Project Management, Achieving Competitive Advantage. Pearson, Fourth Edition, ISBN: 9

Project Management, Achieving Competitive Advantage.
Pearson, Fourth Edition, ISBN:
978

0

13

379807

4.
Free software: Project Libre found at
https://www.projectlibre.com/
Course
Description
This course develop
s a foundation of concepts and solutions that supports the planning,
scheduling, controlling, resource allocation, and performance measurement activities
required for successful completion of a project. Basic project management tools will be
introduced.
S
tudent Learning Outcomes
(Should be measurable; observable
; use action
verbs
)
1.
Recognize the basic properties of projects, including their definition.
2.
Understand and apply to a problem, the life cycle of a project.

The
syllabus/schedule
are subject to change.
3.
Understand
and discuss
how important it is
for project managers to be able to
make cross

functional decisions.
4.
Understand how project management is a ‘leader

intensive’ profession.
5.
Be able to complete a project checklist, work breakdown structure, activity
networks, Gantt charts, and a project pro
posal.
6.
Discuss basic cost estimating as it relates to the project schedule and work
breakdown structure.
COURSE REQUIREMENTS
Minimal Technical Skills Needed
Student
s must be able to use Microsoft Word for assignments. Students will become
comfortable usi
ng the basic templates found in Project Libre.
Instructional Methods
There are a number of assignments due each week, among them will be Case Studies,
Discussion posts, and Project Libre assignments.
Student Responsibilities
or Tips for Success in the Course
Students are expected to log into the course 3

4 times per week. Initial discussion
posts are due on
Tuesday
of each week. Final replies (2) will be due on
Saturdays
of
each week when discussions are assigned.
The Introduction is a chance for you to
‘meet’ your colleagues in the class Specific instructions on what to post are available
when you click on Introduction in Course home.
The
Discussions
are directly related to the assigned readings
or videos
. Upon
completion of the assigned readings, you are expected to engage in an
ongoing
discussion/debate with your classmates. Your contributions to the discussion forums
will be graded for
quality
and a
detailed analysis
linking the material to a critical
apprai
sal of theory, policy, and practice. The introduc
tion of outside materials is
mandatory (unless otherwise noted in the discussion topic assignment
).
In all cases,
students must cite in

text and provide a full bibliography/works cited at the end of their
p
ost for all
citations mentioned in the post. Se
e the ‘How to Cite’ Factsheet).
Also, you
can find information on the
Purdue Owl
.
The specific discussion assignment is located in each unit
C
hapter
by clicking on the
Discussion link.
The
Reply
posts are responses you make to the discussion posts that you and your
classmates post
as assigned
.
Reply
posts should be meaningful. Merely agreeing or disagreeing with a classmate will
not be lo
oked upon favorably and will result in a loss of points. A meaningful post is one
that moves the discussion forward in some substantive way through providing one’s

The
syllabus/schedule
are subject to change.
perspective, additional information through research, or reframing the discussion in
some n
ew way. You are expected to engage in an
ongoing
discussion/debate with
your classmates. Your comments will be graded for
quality
, and
relevance
. Your
comments will also be graded based on your ability to engage in critical thinking.
Students must prov
ide one outside source for at least one comment that they
make.
Extra Credit may be available for outstanding posts. Remember, they’re
50% of your grade.
GRADING
Graded Activities

Student Introduction

5%

Academic Honesty Policy

5%

Discussion
Forums

50%

Case Studies

15
%

Final Project

25
%
Final grades in this course will be based on
the following scale
:
A
=
90%

100%
B
= 80%

89
%
C
= 70%

79
%
D = 60%

69
%
F
= 59% or Below
Assessments
Assessment Method
: Discussion and Comment posts will be graded using
the Discussion Post Grading Rubric located in Document Sharing.
TECHNOLOGY REQUIREMENTS
LMS
All course sections offered by Texas A&M University

Commerce have a corresponding
course shell in the myLeo O
nline Learning Management System (LMS). Below are
technical requirements
LMS Requirements:
https://community.brightspace.com/s/article/Brightspace

