Project Selection and

Management and Planning

ECE 587/687 – Lecture 4
Introduction
• Project management has emerged because characteristics of our late twentieth-century
society demanded the development of new methods and techniques of management,
but its roots may be traced back to ancient times. For example, project management
was used to a certain degree in constructing historical architectural wonders such as
Roman buildings and roads.
• The origin of the modern project management may be traced back to the late 1950s
when Paul O. Gaddis published an article entitled “The Project Manager” in the
Harvard Business Review. This paper discussed the role of the project manager in an
advanced-technology industrial sector, the prerequisites for carrying out the project-
management task, and the type of training necessary to develop an individual to
manage projects. In 1969, the Project Management Institute (PMI) was established, and
it has played an instrumental role in the development of the project management field.
Today, PMI has around 10,000 members. Since the late 1950s, more than 150 books
and hundreds of articles have appeared on various aspects of project management.
• Project selection may simply be described as the process of evaluating projects, and
then choosing to implement some of them to achieve the goals of the parent
organization. Thus, project selection is very important to engineering companies,
because through the evaluation process, intelligent decisions concerning investment in
projects can be made. More specifically, these decisions are crucial to the success or
failure of the companies.
• There are four objectives of project selection: choose only the viable projects, reject the
undesirable projects, ensure that there is no damaging effect on flow of project
Terms and Definitions
• Project. This is a plan of work job assignment, or task. (It is also referred to as a job or task.)
• Project management. This is the art of directing and coordinating material and human resources throughout the
project life span by utilizing various management methods and techniques to achieve effectively predetermined
goals of scope, quality, time, cost, and participant satisfaction.
• Project manager. This is a person with an assigned direct responsibility for project execution.
• Project organization. This is an establishment of people, procedures, responsibilities, and authority.
• Project selection. This is the process of evaluating projects and then choosing to implement some of them to
achieve the goals of the parent organization.
• Project objectives. These are the goals, as measured by time parameters, constraints or targets, results,
milestones, and control considerations, and usual project sequencing.
• Project team. This consists of all participants involved in the project (i.e., full or part time).
• Project parameters. These are the factors, specifications, or characteristics of the complete project or of its parts.
• Project proposal. This is a summary of a proposed project concerning its managerial, schedule, and technical
contents.
• Project control report. This is a management report and an operations tool utilized to report manpower- or
financial-related information in a summarized form both by program and organization.
Types of Information Required for Evaluating
a Project
• Usually, various types of
information are needed to
evaluate a project. Figure
4.1 presents five main
categories of such
information.
• Tables 4.1–4.5 present
important sub-elements
of required marketing
related, production-
related, manpower-
related, finance-related,
and administrative-
related and miscellaneous
information, respectively.
It is to be noted that these
sub-elements may vary
from one project to
another.
Project Selection Models
• Over the years, a large number of mathematical models for selecting projects have been
developed. Some of these models are actually being used to select projects in the
industrial sector. For example, a survey of 40 high-level staff members from Fortune 500
companies revealed that 80% of the respondents reported using one or more financial
models in research and development–related project decision making. Nonetheless, often
reasons such as those listed next are cited for rarely using the mathematical models in
project selection in industry or government:
• Inadequate reliable estimates for cost, performance, utility, and time;
• Inadequate recognition of the interrelationships between projects;
• Dynamic nature of project selection and review;
• Poor handling of uncertainty and risk;
• Poor consideration given to the relationship between the effort applied to a project and the chance
for success;
• Necessity for multiple criteria for evaluation.
•Past experience indicates that in choosing a mathematical model for use in project
selection, considerations must be given to factors such as realism, ease of use,
flexibility, capability, cost, and easy computerization.
Benefit-Cost Ratio Model
• This simple model is concerned with performing analysis to determine if
benefits from a given project outweigh its cost. More specifically, it is only
worthwhile to consider a project for development if its benefits are far
greater than the investments. Nonetheless, the benefit/cost ratio is defined
by
where
BCR is the benefit/cost ratio.
TIC is the total investment cost including the operating cost.
UB is the user benefits.

