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CEPM501: Organizing the Project and Its Components

What you'll do

Examine the project management life cycle and the continuum of project characteristics Develop a work breakdown structure Construct a project network including mechanisms to identify task durations Construct a Gantt chart Use float information for decision making Identify the critical path Recognize shortcomings in computation Identify sources of uncertainty in task durations Examine PERT computations

Course Description

On the surface of it, project management seems very straightforward: there's work that needs to get

done, and there are resources dedicated to do it. But even at those organizations considered "best practice" companies, 80 percent of finished projects are not economically successful. That means that

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even in the best-managed organizations, 20 percent of finished projects cost more than their original estimates, they run late, and they deliver less value than expected. And 30 percent of projects are never finished at all; they're canceled altogether. How can seasoned project managers get better results? In this course, Linda Nozick, Professor and Director of Civil and Environmental Engineering at Cornell, leads students through clear, understandable, and practical methods of achieving better results. Students will practice decomposing a project into elements that can be scheduled, tracked, and controlled.

This course does not assume learners have any formal project management training, nor that they intend to sit for a Project Management Professional certification, Six Sigma, or similar certification. In that regard, this is not a prep course for a project management certification, though it will be quite valuable for anyone who is interested in pursuing one. This program equips learners with the concepts, tools, and language of project management that they can apply to any size and type of project. The course will not be specific to any formal project management software (for example, Microsoft Project).

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Linda K. Nozick Professor and Director of Civil and Environmental Engineering College of Engineering, Cornell University

Linda K. Nozick is Professor and Director of Civil and Environmental Engineering at Cornell University. She is a past Director of the College Program in Systems Engineering, a program she co-founded. She has been the recipient of several awards, including a CAREER award from the National Science Foundation and a Presidential Early Career Award for Scientists and Engineers from President Clinton for "the development of innovative solutions to problems associated with the transportation of hazardous waste." She has authored over 60 peer-reviewed publications, many focused on transportation, the movement of hazardous materials, and the modeling of critical infrastructure systems. She has been an associate editor for Naval Research Logistics and a member of the editorial board of Transportation Research Part A. She has served on two National Academy Committees to advise the US Department of Energy on renewal of their infrastructure. During the 1998-1999 academic year, she was a Visiting Associate Professor in the Operations Research Department at the Naval Postgraduate School in Monterey, California. Professor Nozick holds a B.S. in Systems Analysis and Engineering from the George Washington University and an M.S.E and Ph.D. in Systems Engineering from the University of

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Pennsylvania.

Table of Contents

Module 1: Identify the Project Scope and Complexity

1. Module Introduction: Identify the Project Scope and Complexity

2. Watch: Identify the Level of Project Complexity 3. Watch: Project Outcomes 4. Tool: The Clear/Clear Ideal 5. Watch: The Project Life Cycle 6. Watch: Define a Work Breakdown Structure (WBS) 7. Watch: Why Is a WBS Important? 8. Course Project, Part One, Identifying the Project Scope and

Complexity 9. Module Wrap-up: Identify the Project Scope and Complexity

Module 2: Create the Project Network

1. Module Introduction: Create the Project Network 2. Watch: A Project Network 3. Watch: Task Durations and Precedence Relationships 4. How Do You Determine Activity Durations? 5. Watch: The Critical Path Method "Forward Pass"

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6. Watch: The Critical Path Method "Backward Pass" 7. Watch: Float 8. Read: Float and Free Float 9. Course Project, Part Two, Creating the Project Network 10. Module Wrap-up: Create the Project Network

Module 3: Identify Sources of Uncertainty

1. Module Introduction: Identify Sources of Uncertainty 2. Watch: A Gantt Chart 3. Read: Managing Project Uncertainty 4. Watch: Schedule Uncertainty 5. Read: Focus on Schedule Uncertainty 6. Your Experience with Managing Uncertainty 7. Watch: What Is Probability? (And What Are Probability

Distributions?) 8. Read: What Does It Mean to Generate Observations from

Probability Distributions? 9. Watch: Introduction to PERT 10. Course Project, Part Three, Identifying Sources of Uncertainty 11. Tool: Action Plan 12. Module Wrap-up: Identify Sources of Uncertainty 13. Read: Thank You and Farewell

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Module Introduction: Identify the Project Scope and Complexity

For project managers, "success" means that your project meets its goals: it's delivered on time, on budget, and it produces the needed results. You have to work within the constraints of time and resources to make that happen. One of the most

important things that project managers can do to influence project success is to identify the scope and complexity of the project. You want to identify, as clearly as possible, what the desired outcomes and required methods are going to be. You also want to identify the steps of work that are required. In this module, you will set yourself up for project success by articulating project outcomes and methods and creating a work breakdown structure that itemizes the work to be done. You will have access to a helpful reference tool to guide your efforts, and you will examine the project life cycle, complexity, and scope.

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Watch: Identify the Level of Project Complexity

It's very important for even the most seasoned project managers to articulate the level of complexity within the project, and there are a number of ways in which you can do that. Professor Nozick offers some insight into why project management, although seemingly straightforward, is a deceptively complex undertaking.

Transcript

Everybody has an intuitive understanding of what a project is. For our purposes, it's good if we have a little bit of a definition that we can refer back to. So for us, a project is going to be a collection of activities that need to be completed within time and resource availability limits. On the surface of it, this seems like a very simple construct. It shouldn't be that hard to do a project. You have activities that need to be done. You have time and resources to do them. On the surface of it, it seem like a relatively simple activity, that of a project manager. The reality is that this is not simple at all. It's very, very difficult to get this right.

One way to understand how difficult it is, is to look at some statistics for projects that have been done in industry, just to get an idea of how hard this task really is. So here's a few statistics to consider. McKinsey & Company, they report on large information technology projects, those with budgets beyond $15 million. They run about 45% over budget, 7% over time, and deliver about 56% less value than expected. Let's pause on that for a moment. So

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we're talking about relatively large projects right? $15 million for the project, that's a lot of people doing a lot of work. They run on average about 45% over budget, about 7% over time and they deliver about 56% less value than expected. Those are big numbers. That's quite a big gap between ideal and where the projects are actually performing.

For non-software information technology projects they report that the average benefit shortfall is about 133%. You could argue about how they measure budget shortfall and benefit shortfall, but 133% is a large number. Another organization that provides insight into how hard this job really is is the Standish Group. So they regularly publish statistics results of surveys on a performance of information technology projects as well. So looking at their data from 2010 to 2014, they report that about 50% of projects will cost more then 180% of their original estimates. Think about that for cost overruns. 50% of projects will cost more than 180% of their original estimates. And about 30% of their projects will be cancelled.

Finally, there was a study done at the Technical University of Berlin. They focused on projects undertaken at 200 German multi- national companies. And they found that the percent of projects within companies that are economically successful range from 50%, at what was deemed poorly managed companies, to about 80% at best practices companies. So on the surface of it you would think project management, the job doesn't seem that hard. You've got activities to do, you've got resources to do them, you match them, you're good to go. But even at what's been deemed

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best practices companies, you see about 80% that are economically successful. That means 20% were not. Okay, that's a big number I think.

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Watch: Project Outcomes

As a project manager, one of your primary goals is to put meaningful processes in place. Reducing the level of ambiguity in outcomes and methods at the outset will pay dividends, as Professor Nozick explains.

Companies are financially successful when they keep projects in that desirable top-right quadrant, "clear-clear," with clearly established methods and outcomes. So why aren't all projects in that clear-clear quadrant?

Sometimes the outcomes are clearly defined in advance—for example, the customer wants a car battery that goes 400,000 miles for less than $100—but the methods of achieving that goal aren't clear. We don't know how we're going to accomplish what's being asked of us. Sometimes the methods are clearly established but the outcomes are vague. These are typically personnel issues; for example, people want to maintain familiar protocols and routines, but they're not producing the results that the company needs. We know what we want to do, but what we want is not producing results. And sometimes a project is vague in terms of both its methods and outcomes; for example, the customers don’t really know what they want. When the needs are not well understood from the beginning, the projects will run late, they will go over budget, the customers will not be pleased, and the employees will be frustrated. When you, as the project manager, can observe from the outset that the

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outcomes and methods are unclear, that should be a warning sign that the project will not meet its goals.