Platform

Req
uirements
LMS Browser Support:

Notes
295
Management Science,
21(6): 718–22; Venkataraman, R., and
Pinto, J. K. (2008).
Cost and Value Management in Projects.
New York: Wiley.
20.
Panknin, S., quoted in Grieshaber, K. (2013, April 8).
“Berlin’s airport delays shame Germans.” http://news.
yahoo.com/berlins-airport-project-delays-shame-ger

mans-093036692–finance.html
21.
Flyvbjerg, B., Garbuio, M., and Lavallo, D. (2009).
“Delusion and deception in large infrastructure projects:
Two models for explaining and preventing executive
disaster,”
California Management Review
, 51(2): 170–93;
“Building BRICs of growth.” (2008, June 7).
The Economist
.
www.economist.com/node/11488749; Lovallo, D., and
Kahneman, D. (2003). “Delusions of success: How opti-
mism undermines executives’ decisions,”
Harvard Business
Review
, 81(7): 56–63; Flyvbjerg, B., Holm, M. S., and Buhl,
S. (2002). “Underestimating costs in public works projects:
Error or lie?”
Journal of the American Planning Association
,
68(3): 279–95.
22.
Meredith, J. R., and Mantel, Jr., S. J. (2003).
Project Management,
5th ed. New York: Wiley; see also Christensen, D. S.,
and Gordon, J. A. (1998). “Does a rubber baseline guaran-
tee cost overruns on defense acquisition contracts?”
Project
Management Journal,
29(3): 43–51.
23.
Maher, M. (1997).
Cost Accounting: Creating Value for
Management,
5th ed. Chicago: Irwin.
24.
Gray, C. F., and Larson, E. W. (2003).
Project Management,
2nd ed. Burr Ridge, IL: McGraw-Hill.
25.
Flyvbjerg, B., and Ansar, A. (2014, March 19). “Ending the
flood of megadams,”
Wall Street Journal
, p. A15; Ansar, A.,
Flyvbjerg, B., Budzier, A., and Lunn, D. (2014). “Should
we build more large dams? The actual costs of hydro-
power megaproject development.”
Energy Policy
. http://
dx.doi.org/10.1016/j.enpol.2013.10.069
26.
“Boston’s Big Dig opens to public.” (2003, December 20).
www.msnbc.com/id/3769829; “Big Dig billions over
budget.” (2000, April 11). www.taxpayer.net/library/
weekly-wastebasket/article/big-dig-billions-over-bud-
get; “Massachusetts to sue Big Dig companies.” (2006,
November 27). www.msnbc.msn.com/id/15917776; “Big
Dig contractors to pay $450 million.” (2008, January 23).
www.msnbc.msn.com/id/22809747
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296
9
■ ■ ■
Project Scheduling
Networks, Duration Estimation, and Critical Path
Chapter Outline
Project Profile
After 20 Years and More than $50 Billion, Oil
Is No Closer to the Surface: The Caspian
Kashagan Project
introduction
9.1
Project Scheduling
9.2
Key Scheduling terminology
9.3
develoPing A networK
Labeling Nodes
Serial Activities
Concurrent Activities
Merge Activities
Burst Activities
9.4
durAtion eStimAtion
9.5
conStructing the criticAl PAth
Calculating the Network
The Forward Pass
The Backward Pass
Probability of Project Completion
Laddering Activities
Hammock Activities
Options for Reducing the Critical Path
Project mAnAgement reSeArch in Brief
Software Development Delays and Solutions
Summary
Key Terms
Solved Problems
Discussion Questions
Problems
Internet Exercises
MS Project Exercises
PMP Certification Sample Questions
Notes
Chapter Objectives
After completing this chapter, you should be able to:
1.
Understand and apply key scheduling terminology.
2.
Apply the logic used to create activity networks, including predecessor and successor tasks.
3.
Develop an activity network using Activity-on-Node (AON) technique.
4.
Perform activity duration estimation based on the use of probabilistic estimating techniques.
5.
Construct the critical path for a project schedule network using forward and backward passes.
6.
Identify activity float and the manner in which it is determined.
7.
Calculate the probability of a project finishing on time under PERT estimates.
8.
Understand the steps that can be employed to reduce the critical path.