• For a project to be beneficial, the value of BCR must be greater than unity.
Example
• Assume that a machine’s acquisition cost is $100,000 and its expected useful life
is 15 years. The annual maintenance plus operation cost of the machine is
estimated to be $4,000. The lifetime benefits of the machine are estimated to be
$200,000. Calculate the value of the benefit/cost ratio.
Disman Model
• This is a useful model to determine the maximum amount of money
justifiable for a project. This model was developed by S. Disman. He
reasoned that the income over a given period from an investment is
where
I is the income from an investment over a specified period.
INV is the amount of investment.
i is the rate of return on the investment.

• For a 1-year period, from equation, we get

• The above equation is used to estimate the maximum investment

justifiable for a project when the rate of return and the annual net income
are known. Thus, for 1 year, we write where
INVm1 is the maximum investment
justifiable for 1 year.
• For n years, using before equation we write
where
INVmn is the maximum investment justifiable for n years.
NIj is the net income from the project for year j.

• Equation (4.4) is modified to the following form to take into

consideration the risks associated with the technical and commercial
successes of the project or product:

where
Pc is the risk of project or product’s commercial success.
Pt is the risk of project or product’s technical success.
INVmax is the maximum investment justifiable for n years.
Example
• A company anticipates developing a new machine with an expected life of only 3
years. The expected annual net income from the machine for 3 years is $80,000.
The estimated risks of machine’s technical success and commercial success are
0.8 and 0.7, respectively. Calculate the maximum investment justifiable for the
new machine, if the rate of return on the investment is estimated to be 40%.
Pacifico Model
• This is the profitability index of acceptability, or more simply the benefit/ cost ratio. A
project can be accepted, if the value of this ratio is greater than unity. The equation for
the model is expressed by

• where
• PIA is the profitability index of acceptability.
• Pi is the probability of i; i = 1 (research success), i = 2 (commercial success, given
process success), i = 3 (development success, given research success), and i = 4 (process
success, given development success).
• AP is the average annual profit per unit.
• AS is the average annual sales volume in units of products.
• L is the expected life of the product extension expressed in years.
• IC is the investment or the total cost of the research and development effort for the
Mottley and Newton Model
• This model computes an overall score for each project and then selects the
project with the highest score for development. The model is based on five
basic factors: project cost, product or project completion time, strategic need,
promise of success, and market gain. All of these factors are assumed to
contribute to the potential profits of the company. The equation for the model
is expressed by
where
OS is the overall score of a project.
RSi is the rated score of the ith factor; i = 1 (the strategic need), i =
2 (product or project completion time), i = 3 (project cost), i = 4
(promise of success), i = 5 (market gain).

• Each of the above five factors is assigned a score from 1 to 3 and reasons for
assigning scores are tabulated in.
Example
• An engineering company is proposed with four product
development projects: A, B, C, and D, and it would like to
develop only one of these projects. Table 4.6 presents scores
for five factors associated with each of these projects.
Determine the most promising project for development.
Calculated-Risk Model
• This model is the simplified version of return on investment approach and,
for screening purposes, it is extremely useful for comparing with a
predetermined minimum rate. The equation for the model is expressed by

• where
• I is the index.
• TNAI is the total net annual incomes from the project.
• RF is the risk factor that represents all risks associated with incomes.
• TE is the total expenditure that includes capital assets, product, and market
development.
Sobelman Model
• This model takes into consideration the time value of the
money by determining the present value of average
profits and costs. The project is considered for
development only when its index value is positive. The
equation for the model is defined by
where
VP is the value of project.
AACPD is the average annual cost of the product
development.
AANP is the average annual net profit.
i is the interest rate.
M1 is the product completion time expressed in years.
M2 is the group of those products’ average development time
(expressed in years) of which the project under consideration
is a member.
N1 is the product useful life expressed in years.
N2 is the group of those products’ average useful life
(expressed in years) of which the project under consideration
Example
• Assume that we have the following data: N1 = 8 years, M1 = 3 years, i = 0.05,
N2 = 4 years, M2 = 2 years, AANP = $30,000, and AACPD = $5,000. Calculate
the value of VP.
Manley Model