Transcript

With all of that as background let's think about what we can do so that the project, with you in a project manager role, that this is a little easier. So that you can understand where to channel your efforts so you don't wind up being one of the unsuccessful projects or managing one of the unsuccessful ones. So one of the first things you can consider when thinking about how complicated the landscape is when you start to get involved in a project, is asking the question about how much do I understand about the project deliverables and the methods that will be needed to complete those deliverables?

That's one place to start in thinking about how complicated the world is that you're stepping into. This graphic gives a sense of that, of the space defined by those two questions. That is what's the clarity and the project outcomes, and notice that's along the vertical access. And along the y-axix, horizontal access, you have clarity in the methods required. So what do you need to do and what do you need to produce and then what do you need to do to get those products done.

So if you have clarity in the project outcomes and you have clarity in the methods required, you're pretty much in good shape. A lot of projects don't fall in to that category but that's a very nice space to find yourself in. You may find yourself in a situation where you

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have clarity in the project outcomes but you don't know the methods required to do them or they're vague, your understanding of what they need to be is vague. That may mean that you don't quite have the skills on board of your team to address that project and you need to think very carefully about your team. It may also mean that the project deliverables are very ambitious to the technological state of the art. Or it may be that in fact it's not so far from the technological state of the art but in fact the resources available whether they're people or money or whatever is insufficient. That's a little bit of a scary place to be. So if you go from clear and clear and you look north from that spot, another place to look at is clarity in the project outcome. Suppose they're vague, and the methods required are clear.

Let's think about this for a moment. What does it mean to not have clarity in project outcomes, but then have clarity in the methods required? This may mean that you have somebody with a hammer that's looking for a nail, and that's not a good place to be. You really can't have vagary in the outcomes and know what methods you're going to use. That is not approaching the project in a very sound way. Am in the final quadrant we can think about is when you have vagueness in the outcomes and vagueness in the methods required, and that's kind of terrifying. And so, the job of the project manager is going to be to try to put processes in place to try to resolve whatever lack of clarity exists in either of the axes or in both of the axes. And for our purposes we're just going to say, vagueness in the project outcome but clarity in the methods really don't make a whole lot of sense. But the goal of the project manager is to try to put the processes in place, try to figure out

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with the team and with the customers, how to get to that spot where there's clarity in the outcomes and there's clarity in the methods required.

So, this idea of understanding how deep the water is by looking at those two dimensions—clarity and the outcome and clarity and the methods required— that's one very important way to think about project complexity. And one very important thing to have on your mind as the project starts. There are other elements that can create complexity, difficulty for the project manager. One is tightness of the schedule. So you may know what it is you need to do, and you may know what it's going to take to do it, but you may not really have enough time to do it based on the schedule agreed to with the customer. This is an important constraint to realize and negotiate. Funds and resources available. You may know what it is you need to do, you may know how to do it, but you may not have the people onboard or the time from those individuals to make it work.

Another element that can be a source of tremendous complexity is the political context in which the project exists. That complexity, that political complexity can be within your organization and within your customer's organization. And understanding that is very, very important, because it can impact a whole lot of things. And finally, the skills and the availability of the work force. People in general for projects are the main thing that are going to get your project done, so having the right people, with the right skills, doing the right jobs is very, very important to control that dimension of complexity.

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Tool: The Clear/Clear Ideal

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Watch: The Project Life Cycle

The project life cycle is dynamic; revisions to the plan are often necessary as the project progresses. Being aware of the project life cycle is important because every stage of the cycle influences the success of the entire project. Professor Nozick discusses the iterative nature and significance of the project life cycle.

The project life cycle is a model for categorizing the stages of a project developed by the Project Management Institute (PMI). Professor Nozick references the paper "Designing to Reduce Construction Costs," Paulson, Boyd; ASCE San Diego conference; April, 1976.

Transcript

It's worth looking at the project lifecycle for a moment. So a project on the surface of it has maybe five activities. This is defined by the project management institute. This is a good definition as any. Conception and initiation of the project. Definition in planning, project launch or execution. Project performance and control and project close. On the surface of it this looks like linear. You go from step one, to step two, to step three, to step four, to step five. You need to be aware that there's going to be iterations here. Your may go through the project conception initiation phase and then try to define it more carefully. And then realize you need to rethink some of that conception, some of that initiation. Or you might get into execution and realize some of your design ideas are not so good

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and you might need to go back and rethink the planning.

So there's going to be feedback loops in this process. Another thing that's really important to think about in the project life cycle is the influence of different stages in the project life cycle across the entire project. So this chart that you're seeing right now, this graph it comes from Paulson in the late 70's. It was focused on construction projects, mostly because construction projects sometimes it is very easy to get data on, or easier because there are a lot of public ones. But Paulson in 1976 published a paper which was very interesting. The focus of that paper was looking at the difference between how you expend money on a project and then how much the degrees of freedom get nailed down in that project over time.

So think of it as more degrees of freedom nailed down means you have less choices later on. And you've made a lot of decisions, and now you're playing those decisions out. So if you look at the project timeline along the horizontal axis, you can see the stages of initiate, design, procure/construct, and then go on to closure. So you can see over time, you're expending money. And you can see that increasing curve over the life of the project. Look at level of influence. So the amount of influence you have at the beginning of a project to how that project will turn out is very, very large. But as you make those design choices, those initial decisions, you actually nail down a lot of what's going to happen in the rest of your project.

Oftentimes, people don't realize that. They think of the beginning of the project as having a lot of time and to think carefully about

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what you want to do. They think, well okay, I'm going to get to revisit all of this stuff. You do have to be very careful at the beginning of the project and as you go through those initial phases to realize what choices you're making, because they're going to have a profound influence as you go on. There are several other papers that build on this idea. Another one was just published in 2007. And they talk about the statistical evidence behind the fact that the more money and time that was spent in design led to lower construction costs. There's no doubt that this general pattern exists in a number of other industries. So this is something to keep in mind as you begin the project life cycle and you think about those early steps. Those early steps are actually very, very fundamental to the likelihood that you'll create a successful project.

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Watch: Define a Work Breakdown Structure (WBS)

Project managers use a number of tools to create an effective project plan, and a work breakdown structure is one of the essentials. Developing this hierarchical structure of activities that have to be completed is critical. Professor Nozick discusses an example of a WBS.

For our purposes, a "clearly defined outcome" means that there’s no piece of it you could break down further to get more insight. It helps you create a narrative that you could use to discuss the work; you can use it to negotiate schedules, dollars, and the necessary skills of assigned resources.

Transcript

A work breakdown structure is a critical element in project planning, because it explicitly and completely decomposes all the deliverables into actionable activities. That's a lot of words, so we're going to go through this a little bit slowly to try to understand exactly what they all mean. A work breakdown structure has a hierarchical structure. Each level in the work breakdown structure, each level in the hierarchy contains more detail as to what is to be done than the level that is immediately higher. It's a lot easier to understand those ideas if we go through an example.

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This example maybe many of you have been through already if you've had to relocate for work. So suppose you've had to relocate to a new city. Okay. There are a lot of things that you need to do in order to make that happen. So with the work breakdown structure you'll specify what are the things that I need to do to make that occur. Well one thing you're going to need to do is identify the requirements for your new home. So another thing you're going to need to do is identify a realtor in the new city you need to move to. You're going to need to select a house. You may need to renovate that house. You'll actually have to physically move, you, your family, and your belongings. If you have children, you'll have to select a school, and then you'll have to notify others of a change of address.

Those items reflect the top level in the hierarchy from identify requirements, identify a realtor, select a house, renovate the house, move, select a school, and notify others of their change of address. So you look at the numbering. Relocate, change cities, change your location where you live, that's 1.0, labelled as 1.0. Notice the next level in the hierarchy is labelled: identify requirements, 1.1, identify a realtor, 1.2, select a house, 1.3, house renovations, 1.4, move, 1.5, school selection, 1.6 and notify others of a change of address, 1.7.

