Preface ...................................................... xvii
Acknowledgments ............................................... xix
Author ........................................................ xxi
1 Systems Principles for Project Management .................... 1
Lessons from Classical Control Systems ....................... 1
Improved Organizational Performance .......................... 2
Definition of Systems Engineering ............................ 4
Project Systems Logistics .................................... 5
Systems Constraints .......................................... 5
Systems Influence Philosophy ................................. 7
Systems Value Modeling ....................................... 8
Example of Value Vector Modeling ............................. 9
Management by Project ....................................... 11
Integrated Systems Implementation ........................... 12
Critical Factors for Systems Success ........................ 13
Early Systems Engineering ................................... 14
DODAF Systems Architecture for Project Management ........... 14
Grand Challenges for Engineering ............................ 15
Systems View of the Grand Challenges ........................ 16
Body of Knowledge Methodology ............................... 17
Components of the Knowledge Areas ........................... 18
Step-by-Step and Component-by-Component Implementation .... 20
Project Systems Structure ................................... 23
Problem Identification .................................... 23
Project Definition ........................................ 23
Project Planning .......................................... 23
Project Organizing ........................................ 23
Resource Allocation ....................................... 24
Project Scheduling ........................................ 24
Project Tracking and Reporting ............................ 24
Project Control ........................................... 24
Project Termination ....................................... 25
Project Systems Implementation Outline ...................... 25
Systems Decision Analysis ................................... 28
Step 1 Problem Statement ................................. 28
Step 2 Data and Information Requirements ................. 29
Step 3 Performance Measure ............................... 29
Step 4 Decision Model .................................... 29
Step 5 Making the Decision ............................... 30
Step 6 Implementing the Decision ......................... 30
Group Systems Decision-Making Models ........................ 31
Brainstorming ............................................. 32
Delphi Method ............................................. 32
Nominal Group Technique ................................. 34
Interviews, Surveys, and Questionnaires ................... 35
Multivote ................................................. 35
Systems Hierarchy ........................................... 36
D-E-J-I Model for Project Execution ......................... 40
Design Stage of D-E-J-I ..................................... 41
State Transformation ........................................ 42
Evaluation Stage of D-E-J-I ................................. 44
Half-Life Computation for Learning Curves ................... 45
Justification Stage of D-E-J-I .............................. 47
Integration Stage of D-E-J-I ................................ 48
Computational Example ....................................... 51
Exercises ................................................... 52
References .................................................. 53
2 Systems-Wide Project Planning ............................... 55
Project Planning Objectives ................................. 55
Time-Cost-Performance Criteria for Planning ................. 60
Systems Levels of Planning .................................. 60
Components of a Plan ........................................ 61
Motivating the Project Team ................................. 63
Axiom of Theory X ........................................... 63
Axiom of Theory Y ........................................... 64
Maslow's Hierarchy of Needs ................................. 64
Hygiene Factors and Motivators .............................. 65
Management by Objective ..................................... 66
Management by Exception ..................................... 67
Project Feasibility Study ................................... 67
Scope of Feasibility Analysis ............................... 68
Contents of Project Proposals ............................... 69
Proposal Preparation ...................................... 70
Proposal Incentives ....................................... 72
Budget Planning ............................................. 72
Тор-Down Budgeting ........................................ 73
Bottom-Up Budgeting ....................................... 73
Zero-Base Budgeting ....................................... 74
Project Work Breakdown Structure ............................ 74
Legal Systems Considerations ................................ 75
Systems Information Flow .................................... 76
Cost and Value of Information ............................... 77
Triple С Model .............................................. 79
Communication ............................................. 80
Complexity of Multi-Person Communication .................... 86
Cooperation ............................................... 87
Coordination .............................................. 89
Resolving Project Conflicts with Triple С ................... 90
Classical Abilene Paradox ................................... 92
Exercises ................................................... 94
3 Project Systems Organization ................................ 95
Environmental Factors in Project Organization ............... 95
Issues in Social and Cognitive Domains ...................... 96
Leadership Development .................................... 96
Preparing the Project Personnel ........................... 96
Project Office ............................................ 97
Organizational Breakdown Structure .......................... 97
Selecting an Organization Structure ....................... 97
Formal and Informal Structures .............................. 99
Span of Control ........................................... 99
Functional Organization .................................... 100
Product Organization ....................................... 101
Matrix Organization Structure .............................. 103
Mixed Organization Structure ............................... 105
Alternate Organization Structures .......................... 106
Bubble Organization Structure ............................ 106
Market Organization Structure ............................ 106
Chronological Organization Structure ..................... 107