• This model can also be used to evaluate new projects, and its basis is the net
profit/sales ratio. The model ratio is defined by

• where
• θ is the time to recover total investment expressed in years.
• ATS is the annual total sales of the product.
• RC is the research cost prior to taxes.
• WC is the working capital.
• E is the expenditure in plant.
Profitability Index Model
• This index is based on constant demand and is expressed by

• where
• I is the index.
• TE is the total expenditure on the project.
• AASV is the annual average sales volume.
• SML is the static market life.
• USP is the unit selling price.
• Pcs is the product’s commercial success probability.
• P is the product’s technical success probability.
Relative Worth Index Model
• This is another model used to select projects and is known as the index of relative worth. The index is defined by

• where
• i is the interest rate.
• Ird is the investment for research and development of product.
• Pse is the success probability of the product because of economic conditions.
• Pcsd is the commercial success probability of the product because of new design.
• Pts is the technical success probability of the product.
• n is the market life of the product expressed in years.
• Ik is the investment in year k.
• NIk is the net income in year k.
• RWI is the index of relative worth.
Dean-Sengupta Model
• This is another model used in selecting projects, and it becomes possible to obtain
information on the relative performance of two projects by comparing their respective
indexes. The model index is expressed by

• where
• Ids is the Dean-Sengupta index.
• Pts is the project’s technical success probability.
• Pm is the probability that the product will be marketed given it is successful technically.
• R is the annual return from a project, if it is a technical success and marketed.
• AIC is the annual investment cost.
• i is the annual interest rate.
• M is the project’s useful life expressed in years.
Net Income Present Value Model

• This is a useful model to determine the present value of net income from a
project. The equation for the model is expressed by

• where
• PW is the net income present value.
• AVNRI is the average value of net return on investment.
• NI is the net income.
• i is the interest rate.
• n is the time to recover capital expressed in years.
Need for Project Management, Project Organization Life Cycle Phases,
and Project Management Functions and Procedure Characteristics