So effectively, it's like creating a list. To relocate what am I going to need to do? Here's my list, okay. Then we have to go to each one of those and be much more specific because what does that mean to select the house? That's not so actionable, you’re going to need some more details. Okay. So let's start at identify

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requirements as we walk down this tree, this hierarchy. So 1.1, identify requirements, there's a budget. Okay. So we need to be explicit. How much are we willing to pay? What's the range of acceptable cost? 1.1.1 is budget, because we've taken 1.1 and we've fleshed it out some, we've added budget. We've also got to look at family requirements because you're not moving by yourself, assume this is a family situation. And so, there's going to be family generated requirements. Requirements for the home itself, requirements based on your partner's job needs, where maybe that job is located, and requirements for the neighborhood. So look at under 1.1.2, which was family requirements, we've split that up into three ideas: the requirements for the home, the requirements based on your partner's job needs, and then requirements for the neighborhood.

So now we're up to four-digit numbering. So let's look underneath requirements for the home. Suppose there's adults in the home and there's children in the home. We're going to need to figure out what those requirements are for each of the groups. So you can see how detailed this exercise becomes. But it really does help make you walk through everything you're going to need to do to successfully complete the project. And that's what makes the work breakdown structure so very powerful. It identifies all the work that's going to need to be completed. And notice that the focus is on what needs to be done, not how it will be done. We didn't talk about surveys. We didn't talk about the methods to accomplish any of these goals here. We just talked about what needed to be accomplished. And you can see that each piece of work only appears once in the tree. The tree explicitly tells you everything

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that needs to be done, and everything that needs to be done is explained exactly once. And it explained to some degree how each piece of work relates to every other piece of work. Notice it is not explicit in any way about precedence. Look down the tree and notice, look at move. We can't unpack before we buy the purchase material, purchase the packing materials, and actually engage with a moving company and have the move actually occur. The work breakdown structure doesn't explicitly address precedence, that will happen as we develop the project network off of the work breakdown structure. But it does carefully go through all of the pieces of work that need to be done.

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Watch: Why Is a WBS Important?

In order for you to execute a successful project, you will need to share with your team an understanding of the project plan and the expected outcomes. Creating a WBS will help develop that shared understanding and help you with more detailed planning.

Transcript

And why is that important. You could say gee, this is my project, this is what needs to be done, I have a good idea of what it is, lets get going. The reality is for a project to be successful there needs to be a clear and shared understanding of what needs to be done. One, because nobody is perfect and we can be fallible. And two, there has to be a shared belief of how we're going to move forward to get the project done.

Okay, so you need this clear, shared understanding. So that makes a work breakdown structure very, very important. It also creates a very clear expectation of what's going to be accomplished. So there's no, 'I think this,' somebody else thinks that, we don't talk about it for a few months, and then something bad happens. Okay, so the shared understanding, clear expectations, that's really the center point of the work breakdown structure, plus the ability to then do much more detailed planning afterwards. So notice the work is always divided into pieces that can be assigned to individuals or teams to complete. So you're going to think about as you go through this, and when you finish it,

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could I have actually assigned all the pieces of work to some team? Could I budget for each of the activities? Could I track the progress of each of the activities? If you can't do those things, your work breakdown structure is not complete.

So, how much detail is needed? This is a very important question. And really, in some sense it's in the eye of the beholder. But the real test is, can you create a meaningful schedule off of it? Does it have enough detail to create a meaningful budget? And can you assess all the resource needs that you're going to have against it? If you can't do those things you need more detail. If you're planning down to what a person is going to do in a half an hour block, that may be too detailed.

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Course Project, Part One, Identifying the Project Scope and Complexity

Project instructions:

As you have seen, the projects that are financially successful are those for which the desired outcomes and the methods to achieve those outcomes are very clear throughout the project life cycle. Now you will practice articulating the relative clarity and ambiguity in project methods and outcomes for two projects, and you will identify the work to be done by creating a WBS.

To complete this assignment:

1. Download the "Organizing the Project and Its Components" course project.

2. Complete part one. 3. Save your work. 4. You will not submit anything at this time. You will submit your

completed project at the end of this course.

Before you begin:

Before starting your work, please review the rubric for this assignment and eCornell's policy regarding plagiarism.

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Module Wrap-up: Identify the Project Scope and Complexity

What does "success" mean? It means that your project is delivered on time, on budget, and it produces the needed results, either for the customer or for your organization. You have to work within the constraints of time and resources to make that happen. One of the most important things that project managers can do to influence project success is to identify the scope and complexity of the project. In this module, you practiced articulating clarity in the desired outcomes and required methods. You created a work breakdown structure, which is a critical project-management tool that identifies the hierarchy of activities to be completed. You also examined key concepts related to project life cycle, complexity, and scope. These are all critical areas for project managers to fully understand and to continue to work with and refine on an iterative basis throughout the project.

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Module Introduction: Create the Project Network

One great way to manage your projects more effectively is to create a graphical representation of the work that needs to get done. By doing so, you'll be able to surface problems and opportunities: you'll be able to spot any areas in

which activities will be accidentally overlapping or where you can make adjustments to assignments to keep work moving ahead. It's not always easy for project managers to estimate activity durations, and you will examine some recommended strategies for doing so very effectively. You will also have an opportunity to discuss your own best practices for this critical task. You will examine a method for figuring out the earliest possible start time and end time that each activity can have without lengthening project duration. Finally, you will put these concepts to use in the course project, in which you work on your own project network.

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Watch: A Project Network

It can be very helpful to create a graphical illustration of the sequence of activities that make up a project. You can use it to figure out whether there are any constraints regarding the order in which the activities must be completed. Professor Nozick explains.

Transcript

A project network is one of the key things as you execute your project, that you'll need for planning and control. It's developed from the work breakdown structure. Remember, the work breakdown structure gave us a detailed list of what needed to be done. The project network is actually a graphical representation of the activities that need to be done. It's very explicit about the order in which they must be done. That is it has what's called precedence constraints.

Remember when we talked about the work breakdown structure, there was no sense necessarily of the order in which those activities would need to be done. The project network corrects this and it adds precedence constraints to our understanding of how the project will operate over time. Let's walk through an example of a project network to understand what this all really means. This example is organized around the idea of building a treehouse. So the first activity is to pick the trees. Second activity of building the treehouse is to design the treehouse. Once you've designed the treehouse, you can do two things. You can prepare the trees for

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the treehouse to be put there and you can purchase tools and materials. Once both of those things are completed, you can build and mount the main supports for the treehouse. Once the supports are in place, you can then lay out and then build the platform and the railings. Once all of that is done, you can then design the interior and you can build the structure. Both of those can go on in parallel. Once you've designed the interior, you can go purchase the items for the interior. Once you've purchased the items for the interior and you have, in fact, built the structure, you can then install the interior items.

So in this case, I've put precedence constraints between designing the interior and actually laying out and building the platform and the railing. In reality, that's not necessarily needed but for the purposes of our example, it's fine. What you really want to have for your project network is precedents that are really, truly needed. In this case, maybe it is once you've put out that you've laid out the platform and you've built the platform and the railings. Maybe you have a better sense in this example of what the interior's really going to look like, and then maybe it is easier to design it at that point. I don't know the answer to that, but either way it's fine. So in this case, we'll use this as the project network.

Now it's important to notice two key constructs in the project network. One is nodes, nodes are actually milestones. So after you're done picking the trees, you actually have completed something. Which trees are going to be used for your treehouse is understood. These nodes represent milestones in the execution of the project. They're good ways for you to think about monitoring

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and control. Aarcs on the other hand, are activities, they're unique activities. So pick the trees is an activity. Purchase tools and materials, that's an activity. And notice those would have been on our work break down structure. But actually the way they're put together in the network we now have something called precedence relationships. We now understand you aren't going to design the treehouse until you've picked the trees because that tells you something about how the treehouse is going to need to look.

The same thing would have been true in our example on the work breakdown structure about moving. You wouldn't unpack before you've actually done the move. Though there was no explicit statement of that in the work breakdown structure, it comes out in the project network. It's also useful to notice that this project network has dash darks. You notice there's dash darks and there's no words associated with them. So for example, build and mount the main supports. There is a solid arc that goes into that, purchase tools and materials, which is an activity. And then there's a dashed one. The dashed one is there because in fact there's two activities that need to happen before it can build and mount the main supports. They are to prepare the trees and to purchase tools and materials. But we don't have multiple arcs that connect the same pair of nodes. Notice there's only one. And that's why the dummy arc comes in, it allows us to represent these parallel activities.

