Project Risk Management

It was noted in Chapter 1 that one of the primary roles of the project manager is manag­ing trade-offs between time, budget, and scope. As we discuss in this section, there are a host of activities that can be completed during the project planning phase that greatly facilitate managing project-related risks. The field of

Methods of Project Budgeting

Budgeting is simply the process of forecasting what resources the project will require, what quantities of each will be needed, when they will be needed, and how much they will cost. Tables 4-1 and 4-2 depict the direct costs involved in making a short documen­tary film. Table 4-1 shows the cost per unit of

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Project Cost Estimating

In this section, we look at the details of the process of estimating costs and some dangers of arbitrary cuts in the project budget. We also describe and illustrate the difference between activity budgeting and program budgeting. 1. Work Element Costing The task of building a budget is relatively straightforward but tedious. Each work

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Improving Project Cost Estimates

At the end of his “Don’t Accept Dictation,” reprinted above, McCarthy wrote “Each per­son who has a task to do must own the design and execution of that task and must be held accountable for its timely achievement. Accountability is the twin of empowerment.” If empowerment is to be trusted, it must be accompanied

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Project Budget Uncertainty and Project Risk Management

In spite of the care and effort expended to create an accurate and fair budget, it is still only an estimate made under conditions of uncertainty. Because projects are unique, risk pervades all elements of the project, and particularly the project’s goals of performance, schedule, and budget. We will discuss these issues of uncertainty

Project risk Simulation with crystal Ball

At this point, we will deal with one of the more quantitative methods of dealing with risk as it applies to the task of simulating budgets and cash flows. The essence of risk analysis is to make estimates or assumptions about the probability distributions associated with key parameters and variables and to use analytic

Pert and CPM Networks for Scheduling Project

In the late 1950s, the Program Evaluation and Review Technique (PERT) and the Critical Path Method (CPM) were independently developed. PERT was developed by the U.S. Navy, Booz-Allen Hamilton (a business consulting firm), and Lockheed Aircraft (now Lockheed Martin Corp.); and CPM was developed by Dupont De Nemours Inc. When they were developed, there

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Project Uncertainty and Risk Management in Scheduling Project

In Chapter 4, Section 4.5 on risk analysis mentioned making most likely (or normal), optimistic, and pessimistic cost estimates for project tasks. Such estimates were shown in Table 4-6, and we promised to illustrate how to use these and similar estimates of task duration to determine the likelihood that a project can be completed

Project Simulation

In this section we can take a different approach to managing risk. Specifically, we build on the probabilistic foundation established in the previous section and use simulation to handle the arithmetic as well as help us to understand the consequences of uncertainty. Simulation analysis can provide insight into the range and distribution of project

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The Gantt chart for Scheduling Project

Henry Gantt, a major figure in the “scientific management” movement of the early twentieth century, developed the Gantt chart around 1917. A Gantt chart displays pro­ject activities as bars measured against a horizontal time scale. It is the most popular way of exhibiting sets of related activities in the form of schedules. 1. The

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Extensions to PERT/CPM for Scheduling Project

There have been several extensions to both network and chart forms of project schedul­ing. At times these extensions are quite sophisticated; for example, the application of fuzzy set theory to aid in estimating activity durations in cases where activity durations are difficult to estimate because project activities cannot be well defined (McMahon, 1993). In

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Expediting a Project

The unreasonable boss problem in Chapter 5, Section 5.2 could be used as our example here, but a smaller problem will help avoid unnecessary arithmetic. Our problem is set in a deterministic world rather than in a probabilistic one, for the same reason. (Please remember that in reality all projects are carried out under

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Resource Loading to the Project

From the first day on the job, the PM is concerned with resource loading. Resource load­ing refers to the amounts of specific resources that are scheduled for use on specific activ­ities or projects at specific times. It usually takes the form of a list or table. Figure 6-7 is an MSP-generated project plan and

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Resource Leveling to the Project

Look once again at Figure 6-8. Tasks 2, 3.2, and 3.3 are all scheduled to start on March 29. The scriptwriter is required for the first two of the three items and the producer for the last two. The scriptwriter’s calendar (Table 6-2) indicates that the scriptwriter can work a 54-hour week—6 days per

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Allocating Scarce Resources to Projects

When we leveled resources in the case of the overworked scriptwriter, MSP simply used the available activity slack to reschedule WBS item 3.2 (see Figure 6-13). The project completion date was not altered because the WBS 3.2’s slack was large enough to swal­low the added time. Often, that is not possible and the software

Allocating Scarce Resources to Several Projects

When the problem of allocating scarce resources is extended to the case when several projects are being carried out concurrently, the size and complexity of the problem increase but the nature of the underlying problem remains the same. The projects might be independent or members of one large superproject. In any case, there is

Goldratt’s Critical Chain

Much research has been done on scheduling with constrained resources, and the findings verify what was expected—projects are completed faster when there are fewer of them struggling for attention from a limited set of facilities (Adler, Mandelbaum, Nguyen, and Schwerer, 1996). More recently, in the book Critical Chain (1997) Eliyahu Goldratt applies his Theory

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The Plan-Monitor-Control Cycle

Managing a project involves continually planning what to do, checking on progress, comparing progress to plan, taking corrective action to bring progress into agreement with the plan if it is not, and replanning when needed. As noted previously, the funda­mental items to be planned, monitored, and controlled are time, cost, and scope so that

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Data Collection and Reporting concerning the Project

Once we have decided on the type of data we want to monitor, the next question is how to turn them into information useful for controlling the project. In this section we cover the physical collection of data and the analysis of that data, if necessary, to transform them into information. Once transformed, however,

Earned Value from the Project

So far, we have discussed monitoring segments of a project—tasks, subtasks, and such. Of primary importance, however, is deriving some measure of overall project progress in terms of performance, budget, and schedule. Such a measure is “earned value.” The common problem with comparing actual expenditures against plan (a.k.a. base­line or budget) for any given

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