LS) times. We can also, after viewing these two budgets, make any changes we wish to the start times and prepare a schedule and budget to correspond. We calculate cost per period by dividing the cost for each activity by its duration. These numbers are given in the chart, figure 11.

Using the network at the earliest start times for each activity, we list the activities under way each time period. Thus in the first week only activity A is in process. In the second week activity B and C are in process. In week three and four only activity B is under way, activity C having been completed at the end of week two. In week five activity D is the only one being worked on, and it is completed in that week. Costs are totaled for each week: Week one is $100 due to A; Week two is $50 due to B plus $120 due to C for a total of $170. (In $000). If an activity is for only a half week its cost is adjusted accordingly. We continue in this way through the network. The numbers are shown in the chart, figures 12 and 13. Figures 14 and 15 show a budget with latest start dates used.

Letter Time $ normal $/week Crashed time $ crashed Time avail $/week crashed
A 1.0 $100 $100 0.5 $140 0.5 $80
B 3.0 $150 $50 1.0 $270 2.0 $60
C 1.0 $120 $120 0.5 $160 0.5 $80
D 1.0 $10 $10 1.0 $10 0.0 -
E 1.0 $225 $225 0.5 $300 0.5 $150
F 3.0 $500 $167 2.0 $700 1.0 $200
G 3.0 $400 $133 1.0 $500 2.0 $50
H 1.0 $150 $150 0.5 $170 0.5 $40
I 1.5 $75 $50 0.5 $135 1.0 $60
J 1.0 $350 $350 0.5 $385 0.5 $70
K 3.0 $450 $150 2.0 $540 1.0 $90
L 2.0 $90 $45 1.5 $160 0.5 $140
Costs are in thousands of dollars.
Column H = ($ crashed - $ normal)/(Time - Crashed time)

Figure 11 Costs per month and cost to crash.













Letter $/month Week1 Week2 Week3 Week4 Week5 Week6 Week7 Week8
A $100.00 100.0
B $50.00 50.0 50.0 50.0
C $120.00 120.0
D $10.00 10.0
E $225.00 225.0
F $166.67 166.7 166.7 166.7
G $133.33 133.3 133.3 133.3
H $150.00
I $50.00
J $350.00
K $150.00
L $45.00
Costper month 100 170 50 50 10 525 300 300
Cumulative 100 270 320 370 380 905 1205 1505

Figure 12 Weekly budget, based on earliest start times. First eight weeks.



Letter $/month Week9 Week10 Week11 Week12 Week13 Week14 Week15 Week16
A $100.00
B $50.00
C $120.00
D $10.00
E $225.00
F $166.67
G $133.33
H $150.00 150.0
I $50.00 50.0 25.0
J $350.00 175.0 175.0
K $150.00 75.0 150.0 150.0 75.0
L $45.00 22.5 45.0 22.5
Cost per month 150 50 275 325 150 97.5 45 22.5
Cumulative 1655 1705 1980 2305 2455 2553 2598 2620

Figure 13 Weekly budget, based on earliest start times. Last eight weeks.

Letter $/month Week1 Week2 Week3 Week4 Week5 Week6 Week7 Week8
A $100.00 100.0
B $50.00 50.0 50.0 50.0
C $120.00 120.0
D $10.00 10.0
E $225.00
F $166.67 166.7 166.7
G $133.33 133.3 133.3 133.3
H $150.00
I $50.00
J $350.00
K $150.00
L $45.00
Cost per month 100 50 50 170 10 133 300 300
Cumulative 100 150 200 370 380 513 813 1113

Figure 14 Weekly budget, based on latest start times. First eight weeks.



Letter $/month Week9 Week10 Week11 Week12 Week13 Week14 Week15
Week16
A $100.00
B $50.00
C $120.00
D $10.00
E $225.00 112.5 112.5
F $166.67 166.7
G $133.33
H $150.00 150.0
I $50.00 50.0 25.0
J $350.00 175.0 175.0
K $150.00 75.0 150.0 150.0 75.0
L $45.00 22.5 45.0 22.5
Cost per month 317 50 100 150 150 98 333 310
Cumulative 1430 1480 1580 1730 1880 1978 2310 2620

Figure 15 Weekly budget, based on latest start times. Last eight weeks.

We can also show these two in graphic form. The graph in figure 16 shows the cumulative requirements for both earliest start and latest start budgets. The area between the lines is the space we must work within. Any budget we choose to make will be between these two extremes.

Crashing

If it is necessary to reduce the amount of time the project takes, it can sometimes be "crashed". Extra money can be spent to speed up some activities, thus making the overall project time shorter. One big advantage of making a network and establishing the critical path is now evident. It is necessary to shorten activities on the critical path in order to shorten the overall project time. Activities not on the critical path can be shortened, but without any effect on total project time. We have already calculated the amount of time available by crashing each activity, and the cost premium we must pay to shorten that activity by one time period, in this case each week. These figures are listed in Figure 10. If a crash of a half week is required we would assume this would cost half what a full week would cost. The process for crashing a project is to first crash the cheapest activity on the critical path. If the time available for that activity is insufficient to shorten the project enough, we move to the next cheapest activity, and so on. Each time an activity is crashed, we must re-check the path times. Crashing shortens the critical path, and this sometimes makes another path critical. Often two paths will be critical, and both must be crashed simultaneously. An example will explain.

Suppose we want to crash our project by two weeks, from 15.5 weeks down to 13.5 weeks. We can see from Figure 11 that of the activities on the critical path, ABDGHIK and L, the cheapest to shorten is H, at $40 per week crashed. However, it can only be shortened by half a week, at a cost of $20. We would crash this activity, and then look to the next cheapest. This is activity G, at $50 per week crashed. It can be crashed by two weeks, so we might be tempted to crash it the remaining 1.5 weeks. But an examination of the path times shows that if we crash activity G by a half week, at a cost of $25, we will have shortened the critical path to 14.5 weeks, and it is now equal in length of time to path ABDFIKL. We now have two critical paths to crash simultaneously. Sometimes the cheapest way is to crash a separate activity on each path, but usually a common activity can be found to crash, thus shortening both paths at the same time. We have a choice of two, B or I, both can be crashed a full week at a cost for either of $60. Crash either. The project time is now 13.5 weeks, and the premium we pay is $20 + $25 + $60.= $105. Remember these are thousands of dollars. The total project cost is now $2620 + $105, an actual total of $2,725,000.

PERT

We will not study this system. The major difference between CPM and PERT is that while CPM uses a single estimate of activity duration, PERT uses three, and assumes that time is a variable. The three times are the most likely time, an optimistic time, and a pessimistic time. These times correspond to a probability curve. The network is used in exactly the same way as the examples we have shown, but based on the most likely time. Any time calculations are then understood to be only estimates, but that the "real" time will lie somewhere between an optimistic and a pessimistic time calculated from the other estimates. There will further be a predictable probability of completing the project at a given time.

Conclusions

Finally, note that there is a good deal of adapting these methods for individual use. Each company tends to make some changes to suit its own preferences. The basic concepts will remain the same.





Two Acronyms

GO-CARTS

set a clear Goal

determine the Objectives

establish Checkpoints, Activities, Relationships, Time estimates.

Create a Schedule.

DRIVER

Develop people

Reinforce commitment

Inform everyone

Vitalize people

Empower yourself and others

Risk approaching problems creatively.