• Although many factors require the practice of project management, some of the frequently
cited factors are the meeting of a project’s tight time schedules, the close controlling of a
project due to penalty contracts, the disruption of an organization’s ongoing activities with the
integration of project activities, and requirements for major innovations.
• A project organization may be divided into the following phases:
• Investigation phase. This is the first phase of project organization and tasks such as developing
specifications, identifying principal problems, and grouping principal tasks are performed during this
phase.
• Start-up phase. This phase begins after the management commits to a project and appoints a project
manager.
• Growth phase. This phase is concerned with building the project organization.
• Maturity phase. This is the fourth phase of project organization and, during the phase, the project
organization’s strength peaks.
• Decline phase. This phase begins soon after solving the principal design problems.
• Phase-out phase. Usually, the project is phased out soon after the buyer officially accepts the delivery of
• Project management performs many functions, and they may be categorized
into seven major areas as shown in Figure.
• The characteristics of a project management procedure include limited life
project, dynamic changes in responsibilities and organization, project
oriented organization, frequent progress evaluation, poor project
management control over participants from other firms, and clearly defined
goal, task, and subtask responsibilities.
Project Manager Responsibilities,
Qualifications, Selection, and Reporting
• Although a project manager performs various types of functions, his or her three basic
responsibilities are as follows:
• To ensure that the product under consideration is produced within the allocated budget;
• To ensure that the product under consideration is delivered to the customer within the limits of a
defined time schedule;
• To ensure that the product under consideration satisfies fully all of the specified performance
requirements.
• A successful project manager possesses qualifications such as:
• Appropriate previous experience;
• Thorough understanding of profitability concepts;
• Effective knowledge of management problems (e.g., marketing, contracts, personnel
administration, control and purchasing, and law);
• A burning desire to train and develop supervisory personnel;
• Sufficient working knowledge in various areas of science.
• In selecting a project manager, factors such as strong technical background
and experience, the ability to get along well with senior management,
previous experience working in various departments, being a good team
player, being currently available, being a mature and a hard-nosed
individual, and walking on water must be considered seriously.
• The reporting of the project manager within the company organization must
be carefully considered. Some important reasons for having a project
manager report directly to a high level in the organizational setup are as
follows:
• To provide the project manager sufficient status to perform his or her job effectively;
• To impress customers, particularly in a competitive environment;
• To obtain adequate and timely assistance in solving problems;
• To report to the individual who directs functions from which the project manager is
expected to get results through coordination.
• By contrast, some of the reasons for having the project manager reporting to
a lower level of management are as follows:
• Too many projects, in particular, the small ones, reporting to senior management
leads to organizational and operational inefficiencies.
• Placing a junior project manager too high up on the management ladder may alienate
senior functional executives on whom the project manager relies for support.
• Putting a small project high up on the management ladder may generate an illusion of
executive attention, but in reality it fosters executive neglect of the project.
Project Management Methods
• Two widely used methods for planning and controlling projects are known as the critical
path method (CPM) and program evaluation and review technique (PERT). The history
of the CPM may be traced back to 1956, when E. I. du Pont de Nemours and Company
used a network model for scheduling design- and construction-related activities. The
PERT was developed about same time as CPM by a team formed by the U.S. Navy’s
Special Project Office in 1958. The team included members from the Lockheed Missile
System Division and from Booz, Allen, and Hamilton, a consulting company.
• Usually, the three important factors of concern in a given project are time, cost, and
availability of resources, and both (CPM and PERT) can easily handle such factors
individually and in combination. In basic theory, CPM and PERT are largely the same.
For both methods, the arrow diagram is the graphic model, and the mathematics are also
quite similar. However, their important differences are as follows:
• CPM is used in situations where the duration times of activities are quite certain (e.g., in
construction projects).
• PERT is used in situations where the duration times of activities are quite uncertain (e.g., in
research and development projects).
• For both of these methods to be most applicable, a
project must possess the following four characteristics:
• Independent jobs or tasks. More specifically, within a
given sequence these jobs or tasks can be started,
stopped, and performed independently.
• Full job completion. This means that whenever a job is
started, it must continue without any interference until
its total completion.
• Ordered jobs. This means jobs or tasks are ordered in a
specified sequence.
• The defined jobs’ completion leads to actual project
completion. This means jobs or tasks are defined in
such a manner that their completion leads to the end of
the project.
• The general steps associated with both PERT and CPM
are shown in Figure, and the specific steps of each of
these methods are presented next, separately
PERT Steps
• Usually, these seven steps are followed to develop a PERT network:
• 1. Break down a given project into various jobs or tasks and identify each of these jobs or tasks.
• 2. Determine the sequence of these jobs or tasks and develop a network.
• 3. Estimate the duration time of each activity.
• 4. Obtain each activity’s expected duration time.
• 5. Determine the time variance of each activity.
• 6. Determine the network’s critical path.
• 7. Calculate the probability of project completion on a given time or date.
• The following formulas are used in steps 4, 5, and 7, respectively:
where
• Formula A (4.20) EADT is the expected activity duration time.
OADT is the optimistic activity duration time. More specifically,
this is the minimum time for completing an activity.
PADT is the pessimistic activity duration time. More specifically,
this is the maximum time for completing an activity.
MLADT is the most likely activity duration time. More
specifically, this is the most likely time that it will take to
complete an activity.
Example
• Assume that the following data are given for a certain activity: OADT= 30 hours,
PADT=50 hours, MLADT = 35 hours
• Calculate the expected duration time of the activity.
• Formula B (4.21)

• Where σ2A is the variance of the activity duration time.