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Watch: Task Durations and Precedence Relationships

How long will tasks take? This question is at the heart of your work as a project manager. Identifying task durations is a complex but essential task. Here, Professor Nozick discusses assigning task durations to a project network.

Transcript

Associated with each activity on your project network is a duration, the amount of time you expect it to take to complete that activity. Identifying those numbers is actually quite complicated. Many projects have activities that have never exactly been done before. So there's maybe not perfect understanding of how long it will take. So how do you negotiate this issue? Well, one thing you can do to try to create those numbers is to look at experience that you've had with previous projects and see if this, by analogy, you can identify durations for activities.

Another thing to do or consider doing is to engage with subject matter experts and ask them for their opinions. And in some activities, for some activities there will be industry standards that are available that you can appeal to. But the creation of those activity durations is a very important activity because it gives you some insight as to how the project will unfold over time. In reality for many many activities that number will be subjected to

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considerable uncertainty, that is the duration of activities. For the moment we are going to focus on these durations as if they are known with certainty. Later we will relax that assumption. Even having to assume that they're known with certainty and then continuing with the project tools the way we're going to discuss them, is still extremely valuable. It gives you a lot of insight into how you're going to need to use your resources over time. But we will talk about tools that will extend from the notion of the deterministic times to stochastic. That is, when you don't know the activity durations with certainty.

So what I've done is to take the project network that we've already been discussing, we've already discussed, and associate with each one of those activities, durations. And notice, I've associated fixed numbers. For instance, the activity to pick trees is assumed to take 30 minutes. The activity to design the treehouse is assumed to take 16 hours. The activity to prepare the trees is assumed to take two hours. To purchase tools and materials, four hours. To build and mount main support, six hours. To lay out and build the platform and the railings, three hours. To design the interior, two hours. To build the structure, eight hours. To purchase interior items, three hours. And then finally to install the interior items, an hour.

One of the important things the project network gave us was a notion of precedents constraints, and we've already discussed that. That is, you can't design the treehouse until you've picked the trees, because that will create certain constraints on what that treehouse can look like. So that's a precedence constraint. In fact,

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that's what's called a finish to start precedence constraint or a traditional one. You can't do activity B until activity A is completed. In reality, you may have project activities for which the relationship is more complicated. For example, you could have a relationship that activity B can actually start once activity A has completed at least this much work. Maybe that's defined in terms of duration. So, after you've completed the first two days of activity A, you can go on to activity B. If that's the case you can split activity A up into two parts, part one and part two. Activity A is two days long. And activity A, part A is two days long and activity A, part two is three days long. And at the completion of activity, the first part of activity A, which is two days, you can start activity B.

So there are ways to work in more complicated relationships between activities into your project network. Why is this important? Well it's important for you to be familiar with the idea that that can happen. It's also important because when you put in precedence constraints you constrain the way you can organize that project over time. Okay so when you say activity B can't start between activity A finishes. That limits your choice of how to execute that project because you can never start activity B until activity A completes. By having these more generalized precedence relationships, you may say well gee, B could start when A is 80% done. You can build that into the project network so when you execute that project, you're taking advantage of that flexibility. So we want to be careful when we set up precedents' constraints, that we really only confine the project as much as really has to be done. Because that will allow us, if we don't over constrain it, to complete it quicker and and maybe with less money. Okay, so

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understanding those precedence constraints and implementing them to the degree in which they're required, that's very important. And the structure of a project network allows us to do that.

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How Do You Determine Activity Durations? Discussion topic:

Creating activity durations is very important because it gives you some insight as to how the project will unfold over time, but it's not easy to do. Professor Nozick has discussed some of the ways in which project managers can estimate activity durations. You can try to base estimates on previous projects that were similar, or you can engage with subject matter experts and ask them for their opinions. For some types of projects, you may be able to find industry standards to draw on.

Create a post in which you offer your preferred method of estimating activity durations. What method have you generally found to be most helpful and reliable? Offer a brief explanation for your recommended best practice.

To participate in this discussion:

Click Reply to post a comment or reply to another comment. Please consider that this is a professional forum; courtesy and professional language and tone are expected. Before posting, please review eCornell's policy regarding plagiarism (the presentation of someone else's work as your own without source credit).

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Watch: The Critical Path Method "Forward Pass"

The critical path is a very important concept for project managers working with activities, resources, and schedules. Professor Nozick explains the importance and benefits of using the critical path method and discusses an example of the forward pass.

Transcript

One of the most basic pieces of information about a project is the project duration. Let's talk about the critical path method. That's a method that let's us understand what the project duration will be using the project network we've just developed. That structure that we've just developed. It gives us, for each activity, beyond just the project duration, it also gives us for each activity what's the earliest time and the latest time each activity can start without lengthening the duration of the project.

So one of the key pieces of information is, of course, the duration of the project. But it'll also tell us what's the latest and the earliest start time for each activity. When we understand what the earliest and the latest time is for each activity, we can understand which activities, if they go along, will actually lengthen the duration of the project. And that's very, very important to understand that. Because as a project manager you're going to have a lot of issues coming at you. You need to understand which ones you really

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need to focus on quickly and carefully. And activities that are on what's called the critical path or our critical activities, those are things we have to watch very carefully or the project duration may be lengthened.

So let's go through what the critical path method is. Because at the end of that process we will know the duration of the project and we'll know the earliest and the latest start time for each activity so we're consistent with that project duration. And as a project manager of course we're very sensitive to those numbers because those are the things that we will probably be evaluated for. How well we can meet our milestones on our projects. So let's walk through the critical path method. It's actually divided into two phases. One phase is called the forward pass and that gets us the earliest start times. And the second phase is called the backward pass and that gets us the latest start times.

So you'll notice associated with the project network, I now associate it with every single node two numbers. At the beginning I don't know what those two numbers are. But what I've created are place holders for each node, where I can insert two numbers. I certainly know the earliest possible start time that I can pick the trees because there's no precedence requirements. I can start that at the very beginning of the project, that is at time zero. Once I know that I'm going to start at time zero and it takes me 30 minutes to pick the trees, I know that the earliest possible start time to design the tree house is in fact 0.5 hours, or 30 minutes. Once I've picked the trees, and that's taken me 0.5 hours, I now can begin to design the treehouse. So the earliest start time for

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that is 0.5, that means I'll reach the milestone, the completion of the design of the treehouse, in 16.5 hours. Once I've reached that milestone, design the treehouse, I can now focus on two other milestones, finishing the preparaton of the trees and finishing the purchase of the tools and the materials.

So let's think about the milestone purchase tools and materials. If at 16.5 hours, I can start that activity, it's going to take me four hours to complete it. We're talking about 20.5 hours to reach milestone associated with node five. That is the completion of the purchase of the tools and the materials. Similarly for prepare the trees in reaching the milestone associated with node four, the completion of the preparation of the trees, that will take 16.5 plus two hours or 18.5 hours from the beginning of the project. And this process continues all the way through the project network, and notice we can just fill in the earliest start time associated with each node. When we do that we find out the shortest make span for this project is in fact 38.5 hours. Paying attention to precedence requirements, the fastest we can complete this project is 38.5 hours. And that completes the forward pass.

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Watch: The Critical Path Method "Backward Pass"

How late can each activity start without lengthening the overall project duration? This is an important question that the backward pass seeks to answer. It will also help you uncover times in the project plan for which there could be some slack.

Transcript

Now let's walk through the backward pass. For the forward pass you notice that we've identified the earliest start time for every single activity. And we figured out that we can reach milestone associated with node 11 in 38.5 hours. If we're going to actually finish the project in 38.5 hours, the latest time we can reach the milestone, that is the one associated with activity 11 or node 11, is 38.5 hours. So notice the earliest start time and the latest start time for reaching that node are in fact identical. If we deviate from that 38.5 for the latest time to reach it, we will in fact have lengthened the project. We can't go shorter because of precedent's requirements, and the fundamental information about how long each activity takes.