Sequential Organization Structure ........................ 107
Military Organization Structure ........................ 108
Political Organization Structure ......................... 108
Autocratic Organization Structure ........................ 109
Project Transfer Organization ............................ 109
Organizing Multinational Projects .......................... 112
Exercises .................................................. 115
4 Project Scheduling ......................................... 117
Fundamentals of Network Analysis ........................... 117
Critical Path Method ....................................... 121
CPM Calculation Example .................................... 123
Forward Pass ............................................. 123
Backward Pass ............................................ 124
Determination of Critical Activities ....................... 125
Using Forward Pass to Determine the Critical Path ........ 128
Subcritical Paths ........................................ 128
Gantt Charts ............................................... 129
Gantt Chart Variations ................................... 131
Activity Crashing and Schedule Compression ............... 132
PERT Network Analysis ...................................... 138
PERT Estimates and Formulas .............................. 139
Beta Distribution ........................................ 141
Triangular Distribution .................................. 142
Uniform Distribution ..................................... 143
Distribution of Project Duration ......................... 144
Central Limit Theorem .................................... 144
Probability Calculation .................................. 145
PERT Network Example ..................................... 146
Precedence Diagramming Method .............................. 148
Anomalies in PDM Networks ................................ 154
Complexity of Project Networks ........................... 155
Example of Complexity Computation ........................ 159
Evaluation of Solution Time .............................. 160
Performance of Scheduling Heuristics ..................... 160
Formulation of Project Graph ............................... 161
Depth-First Search Method ................................ 162
Activity-On-Arc Representation ........................... 163
Exercises .................................................. 165
5 Systematic Resource Allocation ............................. 173
Resource Allocation and Management ......................... 173
Resource-Constrained Scheduling ............................ 174
Resource Allocation Examples ............................... 175
Longest-Duration-First ................................... 176
Resource Allocation Heuristics ............................. 177
Activity Time ............................................ 177
Activity Resource ........................................ 178
Time Resources ........................................... 178
GENRES ................................................... 178
Resource over Time ....................................... 178
Composite Allocation Factor .............................. 179
Resource Scheduling Method ............................... 180
Greatest Resource Demand ................................. 180
Greatest Resource Utilization ............................ 181
Most Possible Jobs ....................................... 181
Other Scheduling Rules ................................... 181
Example of ACTIM ......................................... 182
Comparison of ACTIM, ACTRES, and TIMRES .................. 183
Quantitative Modeling of Worker Assignment ................. 184
Takt Time for Activity Planning ............................ 188
Tips for Using Takt Time ................................... 190
Resource Work Rate ......................................... 190
Work Rate Examples ......................................... 192
Resource-Constrained PDM Network ........................... 193
Critical Resource Diagram .................................. 194
Resource Management Constraints .......................... 195
CRD Network Development .................................. 195
CRD Computations ......................................... 196
CRD Node Classifications ................................. 196
Resource Schedule Chart .................................... 197
CRD and Work Rate Analysis ............................... 198
Resource Loading and Leveling .............................. 199
Resource Leveling ........................................ 200
Resource Idleness Graph .................................. 200
Probabilistic Resource Utilization ......................... 201
Learning Curve Analysis .................................... 203
The Log-Linear Model ....................................... 204
Average Cost Model ..................................... 204
Unit Cost Model ........................................ 207
Graphical Analysis ....................................... 209
Multivariate Learning Curves ............................. 211
Bivariate Example .......................................... 213
Interruption of Learning ................................... 215
Learning Curves in Health-Care Projects .................... 216
Exercises .................................................. 217
References ................................................. 223
6 Project Control System ..................................... 225
Elements of Project Control ................................ 225
Factors Affecting Time ................................... 226
Factors Affecting Performance ............................ 226
Factors Affecting Cost ................................... 227
Control Steps ............................................ 228
Formal and Informal Control .............................. 228
Schedule Control ......................................... 230
Project Tracking and Reporting ........................... 230
Performance Control ...................................... 234
Continuous Performance Improvement ....................... 235
Cost Control ............................................. 237
Information for Project Control ............................ 238
Measurement Scales ......................................... 239
Data Determination and Collection .......................... 241
Data Analysis and Presentation ............................. 243
Raw Data ................................................. 243
Total Revenue ............................................ 244
Average Revenue .......................................... 246
Median Revenue ........................................... 248
Quartiles and Percentiles ................................ 248
Mode ..................................................... 249
Range of Revenue ......................................... 249