• Example
• Assume that the following data are given for a certain activity: OADT=
30 hours, PADT=50 hours, MLADT = 35 hours
• Calculate the variance of the activity duration time with formula B.
• Formula C (4.22)
• This formula is concerned with calculating the
probability of completing a project on the due date or
time. The following y transformation formula is used:

• where
• DT is the due time or date for completing the project.
• EECTl is the earliest expected completion time of the
last network activity.
• TS is the total sum of variances of activity duration
times along the network critical path (i.e.,TS = ∑σ 2A ).
• That equation is associated with the normal distribution
and Table 4.7 presents tabulated probability values for
y.
Example
• Assume that a PERT network representing a project is composed of 10
activities. The earliest expected completion time of the last network activity
is 50 days and the sum of the variances of the activity duration times along
the network critical path is 25 (i.e., ∑σA2 = 25). The project must be
completed within 65 days. Calculate the probability that the project will be
completed within the specified time.
CPM Steps
• The following steps are associated with CPM:
• 1. Break down the project into various jobs or activities and identify them.
• 2. Determine the sequence of jobs or activities and develop the network.
• 3. Estimate duration time of each activity.
• 4. Determine the network’s critical path.
CPM/PERT Symbols
• The symbols used to construct a CPM or PERT network are shown
in Figure 4.4. Each of these symbols is described next.
• Circle. This represents an event. More specifically, the circle denotes an
unambiguous point in time in the life of a project (e.g., an event can be a
start or a completion of an activity or activities). Normally, the events are
labeled with a number.
• Continuous arrow. This denotes an activity that starts from a circle and ends
at a circle. An activity for its completion requires money, time, and
manpower.
• Dotted arrow. This is used to denote a restraint or a dummy activity. A
dummy activity is an imaginary activity accomplished in zero time.
Furthermore, the dummy activity does not consume any money, time, or
manpower.
• Circle with divisions. This also represents an event and is shown in Figure
4.4(d). In the figure, the circle is divided into two halves. The top half is
used to label the event with a number, and the bottom half is divided further
into two halves: the left side is used for the latest event time (LET) and the
right side for the earliest event time (EET). EET means the earliest time in
which an event can be reached, and LET the latest time in which an event
can be reached without delaying the completion of the project
• Figure 4.5 shows an application of the dummy activity y. The figure
denotes that activities L and M must be accomplished before starting
activity N. However, only activity M must be accomplished prior to
starting activity O.
Essential Formulas and Network Critical Path
Determination
• Various types of formulas are used in performing CPM/PERT network analysis.
The symbology used in these formulas is shown in Figure

• The symbols in Figure 4.6 are defined here:

• A (i, k) is the completion time of the activity between events i and k.
• LET (i) is the latest event time of the event i.
• LET (k) is the latest event time of the event k.
• EET (i) is the earliest event time of the event i.
• EET (k) is the earliest event time of the event k.
• Formula I
• This is used to calculate the latest start time for activity (i, k) expressed by LST

• where LST is the latest start time.

• Formula II
• This is used to calculate the latest finish time for activity (i, k) expressed by

• where LFT is the latest finish time.

• Formula III
• This is used to calculate the earliest start time for activity (i, k) expressed by

• where EST is the earliest start time.

• Formula IV
• This is used to calculate the earliest finish time for activity (i, k) expressed by

• where EFT is the earliest finish time.

• Formula V
• This is used to calculate the total float for activity (i, k) expressed by
• The longest path from one end of a CPM/PERT network to another end
(i.e., from the first event to the last event) is the critical path of the
network. It means all activities along the critical path must be completed
on time for project to finish on predicted time. It is to be noted that the
term longest path means the total time of the critical path given by the
largest sum of expected activity times of all paths that originate from the
first event and terminate at the last event of the network.
• A more systematic approach for determining the critical path of a
CPM/PERT network is as follows:
• Construct network.
• Determine the EET of each network event by making a forward pass of the network
and using the following relationship:
• For any event k,
• The earliest event time of the first network event is equal to zero. More specifically,

• Determine the LET of each network event by making a backward pass of the
network and using the following relationship:
• For any event i,

• The latest event time of the last network event and the earliest event time of the last
network event are equal. More specifically,

• The latest event time of the first network event is always equal to zero [i.e., LET
(first event) = 0]
• Identify the network events with EET = LET. If the network has only one path
with events that satisfy the condition LET = EET, then that path is critical.
Otherwise, go to the next step.
• For each path whose events’ LET = EET, determine the total floats for all of its
activities using Formula V. Add the total floats of all activities of each path. The path
Example
• Assume that a project was broken down into seven activities, as presented in
Table 4.8. The table also presents the expected duration times of all these
activities. Construct a CPM network for the project and identify that network’s
critical path.