So now we're going to do what's called the "backward pass," and that will fill in for us the latest time we can reach each of those milestones. So if we're going to complete install interior items by 38.5 hours, that means we must start the activity install interior

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items at 37.5 hours. If we don't reach milestone ten by that time, we're going to be in trouble. We're not going to reach the project duration of 38.5. Suppose we reach the milestone associated with node ten at 37.5, now we need to reach the milestone associated with node nine, that is the completion of purchase interior items. The latest time that we can reach that is 37.5. The earliest time we can complete that milestone is 34.5. Notice they're no longer the same. The earliest and the latest are now different. If you look at the milestones associated with nodes 11 and 10, they're identical. The earliest and the latest are the same. Now they are different. We have some slack in the system. We can certainly get to 37, get to the completion of purchase interior items, by 34.5, but we don't have to. If we get to it, as long as we get to it by 37.5, we're not going to lengthen the project. It will not cause a lengthening of the project. So we have a window here.

Let's investigate the latest start time associated with building the structure. So we have to complete milestone 10; the latest time we can complete it is 37.5 to be on time with the project at 38.5. We actually have to start building the structure by 29.5 and that was actually the same time that we had to start the activity to complete by 38.5. So notice there is no flexibility here. The earliest and the latest time to start building the structure is in fact identical. There is no slack in this system for that activity. And we can go through this process and make our way back up the tree, back up the network, and notice we can complete each one of the latest start times for each one of the milestones. And from this calculation, we now have a tremendous amount of information. For instance we now know what the critical path is through the project that we really

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have to manage carefully to actually complete on time. That is 38.5 hours. If we delay any of the activities along this path we will in fact delay the project duration. And generally you're going to be evaluated based your ability to meet your schedule.

So understanding where that tension is in the system, that's very, very useful. So the critical path is the longest path through the network. All the activities along the critical path are critical activities. They have earliest and latest start times that are identical. And these are the ones that you could, in some sense, view as high priority. Now I'm going to put a bit of caution behind that. There's no guarantee that the critical path will be the only project that's close to 38.5, for example, in duration. You need to be a little bit careful. So what this process does, is identify for us what is absolutely critical. But it doesn't say that there's no other path that's close in duration and also needs some management oversight, or a lot of management oversight. So you need to be careful when you use this tool. It's extremely valuable. It highlights where there's absolutely no slack. But there could be activities for which the earliest and the latest are very close together, though not identical. And you certainly want to be aware of those as well.

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Watch: Float

Where does your schedule offer you some flexibility? And where does your schedule offer no room for flexibility? These questions can be answered by an examination of float, as Professor Nozick discusses.

Transcript

So up to now we've used the critical path method to generate the estimate of the project duration and the earliest and the latest start time for all activates in the project. There's actually more information to be gleaned off of those calculations. One important concept that's useful is the idea of float. So float is the amount of time that an activity can be delayed without affecting the project duration. So we know that the float for each activity on the critical path is 0, because anything you do to delay that activity will in fact delay the completion of the project. However for activities off the critical path, there may be some float that can be productively used. When you get into a problem in some other part of the network.

So, what float does is give you a sense of where the project manager needs to focus their attention. When float is small, these are the things that if you don't pay a lot of attention to, they may cause the project to be late. There may be areas in the project where there's quite a lot of float. And in fact you can pay a little bit less attention and maybe focus on some of the things where there

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is less float, to get the project done more reliably and more easily. So we want to be careful, the same warning I gave earlier associated with a critical path. Just because an activity is not on the critical path does not mean you can just ignore it. If it's not on the critical path, it may be close to being critical. That is, the earliest and the latest start times are very close in time. The critical path method won't flag that, you'll have to see it. One way to see it is through these computations like float. So float is an activity based measure of schedule flexibility. That's the way you can think about it. So total float for an activity is that total time you have available to do the activity minus the time required to actually do it. So you can if the window is very,very wide compared to the time it takes you to actually do it, you can use up part of that window and not be too nervous. If that window is relatively small compared to the time required, why you have got to be a little more careful there.

So how do we compute total load? How do we operationalize the idea of total time available minus time required? Well we can use the latest finish time for an activity, subtract off the earliest start time, and then subtract off the duration. And when you do that calculation you get a sense of how much flexibility you have there. And that flexibility is called total float. So let's do that calculation for the activity prepare trees. So let's do that calculation for the activity, purchase tools and materials. Let's do that one first. That one's on a critical path, so it's important to go through that calculation and understand how float, what float, what the value of float in on the critical path. Intuitively, we should know it's zero.

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Let's make sure that that's true. So purchase tools and materials. The latest finish time for that activity is 20.5 hours. The earliest start time for that activity is 16.5. And it takes us four hours to do it. So 20.5, subtract 16.5, and now subtract 4 more hours. When you do that you find out that the total float is zero. And that's what we expect for something along the critical path. Any activity along the critical path will have total float equal to zero. Now let's look at the activity Prepare Trees. That is not on the critical path. And if we look at the latest finish time for that activity, it's 20.5. The earliest start time is 16.5 and it takes us two hours to do it. So 20.5, subtract 16.5, subtract 2, that means we have two hours of total float. The window is four hours long. It's going to take us two hours to do it so we have two hours of flexibility there.

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Read: Float and Free Float

Using up float hours may cost you later by extending the length of the project

Calculating float and free float will help you conceptualize where you have schedule flexibility

Before moving on, it may be helpful to see another example of total float. Refer again to the sample work breakdown structure and focus on the activity "purchase interior items."

"Purchase interior items" is not along the critical path. The latest finish time for this activity is 37.5 hours; the earliest start time is 31.5. It takes 3 hours.

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We can calculate total float, then, to be 3, because 37.5 - 31.5 - 3 = 3.

In this case, there is a 6-hour window; that's the 37.5 - 31.5. In that 6-hour window, you have to do 3 hours' worth of work (purchase interior items). So there are 3 hours of schedule flexibility for that activity. In total float, it's worth noticing that we'd use the latest finish time and the earliest start time.

What does that mean conceptually? If you used up all of your total float, then each activity has now got to start exactly when it needs to and finish exactly when it needs to, or you are going to lengthen

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the project. We've now pushed the activities that are downstream from that so that many of those activities are now effectively critical. That's worth noticing. In other words, it's not like those extra hours, those total float hours, are free; they may cost you later on in the execution of the project.

A concept related to total float is called free float. When conceptualizing free float, you are thinking about all the downstream activities that are also capable of starting at their earliest start time. You haven't used up any of their extra window. For the activity that you're thinking about, you can calculate free float by subtracting its earliest start time from the earliest start time for the tasks that immediately follow it and then look at the duration of that activity. A sample calculation follows below for the sample activity "purchase interior items."

The earliest start time for all the activities downstream of that, or the earliest start time that you can reach milestone 9, is 34.5. The earliest start time for that activity is 31.5, and it takes 3 hours to do it. The free float, then, is 34.5 - 31.5 - 3 = 0.

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If you want the downstream activities to be able to start at their earliest start time, you really don't have any extra free float time. In terms of total float, however, you still have 3 hours.

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Course Project, Part Two, Creating the Project Network

Project instructions:

As you have seen, task durations and uncertainty are critically important to project managers. Now you will practice creating a project network. You will identify task durations, consider how certain you really are about those durations, identify the critical path, and think about what else may become critical.

To complete this assignment:

1. Download the "Organizing the Project and Its Components" course project.

2. Complete part two. 3. Save your work. 4. You will not submit anything at this time. You will submit your

completed project at the end of this course.

Before you begin:

Before starting your work, please review the rubric for this assignment and eCornell's policy regarding plagiarism.

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Module Wrap-up: Create the Project Network

Looking at a graphical representation of the work that needs to get done is one tool for managing a complex project with many different activities and resources. By doing so, you'll be able to surface problems and opportunities: you'll be able to spot any areas in which activities will be accidentally overlapping or where you can make adjustments to assignments to keep work moving ahead. It's not always easy for project managers to estimate activity durations, and in this module, you examined some recommended strategies for doing so very effectively. You also had an opportunity to discuss your own best practices for this critical task. You examined the critical path method, which helps you figure out the earliest possible start time and end time each activity can have without lengthening the total project duration. Finally, you put these concepts to use in your course project, in which you created your own project network.