Project MAnAgeMent Body of Knowledge core
concePts covered in this chAPter
1.
Plan Schedule Management (PMBoK sec. 6.1)
2.
Define Activities (PMBoK sec. 6.2)
3.
Sequence Activities (PMBoK sec. 6.3)
4.
Estimate Activity Resources (PMBoK sec. 6.4)
5.
Estimate Activity Durations (PMBoK sec. 6.5)
6.
Develop Schedule (PMBoK sec. 6.6)
7.
Control Schedule (PMBoK sec. 6.7)
Project Profile
After 20 Years and More than $50 Billion, oil is No closer to the Surface: the caspian Kashagan Project
Two decades ago, the world was in desperate need of new sources of oil, just as emerging economies were anxious
to exploit their natural resources in exchange for improvements in the standard of living. It was against this backdrop
that the Kashagan oil project was launched. A partnership between Kazakhstan and a consortium of oil exploration
companies (including Shell, Exxon Mobil, Total, ConocoPhillips, and Eni, among others), the Kashagan project involved
offshore drilling in the Caspian Sea. The oil field was discovered in 2000, and with oil reserve estimates that are said to
be the largest in the world outside of the Middle East, the plan was for oil to begin flowing in 2005, with a projected
daily output of 1.5 million barrels. One Shell driller labeled the field “an Elephant.”
Now, years behind schedule and with a budget that has grown from its original total estimate of $57 billion to
$187 billion, the project is still far from completed. Phase 1 of the project was expected to cost $24 billion and the bill
has already grown to $46 billion with little to show for it. In addition to its massive budget overruns, the project has
been continuously plagued by a series of engineering missteps, management disputes, miles of leaky and corroded
pipelines, and technical problems. So bad has the situation become that the project has now been halted indefinitely
while all parties try to understand what went wrong and how to get things back on track.
The Kashagan project’s problems come at a time when relationships between Western oil companies and
resource-owning governments are more important than ever. To replace what they pump, oil companies need to col-
laborate with state-owned companies that control 90% of the globe’s remaining oil reserves, by a World Bank estimate.
Figure 9.1
Kashagan oil field
Source:
Shamil Zhumatov/Reuters/Corbis
Project Profile
297
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Chapter 9

Project Scheduling
introduction
Project scheduling is a complex undertaking that involves a number of related steps. When we
think about scheduling, it helps if we picture a giant jigsaw puzzle. At first, we lay out the border
and start creating a mental picture in our heads of how the pieces are designed to fit together. As
the border starts to take shape, we can add more and more pieces, gradually giving the puzzle
shape and image. Each step in building the puzzle depends on having done the previous work
correctly. In a similar way, the methodologies in project scheduling build upon each other.
Project
scheduling requires us to follow some carefully laid-out steps, in order, for the schedule to take shape.
Just as
a jigsaw puzzle will eventually yield a finished picture if we have followed the process correctly,
the shape of the project’s schedule will also come into direct focus when we learn the steps needed
to bring it about.
But governments often give foreign oil companies access only to the hardest-to-develop acreage. Kashagan’s disastrous
overruns show how these “public/private” collaborations in difficult oil fields can quickly go bad for both sides.
Kashagan is a complicated project under the best of circumstances. The oil derricks sited offshore had to be
redesigned atop “islands” that were built for them when it was discovered that the Caspian is shallow enough at this
location that it freezes all the way to the bottom during the winter, making drilling with conventional rigs impossible.
The companies had to build artificial islands of rock and rubble and drill through these. Further, the oil is under high
pressure from corrosive natural gas high in toxic chemicals. That meant building a sulfur-removal system onshore,
reached by a pipeline, for the portion of the gas to be recovered. It took operators nearly two years to factor this level
of sour gas into infrastructure design. And heavy pipe-laying machines sometimes broke down in the cold.
A number of circumstances have contributed to the schedule delays and budget overruns, including:

Administrative confusion as the major contractors could not decide who would be in charge of the development.
When Exxon Mobil originally attempted to take charge, Shell executives threatened to pull out of the partnership.
Ultimately, the much smaller Eni SpA was named lead contractor, although each company had veto power over all
major planning decisions.