The network shown has the following three paths originating

from event 1 and terminating at event 7:
• 1–3–5–6–7 (4 + 5 + 14 + 7 = 30 days);
• 1–2–3–5–6–7 (20 + 0 + 5 + 14 + 7 = 46 days);
• 1–2–4–5–6–7 (20 + 8 + 6 + 14 + 7 = 55 days).
• Example
• Assume that the network diagram of a research and development project is
shown in Figure. The diagram shows activities identified by letters,
activity expected duration times (in days), earliest and latest event times
for each event, and event identification numbers. The optimistic, most
likely, pessimistic, and expected time estimates for Figure activities are
given in Table.
• Calculate the probability of completing the project in 77 days by using
(4.21–4.22). The longest and the critical path of the network shown in
Figure 4.8 is 1–2–3–4–5–6 (20 + 15 + 11 + 10 + 16 = 72 days). It means, the
predicted time to complete the project is 72 days.
• Table 4.10 presents the variance for each activity along the critical path. Its
value was calculated using (4.21) and Table 4.9 data
CPM Advantages and Disadvantages
• Some of the advantages of the CPM are as follows:
• It is useful to show interrelationship in work flow.
• It is useful in cost control and cost saving.
• It is useful to determine project duration systematically.
• It is useful to monitor project progress effectively.
• It is useful to avoid duplications and omissions.
• It is useful to improve communication and understanding.
• It is useful to determine the need for labor and resources in advance.
• It is useful to identify critical work activities for completing the project on time.
• By contrast, some of the disadvantages of the CPM are high cost, time
consumption, poor time-estimate provision, and a bias to use pessimistic time
estimates.
Project Management Benefits, Obstacles to Achieve
Benefits, and Project Management Failure Factors
• There are many benefits of project management. Some of these are as follows:
• It identifies a methodology for tradeoff analysis and time limits for scheduling.
• It minimizes the need for continuous reporting and improves the estimating capability for potential planning.
• It identifies functional responsibilities for ensuring that all activities are accounted for, irrespective of
manpower turnover.
• It identifies problems early so that corrective measures may follow.
• It can measure accomplishments against plans.
• The project management benefits can only be achieved by overcoming obstacles such as project
complexity and risks, changes in technology, forward planning and pricing, special needs of
customers, and organizational restructuring.
• Past experience indicates that project management has failed because of factors such as:
• Failure to inform employees about the workings of project management;
• Failure to explain the effect of the project management organizational structure on the wage/salary
administration program;
• Failure to convince employees that executives completely support the change;
• Failure of executives to choose appropriate projects and project managers for the first few times and projects;
Project Planning
• Once a project has been approved and the contract signed, the project work can begin. The first steps are to define
the system requirements and prepare the project plan. For internal projects, a project charter is sent to announce the
project and describe it to stakeholders.
• The project manager, if not already assigned or involved, is now identified to oversee the planning process and
produce a plan that elaborates on any earlier plans as prepared for the proposal, business case study, and/or charter.
• In general, the planning process involves answering these questions, roughly in this order:
• 1. What is the desired end result? Define the project objectives, scope, and system requirements. These specify
the project deliverables, end items, and other sought-after results, as well as the time, cost, and performance targets.
• 2. How will the result be achieved? Define the work activities, tasks, or jobs to be done to achieve the objectives
and requirements. These activities include everything necessary to create and deliver the end-item or deliverables,
including planning, control, and administration activities.
• 3. Who will do it? Specify the project organization—the individuals or departments, subcontractors, and managers
that will perform and manage the work—and specify their responsibilities.
• 4. When and in what order? Create a schedule showing the timing of work activities, deadlines, and milestone
dates.
• 5. How much? Create a budget and resource plan to fund and support the project.
• 6. How well? Specify a method for tracking and controlling project work, which is necessary to keep the project
conforming to the planned work, schedule, budget, and user and system requirements.
Project Execution Plan
• Project planning begins early in the project life cycle—in
most cases with preparation of the proposal. During
proposal preparation, a proposal team or rudimentary
project team is organized, and the team prepares a brief
summary plan for inclusion in the proposal. They prepare
this plan using the same, albeit more abbreviated,
procedures as used later to develop a more elaborate and