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Module Introduction: Identify Sources of Uncertainty

There's no way to eliminate all uncertainty in projects. You may plan everything out in painstaking detail and then a key resource quits before work begins, or the necessary funding you had counted on gets cut. Plans will change. Part

of your success as a project manager requires being able to manage uncertainty and reduce the overall negative impact of changing circumstances. In this module, you will confront the necessity of handling project uncertainty and schedule uncertainty. You will consider probability distributions and how they relate to your practice of project management. You will have an opportunity to discuss with your peers your experience with managing uncertainty, and you will explore how you can leverage unaccounted-for windows of time within the schedule to achieve better results. Finally, you will complete your course project, in which you identify sources of uncertainty in a project of your own.

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Watch: A Gantt Chart

Another essential tool that can be used to organize your project plan is a horizontal bar chart called a Gantt chart. A Gantt chart is a useful way to visualize the project schedule. Building it will reveal clearly which activities in the project overlap in time. In this video, Professor Nozick will demonstrate how to develop a Gantt chart.

Transcript

So a Gantt chart is a very, very useful chart for project planning and control. It's actually a horizontal bar chart and it gives the project schedule. So associated with each activity in the project, you'll be able to see from the Gantt chart the start time and the end time. And you'll be able to understand which activities overlap at a glance. So let's illustrate what a Gantt chart really is by using the project network we've been developing, the one focused on the building a tree house.

So the activities remember were the arrows along the project network: pick trees, design the treehouse, prepare the trees, purchase tools and materials, and on and on. So those are the activities. Each one of those activities will be described by a bar in the Gantt chart. Horizontally, we're going to stack each of the activities, and across the Gantt chart we'll see times. And that time will measure since the project's inception. So if you look at the Gantt chart that goes with this project network, the activity, the first one, is pick trees. And that can start at time period zero. Once you

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finish picking the trees, you can then design the treehouse. So notice you pick trees and that has a bar that starts at time period zero, clock time zero. Zero time from project inception and goes a half an hour out. Then notice design treehouse. That starts a half an hour out and goes another 16 hours. And we've identified the precedence constraints through the arrows. So then you can see, if we're walking down the Gantt chart, you can see all of the activities with the precedence constraints and at a glance you can see which activities will overlap in time.

It's important to notice that to identify the start times, I've actually used the earliest start times from the project network. There may be some load balancing that happens across the project network, load leveling. And so in fact the start times you agreed to may not be actually the earliest. For the moment we aren't talking about resource constraints so I've just Illustrated in this Gantt chart assuming all activities will start at their earliest possible start time. Let's look a little more carefully at activities that actually overlap in time or can overlap in time during their execution. So right after you design the tree house, you have two activities that you can do in parallel; prepare the trees and purchase tools and materials. So notice there's an arrow that goes from design tree house to each one of those two activities. And then purchase tools and materials that takes four hours, so notice the bar is four hours long. And prepare trees, that activity takes two hours, and so you notice the bar is two hours long. And you notice we can see the float that we talked about earlier. There's two hours of float there for that second activity— prepare the trees—because it has a four-hour window and the activity only takes two hours.

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You could do a similar analysis when we think about the part of the project network that's focused on designing the interior, purchasing the items for the interior, and building the structure. So building the structure, that activity which is eight hours long, can happen in parallel to designing the activity and purchasing the interior items. The design in the interior and purchasing interior items, those happen in series one after the other. So you can notice there's an arrow that extends from design the interior, the end of design the interior, to the beginning of purchase interior items. Because there's a precedence requirement, a finish to start precedence requirement.

If you look a little bit more carefully, you can notice that we can actually draw some of the float on the chart if we wanted to. So design the interior. That activity takes three hours but we actually have a six hour window. So there's actually three hours of total float there. Okay, but based on how much float we use up in design the interior, that changes the amount of time we have for purchase interior items. That will eat in into the three hours of float we have on that activity.

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Read: Managing Project Uncertainty

Uncertainty is unavoidable

Your ability to address uncertainty will be critical to your success

Uncertainty in projects is common, and there are many sources of uncertainty. The real challenge is to accept that uncertainty. Your ability to address uncertainty will be critical to success. You have already examined the uncertainty associated with the customer requirements (deliverables) and uncertainty associated with the methods (how you do the work).

There are other categories of uncertainty, such as resource-based uncertainty. Think of resource-based uncertainty this way: to complete your project, you'll need access to resources at very specific times and they have to do very specific things. Access to the people, the funds, and the facilities you need is critical. Understanding that ahead of time and doing the people planning, cost planning, and facilities planning is very important. It will help you anticipate where the shortages might happen.

There can also be uncertainty in the schedule. For some activities, you won't know exactly how long they will take, and that creates

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schedule uncertainty. Human resources may then create schedule uncertainty; that is, the people aren't available when you need them, so the schedule slips.

You may have experienced uncertainty around the quality of the work produced. Errors or substandard quality or performance may cause rework and require additional resources and schedule changes.

Managing Uncertainty

You have identified at least five dimensions of uncertainty. Now consider uncertainty management and what your strategy might be.

The goal is to get rid of uncertainty. Is that fully achievable? Not necessarily. It's not achievable on all projects, not on many projects, and probably not on most projects. Instead, project managers have to use their processes to account for whatever uncertainty they can't eliminate.

This means that when you think about a project, you don't just create that work breakdown structure, create that plan, and then think you're done. Don't assume that you have all the tools you need to manage and control your project. That's not true. You have to execute incrementally, to revisit those calculations, and to iteratively schedule. That's the only way you can keep tabs on your project and update where you are all the time.

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The Human Dimension

Individuals make a really big difference. Project managers need to understand who will bring different strengths to the project and then assign people to roles very, very carefully. The human dimension is of tremendous importance. Finally, communication and visibility of information is critical to your success. You can't act on something if you don't know about it. You have to be able to figure out where your activities are in their execution. What are the troubles people might be experiencing? Uncovering that information and making it visible so decisions can be made is very important to controlling uncertainty on your project or controlling the consequences of uncertainty to your project.

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Watch: Schedule Uncertainty

Uncertainty within the schedule and task durations in the project plan is hugely important. Being able to account for schedule uncertainty in your plan will better prepare you to manage that aspect of the project, as Professor Nozick explains.

Transcript

For a moment let's focus on schedule uncertainty. So up to now we've talked about durations associated with activities being fixed, known in advance. So the critical path method the way we went through it focused on fixed durations. In practice, many activities will not have fixed durations associated with them, but they'll be some uncertainty in those estimates. It may be that you've done a project like this before and you have some historical data that you can use to understand what the uncertainty may be in the task duration or the activity duration. It may be that you have to reach out to subject matter experts and they can provide some insight.

For instance, they may be able to tell you the minimum duration for this activity is three weeks. The maximum duration is ten weeks, and most likely it will take us five weeks. That's quite a spread, that's quite a lot of variability, but that may be a very useful source for information on activity durations. We need to then build that into our analysis. So for right now I'm going to focus on showing you what that kind of uncertainty does to your estimates of your project duration and what may happen to your project as it unfolds.

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In a later module we'll talk about how to actually incorporate all of those calculations into something called the PERT technique, the program evaluation and review technique. So you can use those very explicitly in calculations. But right now I want to give you a feel for what that might mean for the duration of your activity. So let's go back and look at our constructing of the tree house. We found out using fixed durations, for each activity, that project was expected to take 38.5 hours. Now let's suppose those project activities, we don't know for sure what the durations will be. So associated with each activity, let's create two more numbers. Let's assume that the duration we already had in our hands, is now the most likely duration. But now there's a minimum duration, and let's set that to be equal to 80% of the most likely, and let's also associate a maximum duration, and let's make that be 120% of the most likely.

