DIRE DAWA UNIVERSITY

SCHOOL OF ELECTRICAL & COMPUTER

ENGINEERING

IEng 5382 - Industrial Management

& Engineering Economy

Lidiya asfaw
BSc. in Industrial Engineering

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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)
 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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The process of project planning involves:
 Identify activities/tasks in the project
 Estimate times and resources for activities
 Identify relationships and dependencies between activities
 Identify schedule constraints
 Fix the schedule.
4. Scheduling:- The ultimate objective of the scheduling phase is to
prepare a time chart showing the start and finish times for each
activity as well as its relationship to other activities of the project.
In general, scheduling involves the assignment of time periods to
specific tasks within the work schedule. “when?”
 Resource availability, time limitations, urgency level, required performance level,
precedence requirements, work priorities, technical constraints, and other factors
complicate the scheduling process. Thus, the assignment of a time slot to a task
does not necessarily ensure that the task will be performed satisfactorily in
accordance with the schedule. Consequently, careful control must be developed and
maintained throughout the project scheduling process.

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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. 12
 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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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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Example1: 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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Example2: work breakdown structure for aircraft manufacturing project
(level type WBS)

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WBS TECHNIQUES (Reading Assignment)

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

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 Project 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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 AOA Network [ Activity-on- Arrow]

Historically most popular

Nodes represent start and finish events for each

activity
 Arrows can only come from/go to single node

Only one arrow between two given nodes

Start of Activity End of
activity activity

Event Event

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 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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 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
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 Calculation of Earliest and Latest Times

Forward pass – determines Early Start & Finish

Early start of a given node is maximum of early

finishes of preceding nodes

Initialization : ES1=0 [project start]
ESj=Max (ESi+Dij) for all i before node j

ESi
i j
ESj

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 Backward Pass: determines Latest Start & Finish
 Late finish of a given activity is minimum of late starts
of successors
Initialization: LS(latest occurrence of all ending
nodes1)=project duration, D, as determined in
forward pass
LFi=Min(LFj-Dij) for all successor nodes j of
node i being investigated

i
j
LFi L
Fj

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 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.
TFij = LFj – LFi - Dij
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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FFij = ESj – ESi - Dij 36
 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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 Steps in PERT Analysis

 For each activity k

 Obtain ak, mk (mode) and bk
 Compute expected activity duration (mean) dk= te
 Compute activity variance Vk=s2
 Compute expected project duration D=Te using
standard CPM algorithm
 Compute Project Variance V=S2 as sum of critical
path activity variance (this assumes independence!)
 In case of multiple critical paths use the one with the
largest variance
 Calculate probability of completing the project
 Assuming project duration normally distributed
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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 E.H 4 8 10 7.66 1
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 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

CriticalPath = 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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