Relationships with the Kazakhstan government have deteriorated as the project has experienced delay after delay.
By 2008, the government began levying penalties for the extended delays, making the oil companies’ investment
in the project all the more expensive. Eni Chief Executive Paolo Scaroni said his company’s relationship with the
government “has been excellent” considering the years of trouble. A senior official of Kazakhstan’s state-owned oil
company, KMG, disagreed. “It’s a marriage that is made in hell,” he said.

Problems with human resources assigned to the project. As part of the agreement with the local government, oil
companies had to employ large numbers of local workers, with a portion of them mandated to perform office func-
tions. One former official recalled hiring hundreds of enthusiastic locals who had “never sat in front of a computer.”

Leaking pipes. In 2013, the companies prepared for a milestone: starting commercial oil production and transfer

ring the role of operator to a Shell-led group. On September 11, the companies announced that oil was flowing.
About two weeks after that, parts of the underground gas pipeline began leaking into the Caspian Sea. Oil pumping
stopped while workers inspected and found a leak. Crews patched it, and oil pumping resumed. Two weeks later, the
pipeline sprang new leaks. This time, the companies shut down the whole Kashagan operation. Workers spent the
fall excavating parts of the 55-mile pipeline and sending section for tests at a UK lab.

Technical errors. The oil companies used outdated Russian cruise line ships as floating barracks for oil workers. How-
ever, besides these construction-worker barracks, offshore accommodations for the permanent staff were needed.
Around 2005, Eni’s partners realized that plans for these put them too near a production site. Eni redesigned the
accommodations, delaying construction by another year.
The series of missteps and technical challenges has left everyone feeling dissatisfied. Oil company and Kazakh
officials sniped at one another. “Nobody’s happy with the governance, and I don’t think anybody’s happy with the
operatorship,” Shell Chief Financial Officer Simon Henry said. Cracks were found in several places along the pipeline,
according to people familiar with the inspection, who said it appeared the metal had lost some of its factory character

istics, possibly through a combination of poor welding practices and the natural gas’s hydrogen-sulfide content.
Finally, the combination of technical challenges, unexpected (and unresolved) pipeline leaks, finger-pointing by
executives from Kazakhstan and the oil companies, and stiff financial penalties for delays became too much for some
of the consortium. In 2013, longtime partner ConocoPhillips sold its stake in the project to KMG, which later resold it
to China National Petroleum Corp. “We got our $5.5 billion in the bank and got out of Kashagan,” said Al Hirshberg, a
Conoco executive, at a conference last fall. He added: “It feels good to be out of it.”
1

