Project Management: A Comprehensive Guide

Project

A project is an interrelated set of activities with a definite starting and ending point, which results in a unique outcome from a specific allocation of resources.

Goals

The three main goals are:

• Complete the project on time
• Do not exceed the budget
• Meet the specifications to the satisfaction of the customer

Project Objective Statement

The project objective statement defines the time frame and allocated resources for a project.

Scope

The scope is the statement of project objectives that shows the desired project outcomes, time frame, and resources.

Project Organization

Project organization involves understanding the project's structure and how people work together.

Project Life Cycle

The project life cycle consists of four phases:

1. Definition
2. Planning
3. Execution
4. Close Out

Project Management

Project management is a systematized, phased approach to defining, organizing, planning, monitoring, and controlling projects.

Process Structure

Process structure defines the resources needed and how they are split. It also outlines the extent of customer involvement.

Planning a Project

There are five steps to planning projects:

1. Defining the work breakdown structure
2. Diagramming the network
3. Developing the schedule
4. Analyzing the cost-time trade-offs
5. Assessing risks

Work Breakdown Structure

A work breakdown structure is a statement of all work that has to be completed. An activity is the smallest unit of work effort consuming both time and resources that the project manager can schedule and control. Each activity must have an owner who is responsible for doing the work.

Diagramming the Network

Diagramming the network is a network planning method designed to depict the relationships between activities. It consists of nodes and arcs. Precedence relationships determine a sequence for undertaking activities and specify that any given activity cannot start until a preceding activity has been completed. In the activity-on-node (AON) approach, nodes represent activities, and arcs represent the relationships between activities.

Developing the Project

• Estimate the completion time of a project by finding the critical path.
• Identify the start and finish time for each activity.

Developing the Schedule

Calculate the amount of slack time for each activity.

Activity Times

Activity times may be risky, in which case a probability distribution can be used. For this project, the times will be certain.

Critical Path

The critical path is the path that takes the longest time to complete.

Activity Slack

Activity slack is the maximum length of time that an activity can be delayed without delaying the entire project.

Activities on the Critical Path

Activities on the critical path have zero slack and cannot be delayed without delaying the project completion.

Project Schedule

The project schedule specifies start and finish times for each activity.

• Earliest Start Time (ES) is the earliest finish time of the immediately preceding activities.
• Earliest Finish Time (EF) is an activity’s earliest start time plus its estimated duration.  EF = ES + t.
• Latest Start Time (LS) is the latest finish time minus the activity’s estimated duration.
• Latest Finish Time (LF) is the latest start time of the activities that immediately follow.  LS = LF – t

For simplicity, all projects start at time zero.

Cost-Time Trade-Offs

There are always cost-time trade-offs in project management.

You can complete a project early by hiring more workers or running extra shifts.

Penalties and Bonuses

There are often penalties if projects extend beyond some specific date, and a bonus may be provided for early completion.

Crashing a Project

Crashing a project means expediting some activities to reduce overall project completion time and total project costs.

Total Project Costs

The total project costs are the sum of direct costs, indirect costs, and penalty costs.

Direct Costs

Direct costs include labor, materials, and any other costs directly related to project activities.

Indirect Costs

Indirect costs include administration, depreciation, financial, and other variable overhead costs that can be avoided by reducing total project time.

Project Duration and Indirect Costs

The shorter the duration of the project, the lower the indirect costs will be.

Assessing the Benefit of Crashing Activities

To assess the benefit of crashing certain activities, either from a cost or a schedule perspective, the project manager needs to know the following times and costs:

• Normal time (NT) is the time necessary to complete an activity under normal conditions.
• Normal cost (NC) is the activity cost associated with the normal time.
• Crash time (CT) is the shortest possible time to complete an activity.
• Crash cost (CC) is the activity cost associated with the crash time.

Cost to Crash Per Period

Cost to crash per period = (CC - NC) / (NT - CT)

Objective of Cost Analysis

The objective of cost analysis is to determine the project schedule that minimizes total project costs.

Minimum-Cost Schedule

A minimum-cost schedule is determined by starting with the normal time schedule and crashing activities along the critical path in such a way that the costs of crashing do not exceed the savings in indirect and penalty costs.