So this is symmetric On the low side we're at 80% and on the high side we're at 120%. So let's look at the activity pick trees. The most likely is now 30 minutes, now the minimum is 20 minutes because that's 80% of 30, and the maximum is 40 minutes because that's 120% of 30 minutes. So if I use that process I can create three numbers and associate it with each activity. A minimum, a most likely and a maximum. So for example build structure, the most likely there would now be eight hours. That was the eight hours that we had before for the deterministic project or activity duration. Now the minimum is going to be 6.4 and the maximum is going to be 9.6.

Okay if we use those tuples, let's assume that that's associated

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with, each one of those is now associated with a probability distribution, we have the three numbers that define it. I can now pull a number from each of those distributions and I can compute the project duration. So for example, build a structure that had a minimum of four hours, a maximum of 9.6 and a most likely of eight. Suppose I pull one number from that distribution, I get 8.8 hours.

In this particular instance of this project network, it took me 8.8 hours to build the structure. And I can do that for every one of the activities, and I can now then compute the critical path and the project duration. Before, when we knew for certain what each activity took, the project duration was 38.5 hours. Now, based on pulling a single observation from each activity duration distribution, I now find out that this project took 39.9 hours to execute. It's higher than my 38.4, for 38.5 I got before. This shows you the importance of uncertainty and being able to account for, and mostly just to think about it. So you're ahead of the game of how to stay ahead of the uncertainty. So that calculation I did just once. Since there are many realizations from each one of these distributions that could happen, I'm going to do it a bunch of times.

In this case, I'll do it 20. So if I repeat that experiment. For each activity, I go pull a number from the distribution where I've got a min, a max, and a most likely, and then compute the project duration. I get a, I can get a sequence of 20 numbers, each one of those will give me instances of the project duration. Okay in this case I did it 20 times and I got 38.26 as the average. We kind of expect that because the medium and the maximum one is 80% of

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the most likely and the other ones are 120%. So this is matrix. So we'd expect to get fairly close. The range is between 36.2 and 41.2. So the smallest project time I was ever able to execute that project was 36.2, and the largest was 41.2.

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Read: Focus on Schedule Uncertainty

Project managers need to make commitments about what they can deliver on time

Understanding uncertainty helps you make decisions about what you can commit to

Professor Nozick has discussed calculating schedule uncertainty. Now you can review an extended example with one more calculation of that same exercise. Instead of letting the maximum remain at 120%, reset the maximum time to 140%. In other words, things may go a little bit longer. What happens?

For the activity “pick trees,” notice that the minimum remains at 20 minutes and the most likely remains at 30 minutes, but the maximum is now 42 minutes.

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Similarly, for “build structure,” 6.4 remains the minimum number of hours, 8 is still the most likely number of hours, but now, using 140% of the most likely, 11.2 hours is the maximum.

The next step is to draw one observation from each distribution so that you get one number and associate that number with its activity. For example, in this case, you might pull 0.4 minutes for the activity "pick trees," which is less time than the most likely. But for "design the treehouse," you might pull 17.1, which is higher than the most likely of 16 by 1.1 hours. You could pull 8 for "build structure," which is exactly the most likely.

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Notice that the activity "layout and build platform railing" is now 3.2 hours. Now if you do the calculation of project duration, you will get 40.1 hours. That is longer than the expected 38.5 hours.

But this one realization isn't much to work with; if you did this calculation 20 times, what would you learn?

In this case, the average across all 20 of those experiments was 40.64 hours. And now there is a range for this project as low as

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36.4 hours for the entire project and as high as 45.1 hours.

What does this mean? As a project manager, you're going to make commitments on when you can deliver things. Understanding uncertainty is very important when you're trying to make decisions about what kinds of commitments you want to make and what kinds of risks you want to take in being late. Clearly, if it's symmetric and you put for each activity their true mean, actually the mean of the distribution, on average it will finish about on time. But that's on average; that means half the time you won't finish on time. For project managers responsible for time and money, that's worth thinking very carefully about.

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Your Experience with Managing Uncertainty

Instructions:

Reflect on the ways that uncertainty creates chaos and undermines people's ability to complete their tasks. In this discussion, you will share your experience with uncertainty. Create a post in which you respond to the following:

1. What kinds of uncertainty are you used to? Briefly describe your predominant experience.

2. In your experience, how does uncertainty create chaos? What do you, as the project manager, try to do to mitigate the risk of that? Offer 1-2 best practices.

To participate in this discussion:

Click Reply to post a comment or reply to another comment. Please consider that this is a professional forum; courtesy and professional language and tone are expected. Before posting, please review eCornell's policy regarding plagiarism (the presentation of someone else's work as your own without source credit).

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Watch: What Is Probability? (And What Are Probability Distributions?)

Is it important for project managers to understand probability? In order to most effectively estimate duration when there is an aspect of uncertainty, it’s important to have an understanding of the likelihood of a specific outcome occurring as compared to the other potential outcomes. Professor Nozick will discuss the ways that you can calculate this likelihood across a group of outcomes.

Transcript

Probability is the number assigned to an event which gives the relative frequency of that event compared to the rest. So perhaps that is easier to understand in the context of an example. Suppose I have a coin and I'm going to flip a fair coin. The probability that I get a head is 50%. The probability that I get a tail is also 50%. Similarly, drawing an ace from a standard deck of cards. There are 4 aces in the deck and there are 52 cards, so the probability that I get an ace from a standard deck of cards is 4 divided by 52. Now it's important to notice that the probability of all events that are possible will sum to 1, or be 100%.

So an example, the probability that I flip a fair coin and get either a head or a tail is 1, because the coin is either going to land on the head or it's going to land on the tail. So either way, and each of those have a 50% chance of occurring and the sum of 0.5 plus 0.5

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is one. The probability of drawing a card that's either a spade, a heart, a diamond, or a club, similarly is one. So the sum of all events that are possible will equal one. So now, another question is what is a probability distribution and therefore what is random variable? Because we've talked about that a little bit it in some of the other modules. So, a probability distribution is actually just an equation that describes the likelihood of a specific outcome or group of outcomes.

So let's think about our coin flip case. Suppose I have value x, and x is a random variable. That value, that variable takes on a one if the coin flip turns out to be a head, and it takes on a value of zero if the coin flip turns out to be a tail. So that means we can write the probability distribution for x. Right so the probably distribution of x is 0.5 if x equals 1 and 0.5 if x equals 0. And notice there's two 0.5s, add them together and you get 1. Because you either have to get a head or you have to get a tail. Or the random variable x has to equal one or it has to equal zero. There are no other choices.

So in summary, X is a random variable, we don't know what X is, whether it will be a zero or a one until we actually flip the coin, and each outcome has a 50 percent chance of occurrence. So now we can think about the distribution for X. X could be a discrete probability distribution, as in the case of our of our coin flip case or in the case of our aces, drawing an ace from a deck of cards. There are a known number of outcomes and each one of them is associated with a probability, and the sum of each of those, the sum of those outcomes together, the probabilities of occurrence of each one of those outcomes taken together will equal 100%.

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A continuous distribution is a little bit different. It's still a random variable and it can take on any value, but it's between a lower and an upper bound. And the rule by which it takes on each of those values is based on the distribution itself. But now there's an infinite number of outcomes, because between any two numbers, there's actually an infinite number of numbers. So here's an example of a discrete distribution. This is an activity duration. And you can see that there are three possible outcomes: 35 hours, 40 hours, and 45 hours. And each one of those has a different probability of occurrence. But the sum of those three probabilities of occurrence equals 100%. Here is an example of a continuous distribution. And this looks like a bell curve or a normal distribution. And now there's an infinite number of outcomes that are possible. And now we think about the probability of a range of outcomes.

So for example we might ask what's the probability that the random variable takes on a value that's 40 or larger. So then we would think about the area to the right of this line, underneath the curve. And that happens to be 50%. If you look at the total area under the curve, you'll get 100%. Half of it lies to the right of 40 hours. Similarly, let's think about 60 hours of the activity, duration being 60 hours or more. In this case, there is about a 3 percent chance, if you look at the area under the curve going from 60 hours out, you will find about 3% of the area that is underneath the curve. That means there's a 3% chance we'll get more than 60 hours for the duration of this activity. And you can see where this is a useful concept because when you think about being late, your question will be how late, what's the likelihood I'll be that late? Okay, and those kinds of questions can be answered quite readily

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off of probability distributions.