9.1 Project Scheduling
299
9.1 Project Scheduling
Project scheduling techniques lie at the heart of project planning and subsequent monitoring and
control.
Previous chapters have examined the development of vision and goals for the project,
project screening activities, risk management practices, and project scope (including the Work
Breakdown Structure). Project scheduling represents the conversion of project goals into an achiev-
able methodology for their completion; it creates a timetable and reveals the network logic that
relates project activities to each other in a coherent fashion. Because project management is predi-
cated on completing a finite set of goals under a specified time frame, exactly how we develop the
project’s schedule is vitally important to success.
This chapter will examine a number of elements in project scheduling and demonstrate
how to build the project plan from a simple set of identified project activities into a graphical
set of sequential relationships between those tasks which, when performed, result in the comple-
tion of the project goals. Project
scheduling
has been defined by the Project Management Body of
Knowledge as “an output of a schedule model that presents linked activities with planned dates,
durations, milestones, and resources.”
2
The term
linked activities
is important because it illus-
trates the scheduling goal. Project scheduling defines network logic for all
activities
; that is,
tasks
must either precede or follow other tasks from the beginning of the project to its completion.
Suppose you and your classroom team were given an assignment on leadership and were
expected to turn in a paper and give a presentation at the end of the semester. It would first be nec-
essary to break up the assignment into the discrete set of individual activities (Work Breakdown
Structure) that would allow your team to finish the project. Perhaps you identified the following
tasks needed to complete the assignment:
1.
Identify topic
2.
Research topic
3.
Write first draft of paper
4.
Edit and rewrite paper
5.
Prepare class presentation
6.
Complete final draft
7.
Complete presentation
8.
Hand in paper and present topic in class
Carefully defining all the steps necessary to complete the assignment is an important first step in
project scheduling as it adds a sequential logic to the tasks and goes further in that it allows you to
create a coherent project plan from start to finish. Suppose, to ensure the best use of your time and
availability, you were to create a network of the activities listed above, that is, the most likely order
in which they must occur to be done correctly. First, it would be necessary to determine a reason-
able sequence.
Preceding activities
are those that must occur before others can be done. For example,
it would be necessary to first identify the term paper topic before beginning to conduct research on
it. Therefore, activity 1,
Identify topic,
is a preceding activity; and activity 2,
Research topic,
is referred
to as a subsequent, or
successor, activity
.
Once you have identified a reasonable sequential logic for the network, you can construct a
network diagram
, which is a schematic display of the project’s sequential activities and the logical
relationships between them. Figure 9.2 shows two examples of a network diagram for your proj-
ect. Note that in Option A, the easiest method for constructing a network diagram is to simply lay
out all activities in serial order, starting with the first task and concluding with the final activity.
This option, however, is usually not the most efficient one. It could be argued, for example, that it
is not necessary that the whole project team be involved in each of the activities, requiring you to
delay the start of activity 6,
Complete final draft
(F in Figure 9.2), until after activity 5,
Prepare class
presentation.
Another choice might be to use the time better by having some members of the team
begin work on the presentation while others are still completing the paper. Any of these options
mean that you are now constructing a project network with two paths, or parallel streams of activi-
ties, some of which are going on simultaneously. This alternative network can be seen in Option B
of Figure 9.2.
This simplified example illustrates the process of applying sequential logic to project tasks
in order to construct an activity network. In creating a sense of timing for activities in addi-
tion to their functions, the activity network allows project teams to use a method for planning
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Chapter 9

Project Scheduling
and scheduling. There are several reasons why it is so important that project networks and sched-
uling be done well. Among the reasons are the following:
3

A network clearly illustrates the interdependence of all tasks and work packages. Doing
something wrong earlier in the project has severe implications for downstream activities.

Because a network illustrates this interrelationship among activities and project personnel,
it facilitates communication flows. People are much more attuned to the work that went on
before their involvement, and they develop a keener appreciation of the concerns of those
who will take over at later points.

A network helps with master scheduling of organizational resources because it shows times
when various personnel must be fully committed to project activities. Without some sense of
where the project fits into the overall organizational scheme, personnel may be assigned to
multiple activities at a time when they are most needed on the project.

A network identifies the critical activities and distinguishes them from the less critical. The
network reveals the activities that absolutely must be completed on time to ensure that the
overall project is delivered on time; in the process, activities that have some “wiggle room”
are identified as well.

Networks determine when you can expect projects to be completed.

Dates on which various project activities must start and end in order to keep to the overall
schedule are identified in a network.

A network demonstrates which activities are dependent on which other activities. You then
know the activities that need to be highly coordinated in order to ensure the smooth develop-
ment of the project.
These are just some of the advantages of using activity networks for project scheduling.
9.2 Key Scheduling terminology
Every profession has its unique jargon and terminology. In project scheduling, a number of specific
terms are commonly employed and so need specific definitions. In many cases, their definitions
are taken from the Project Management Institute’s Body of Knowledge. Some concepts that you
Option B: Nonserial Sequential Logic
A
Identify topic
B
Research
C
Paper draft
H
Finish
D
Edit paper
E
Prepare
presentation
F
Final draft
G
Finish
presentation
Figure 9.2
Alternative Activity Networks for term Paper Assignment
Option A: Serial Sequential Logic
A
Identify topic
B
Research
C
Paper draft
D
Edit paper
E
Prepare
presentation
F
Final draft
G
Finish
presentation
H
Finish