detailed project execution plan.
• The plan in the proposal includes estimates for the project
duration, cost, and needed resources—just enough
information about the project and its price to enable the
customer to make a decision. In contrast, the project
execution plan lays out details of what will happen in the
project, to be used as a roadmap to guide the project team
throughout the project execution.
Benefits of Planning and Scheduling
• Even a small project is a complex undertaking with a lot of parts that have to fit
together in the right way and at the right time. Because of this, the project manager’s
job is akin to that of the orchestra conductor. If properly conducted, an orchestra will
produce beautiful music. The same is true of project managers. If they do a good job
of leading their project teams and conducting their work, the work will be completed
properly, on time, and according to specifications. This is the project manager’s
equivalent of making beautiful music.
• Time and Cost-Related Benefits of Scheduling
• The old saying that time is money certainly applies to engineering and technology
projects. Anything that adversely affects one adversely affects the other. For
example, poorly planned projects have an uneven workflow. With unsuccessful
projects, it is often the case that members of the project team do not get serious about
their work until they realize that a deadline for a project milestone is drawing near.
• Quality-Related Benefits of Scheduling
• The customer’s quality expectations are translated into practical terms by the
project’s specifications. Consequently, completing all work in strict accordance
with the specifications— doing quality work—is of paramount importance. A
well-developed schedule promotes quality work. To do quality work, team
members need time, resources, and support from the project manager and higher
management. They also need the work that must be completed before their work
can start to be completed on time and according to specifications. Ensuring that
this happens requires a well-planned schedule. Without such a schedule the work
environment becomes disorganized and rushed. People cannot do their best work
in an environment of hectic disorganization and rushed deadlines.
• Safety and Environment-Related Benefits of Scheduling
• Just as quality goes down when work is disorganized, hectic, and rushed, safety
and environmental concerns also become an issue. When team members are
rushed unrealistically they respond by taking shortcuts, cutting corners, and
neglecting proper work practices. When this happens, safety and environmental
concerns are put aside for the sake of making up time and getting the work
completed by the deadline.
Work Breakdown Structure
• Complex projects consist of numerous smaller subprojects, interrelated tasks, and work elements. As
described earlier in the book, the project main end result or deliverable can be thought of as a system
that consists of subsystems, which themselves consist of smaller components, and so on. The method
for subdividing a project into smaller elements is called the work breakdown structure or WBS, and its
purpose is to divide the overall project into “pieces of work” called work packages. Dividing the
project into work packages helps in preparing schedules and budgets and assigning work task
responsibilities.
• Creating a WBS begins with dividing the overall project into major categories. These categories are
then divided into subcategories that, in turn, are each subdivided. With this level-by-level breakdown,
the scope and complexity of work elements at each level get smaller. The objective is to reduce the
project into many small work elements, each so clearly defined that the project can be easily planned,
budgeted, scheduled, and monitored.
• A typical WBS consists of the following four levels:
• Level Element Description
• 1 Project
• 2 Subproject
• 3 Work package
• Level 1 is the total project. Level 2 is the project broken down
into several (usually four to ten) major elements or
subprojects. These subprojects must conform to the
deliverables or work areas specified in the scope statement,
and all of them when combined must constitute the total
project scope. Each subproject is broken down into activities at
Level 3. If a further breakdown is necessary, that occurs at
Level 4. When the project is part of a program, a fifth level is
added at the top, and the levels are renumbered: Level 1 is the
program, Level 2 the project, and so on.
• When the process is completed, tasks at the bottom levels,
whatever those levels might be, are called work packages. In
the table previously, the term “work package” appears at Level
3, but that is for illustration only. Later in the planning process,
larger work packages might be subdivided into more detailed
activities and the activities into still more detailed tasks.
• The actual number of levels in the WBS varies by project, as
do the actual names of the element descriptions at each level.
Figure shows a typical WBS. Note the different levels and
descriptions for each work element.
• Figure illustrates ways to create the WBS for
constructing a house. The top part of the
figure (hardware, product-oriented WBS)