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Read: What Does It Mean to Generate Observations from Probability Distributions?

It can be helpful to identify the range of likely possible outcomes

Cumulative distribution gives the probability that you'll get an outcome that is at least a specific value or less

Generating observations from probability distributions is a fairly advanced idea. It will help you do uncertainty analysis on how much some of your activities will cost you in the project along with what the durations are going to be.

Here's a simple example: imagine that you have to hire a contractor to do a job. The charges will be based on how long it takes to complete the work. You will want to know what the average cost is to complete this job. By identifying the range of likely outcomes, you can more accurately predict the cost.

Let's consider this example of probability distribution for the activity duration.

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It has a mean at about 40 and it's bell shaped; on the curve is the cost for the activity as a function of the activity duration. If you can get a lot of realizations from the activity duration distribution for each one of those numbers, you could compute the activity cost. You could then add them all up and then take the average (divide by the number of observations), then you would have an estimate for the expected cost of the activity.

You need to have a method to generate realizations or numbers that are distributed according to that activity duration distribution. Up until now, we've talked about the probability distribution. Another function that's very useful is called the cumulative distribution. It's derived from the probability distribution, and it gives the probability that you'll get an outcome that is at least a specific value or less.

For example, imagine you found out that there is a 50% chance you'll get an outcome of 40 hours or less for this particular

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distribution. Also, there's a 50% chance that it will take you 40 hours or more. You can notice on this curve, then, the cumulative distribution. If you go out to 40 hours, go up to the curve, you find that there's a 50% probability you will see 40 hours or less. So you can use that idea very directly.

If you have a source of random numbers between 0 and 1, you can randomly take several of those numbers between 0 and 1. For each one, you can use that curve to figure out the duration it goes with. Once you've done that, you will have several durations that are distributed according to that duration distribution. For each one, you can then compute the cost. You could take the average. That is effectively what you're going to do: randomly select numbers between 0 and 1. Imagine you use 0.35. Go find 0.35 along the vertical axis, go out to the curve, and then down to the horizontal axis. Notice that the probability of 0.35 maps to a duration of 36 hours. You can then take that 36 hours, use your cost function, and figure out how much that's going to cost.

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As an illustration, that has been done here 30 times. The average cost over those 30 times is $15,743. The first random number was 0.46. That mapped to a duration of 23.2. That means there's about a 4.6% chance the duration will be 23.2 hours or less. That 23.2 hours would cost $14,864.

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To do this calculation, all you need is the source of uniform 0 and 1 random numbers. Use them in that cumulative distribution function to find a duration for each one of those random numbers. Then use the cost curve and figure out what each costs. You get an

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average for the cost, but you also have more information than that. You can actually build the probability distribution for the cost that you're going to spend. That's important because it helps you think about a budget.

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Watch: Introduction to PERT

There are tools you can use in order to reach a probability distribution for a project’s duration. One of these is called the program evaluation and review technique, or PERT, as Professor Nozick explains. You may not have to calculate PERT in your daily project-management work, but it will be helpful to have an understanding of how it's used and what it offers.

Transcript

So now we're ready to integrate uncertainty into our formal project planning tool. And the tool we're going to look at is PERT, Program Evaluation and Review Technique. And the explicit purpose of this is to allow us to do project duration planning when we have uncertainty associated with each of the activity durations. So, rather than assuming that all activities have a fixed and known duration, we will replace that assumption with each activity has a probability distribution associated with it, which gives the duration of that activity. Now, figuring out how to describe the probability distribution associated with an activity, that is complicated.

One way that's been shown to be very effective in practice is to simplify that down to figuring out what's the minimum, the most likely, and the maximum time it will take to do an activity. And associating those three numbers with the activity. Then there are some very nifty calculations that will let you assess the probability distribution for the duration of the project. That information—

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minimum, most likely, and maximum— that kind of information is quite easy to collect. You can talk to people and they can give you answers, if they're subject matter experts, as to what a minimum, a most likely, or a maximum might be to do something. It's much harder if you ask them, well, what's the variance of the time it'll take to do this? That's a very complicated question for someone to answer. So this has been shown to be a robust method to collect data over time.

So let's walk through PERT the Program Evaluation and Review Technique. Let's start by looking at a particular activity and looking at its duration, the probability distribution that describes it. So in practice, for every activity, there'll be some distribution. That distribution will be not easy to uncover. But we can probably robustly characterize a distribution by using three values on that curve; a minimum or an optimistic value; a pessimistic, which is a maximum value; and then a most likely. So then what we've effectively done is taken this distribution and compacted it into three numbers. So we can think about the range in the outcomes that are possible by just subtracting the pessimistic from the optimistic, for example. Now if you have those three estimates for an activity, a minimum, a most likely, and a maximum, you can then estimate a mean.

Okay, the mechanism to estimate the mean is to take the minimum, plus four times the most likely, plus the maximum. Take that number and divide by six. And that'll give you an estimate for the expected time. So if we think about the example we just did, 3 was the minimum, the most likely was 5, and the maximum was

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10. So if we use those numbers we'll get 5.5 for the expected duration. As I said before, the range is the maximum minus the minimum, which in this case would be 10 minus 3 which gives us 7. And now we even estimate for something called the standard deviation. And that's the complicated notion, the standard deviation of our distribution. But it's a compact way to express how much variability there is. And so we can do that calculation and it's going to be the range divided by six. That will give us the standard deviation, and in this case that's 10 minus 3 divided by 6, and that gives us 1.17. And then the variance is just the square of the standard deviation.

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Course Project, Part Three, Identifying Sources of Uncertainty

Project instructions:

Uncertainty is common to all projects. Your expertise in managing that uncertainty is central to your ability to excel as a project manager. In this part of the project, you will practice working with uncertainty in task durations and practice creating a Gantt chart.

To complete this assignment:

1. Download the "Organizing the Project and Its Components" course project.

2. Complete part three. 3. Save your work. 4. Submit your completed project document(s). If you choose to

submit your WBS, project network, and Gantt chart as separate documents, be sure to follow the following file naming convention:

CEPM501_YourName_WBS CEPM501_YourName_ProjectNetwork CEPM501_YourName_Gantt

Before you begin:

Before starting your work, please review the rubric for this

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assignment and eCornell's policy regarding plagiarism.

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Tool: Action Plan

This Action Plan can guide your efforts on the job

If you find it helpful to do so, you can use the action plan here to outline a plan for yourself that will guide your efforts within your own practice of project management. The action plan on this page follows traditional SMART methodology to help you identify steps to take on the job that are specific, measurable, action-oriented, realistic, and time-based. There is no submission required, but you may choose to use it now as a tool for yourself, as a means of demonstrating to your manager or to peers how this course will influence your efforts on the job, or you may choose to save it and use it to guide your future project-management work.

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Module Wrap-up: Identify Sources of Uncertainty

As you have seen, there's no way to eliminate all uncertainty in projects. Plans will change; human resources may come and go; supplies may be delayed; funding may be in flux. Part of your success as a project manager is being able to manage uncertainty and reduce the overall impact of changing circumstances. In this module, you confronted the necessity of handling project uncertainty and schedule uncertainty. You considered probability distributions and how they relate to your practice of project management. You had an opportunity to discuss with your peers your best practices for managing uncertainty, and you explored how you can leverage float time within the schedule to achieve better results. Finally, you completed your course project, in which you identified sources of uncertainty on a project of your own and created your own Gantt chart.

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Linda K. Nozick Professor and Director

Civil and Environmental Engineering Cornell University

Congratulations on completing "Organizing the Project and Its Components." I hope you now feel more comfortable in identifying and reducing sources of uncertainty and in assigning durations to activities. I hope you are in a better position to manage your projects and to keep them in that ideal "clear/clear" quadrant in terms of desired outcomes and required methods, and that you are better practiced at using effective tools and strategies to serve your projects and your organization.

From all of us at Cornell University and eCornell, thank you for

Read: Thank You and Farewell

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participating in this course.

Sincerely,

Linda K. Nozick

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  • Table Of Contents
  • Module 1: Identify the Project Scope and Complexity
  • Module 2: Create the Project Network
  • Module 3: Identify Sources of Uncertainty