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Chapter 9

Project Scheduling
concurrent or parallel project paths are represented in an activity network. When the nature
of the work allows for more than one activity to be accomplished at the same time, these
activities are called
concurrent
, and parallel project activity paths are constructed through
the network. In order to successfully operate concurrent activities, the project must be staffed
with sufficient human resources to support all simultaneous activities. This is a critical issue,
because a network cannot be created without giving thought to the resource requirements
needed to support it.
network logic suggests that:
Activities D and E can begin following the completion of activity C.
Activity F can begin following the completion of activity D and is independent of activity E.
Activity G can begin following the completion of activity E and is independent of activity D.
Activity H can begin following the completion of both activities F and G.
merge activities
Merge activities are those with two or more immediate predecessors. Figure 9.7 is a partial net-
work diagram that shows how merge activities are expressed graphically. Merge activities often
are critical junction points, places where two or more parallel project paths converge within the
overall network. Figure 9.7 demonstrates the logic of a merge activity: You cannot begin activity
D until all predecessor activities, A, B, and C, have been completed. The start of the merge activity
is subject to the completion of the longest prior activity. For example, suppose that activities A, B,
and C all start on the same day. Activity A has a duration of 3 days, activity B’s duration is 5 days,
and activity C has a duration of 7 days. The earliest activity D, the merge point, can start is on day
7, following completion of all three predecessor activities.
network logic suggests that:
Activity D can only begin following the completion of activities A, B, and C.
C
Paper draft
D
Edit paper
E
Prepare
presentation
F
Final draft
G
Finish
presentation
H
Finish
Figure 9.6
Activities linked in Parallel (concurrent)
Activity A
Activity B
Activity C
Activity D
Figure 9.7
Merge Activity

9.3 Developing a Network
305
Burst activities
Burst activities are those with two or more immediate successor activities. Figure 9.8 graphi-
cally depicts a burst task, with activities B, C, and D scheduled to follow the completion of
activity A. All three successors can only be undertaken upon the completion of activity A.
Unlike merge activities, in which the successor is dependent upon completion of the longest
predecessor activity before it can begin, all immediate successors can begin simultaneously
upon completion of the burst activity.
network logic suggests that:
Activities B, C, and D can only begin following the completion of activity A.
examPle
9.1
Let’s begin constructing a basic activity network. Table
9.1 identifies eight activities and their pre-
decessors in a simple example project. Once we have determined the tasks necessary to accomplish
the project, it is important to begin linking those tasks to each other. In effect, we are taking the
project tasks in the Work Breakdown Structure and adding a project chronology.
Once the network activity table has been developed and the predecessors identified, we can
begin the process of network construction. The first activity (A) shows no predecessors; it is the
starting point in the network and placed to the far left of our diagram. Next, activities B and C both
identify activity A as their predecessor. We can place them on the network as well. Activity D lists
both activities B and C as predecessors. Figure 9.9 gives a partial network diagram based on the in-
formation we have compiled to this point. Note that, based on our definitions, activity A is a burst
activity and activity D is a merge activity.
We can continue to create the network iteratively as we add additional activity nodes to
the diagram. Figure 9.10 shows the final activity network. Referring back to an earlier point,
taBle 9.1
information for Network construction
Name: Project Delta
Activity
Description
Predecessors
A
Contract signing
None
B
Questionnaire design
A
C
Target market ID
A
D
Survey sample
B, C
E
Develop presentation
B
F
Analyze results
D
G
Demographic analysis
C
H
Presentation to client
E, F, G
Activity A
Activity C
Activity B
Activity D
Figure 9.8
Burst Activity
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Instructions

Complete the activity chart in Problem 9.1 on page 325 of your text. Use Project Libre. Don’t forget to explain and defend why you put the activities in that precise order. Submit both documents to the Case Study 6 Folder.