shows the main project end-item (Level 1) and
the physical components of the house to be
included (Level 2). By subdividing a project
in this way—according to physical products or
deliverables, it is easy to attach performance,
cost, and time requirements to each item and
to assign responsibility for meeting those
requirements. That is, creating a WBS in this
way assists in preparing the project schedule
and budget. The bottom part of Figure shows
how the product-oriented WBS would be
subdivided into four levels.
Scheduling
• The next logical step after work definition is to schedule the project work
tasks. A project schedule shows the timing for work tasks and when specific
events and project milestones should occur.
• Project plans are similar to roadmaps: they not only show you what you must
do to get to where you want to go, but they enable you to see what progress
you’ve made along the way. Work packages are what you must do; combined
with the schedule, they are the roadmap to project goals. The roadmap includes
signposts called events and milestones to show how much progress you have
made. Passing the last event means you’ve reached your destination: project
completion.
• Events and milestones should not be confused with work packages, activities,
or other tasks. A work package or task consumes resources and time; it is the
process of doing something (such as driving a car to get somewhere). In
contrast, an event signifies one thing: a moment in time. In a project, events
represent the start or finish of something (equivalent to beginning a trip or
arriving at a destination). In project schedules, each work package or task is
depicted as a line segment, and the two ends of the segment represent the
events of starting and completing the task. For example, in Figure, the line
segment labeled “Task A” represents that task and the time to do it; events 1
and 2 represent the moments when Task A is started and finished, respectively.
In project schedules, each event is associated with a specific calendar date (day,
Gantt Charts
• The simplest and most common scheduling technique is the Gantt chart or bar chart, named after the
management consultant Henry L. Gantt (1861–1919). During World War I, Gantt worked with the US Army
to find a way to visually portray the status of the munitions program. He realized that time was a common
denominator among most elements of a program plan and that it would be easy to assess progress by viewing
each element’s status with respect to time. His approach, which came to bear his name, became widely
adopted in industry.
• The chart consists of a horizontal scale divided into time units—days, weeks, or months—and a vertical scale
showing work elements—tasks, activities, or work packages. Figure shows the Gantt chart for the example
project. Listed on the left-hand side are work packages; along the bottom are work weeks. The beginning and
ending of each bar on the chart represent the starting and completion dates of a work package.
• In large projects with many work elements, a hierarchy of
schedules is used, as illustrated by the three levels in
Figure. The top or project-level schedule shows subprojects
within a project, the intermediate level schedule shows
major activities within a subproject, and the bottom or task
level shows work packages or smaller tasks. Milestones
and target dates are displayed at any level. Each level
schedule expands on the details of the schedule at the level
above it. Intermediate- and bottom-level schedules are used
for project and functional managers to plan labor and
resource allocations. Bottom-level schedules are the most
detailed, showing the daily (and even hourly) schedules of
the tasks within work packages.
• A disadvantage of the Gantt chart is that it does not
necessarily show the dependencies between work elements,
for example, the effects of one work element falling behind
schedule on other work elements. As described, some work
elements depend upon others before they can begin; if
those others are delayed, then so will the elements that
depend on them and, possibly, the entire project. Gantt
charts alone provide no way of determining how delays in
some work elements impact other elements and the project.
Line of balance (Linear Scheduling Method)

• Although projects are by definition unique, one-time endeavors, they sometimes

contain work tasks that are repetitive. Examples include erecting numerous towers
for a new transmission line, constructing multiple largely identical housing units,
and erecting a multifloor building. The towers, housing units, and floors are
identical. A method for planning and controlling these repetitive activities is the
line of balance—LOB (also called linear scheduling method because it is often
used in “linear projects” such as highways and pipelines where the physical
location of the work and progress can be represented in terms of miles or
kilometers). Example illustrates the method.
Example
• A supplier of construction cranes must deliver a total of 12 cranes according to
the schedule in Table 6.1. Prior to each crane’s delivery, a set of activities must be
completed. These are shown as activities A–F in the Gantt chart in Figure 6.15.