Average Deviation ........................................ 250
Sample Variance .......................................... 251
Standard Deviation ....................................... 252
Control Charts ............................................. 253
Statistical Analysis for Project Control ................... 258
Sampling Techniques ...................................... 259
Sample ..................................................... 259
Diagnostic Tools ......................................... 264
Probabilistic Decision Analysis ............................ 266
Normal Distribution ...................................... 267
Decision Trees ............................................. 270
Project Control through Rescheduling ....................... 277
Experimental Analysis for Project Control .................. 278
Personnel Interactions for Experimentations .............. 278
Need for Project Experimentation ......................... 279
Experimental Procedure ................................... 280
Types of Experimentation ................................. 282
Hypothesis Testing ....................................... 282
One-Tailed versus Two-Tailed Hypothesis Testing .......... 283
Producer's Risk versus the Consumer's Risk ............... 285
Control through Termination ................................ 285
Project Control Verification and Validation .............. 286
What Is Verification? .................................. 286
What Is Validation? .................................... 286
What to Validate ....................................... 287
How Much to Validate ................................... 287
When to Validate ....................................... 287
Verification and Validation Stages ....................... 287
Factors Involved in Validation ........................... 288
How to Evaluate the System ............................... 289
Sensitivity Analysis for Project Control ................. 289
Exercises .................................................. 290
7 Project Systems Modeling and Optimization .................. 293
Project Modeling ........................................... 293
General Project Scheduling Formulation ..................... 294
Linear Programming Formulation ............................. 295
Activity Planning Example .................................. 296
Resource Combination Example ............................... 298
Resource Requirements Analysis ............................. 300
LP Formulation ............................................. 301
Integer Programming Approach for Resource Scheduling ....... 302
Time-Cost Trade-Off Model .................................. 305
Maximum Flow Procedure ................................... 306
Time-Cost Trade-Off Procedure ............................ 307
Sensitivity Analysis for Time-Cost Trade-Off ............. 313
Knapsack Problem ......................................... 314
Knapsack Formulation for Scheduling ...................... 315
Example of Knapsack Activity Scheduling .................. 316
Transportation Problem for Project Scheduling ............ 319
Balanced versus Unbalanced Transportation Problems ....... 321
Initial Solution to the Transportation Problem ........... 321
Northwest-Corner Technique ................................. 322
Transportation Algorithm ................................. 323
Example of Transportation Problem ........................ 325
Transshipment Formulation ................................ 329
Assignment Problem in Project Optimization ............... 330
Example of Assignment Problem .............................. 331
Traveling Resource Formulation ........................... 333
Nearest Neighbor Algorithm ............................... 334
2-Opt Technique .......................................... 335
Shortest-Path Problem .................................... 335
Goal Programming ........................................... 337
Resource Allocation Using Simulated Annealing ............ 340
Exercises .................................................. 343
References ................................................. 348
8 Cost Systems Analysis ...................................... 349
Economic Analysis Process .................................. 349
Simple and Compound Interest Rates ......................... 349
Investment Life for Multiple Returns ....................... 351
Nominal and Effective Interest Rates ....................... 353
Cash-Flow Patterns and Equivalence ......................... 355
Compound Amount Factor ..................................... 356
Present Worth Factor ....................................... 356
Uniform Series Present Worth Factor ........................ 357
Uniform Series Capital Recovery Factor ..................... 357
Uniform Series Compound Amount Factor ...................... 358
Uniform Series Sinking Fund Factor ......................... 359
Capitalized Cost Formula ................................... 359
Permanent Investments Formula .............................. 361
Arithmetic Gradient Series ................................. 361
Increasing Geometric Series Cash Flow ...................... 363
Decreasing Geometric Series Cash Flow ...................... 364
Internal Rate of Return .................................... 366
Benefit-Cost Ratio ......................................... 366
Simple Payback Period ...................................... 368
Discounted Payback Period .................................. 369
Fixed and Variable Interest Rates .......................... 371
Amortization of Capitals ................................... 372
Equity Break-Even Point .................................... 374
Analysis of Tent Cash Flows ................................ 376
Special Application of Arithmetic Gradient Series .......... 377
Design and Analysis of Tent Cash-Flow Profiles ............. 377
Derivation of General Tent Equation ........................ 382
Multi-Attribute Project Selection .......................... 384
Utility Models ............................................. 385
Additive Utility Model ..................................... 387
Multiplicative Utility Model ............................... 388
Fitting a Utility Function ................................. 389
Polar Plots ................................................ 393
Analytic Hierarchy Process ................................. 399
Cost Benchmarking .......................................... 404
Exercises .................................................. 406
References ................................................. 407
9 Advanced Topics in Project Planning and Control ............ 409
Forecasting Techniques ..................................... 409
Forecasting Based on Averages .............................. 410
Simple Average Forecast .................................. 410
Period Moving Average Forecast ........................... 410
Weighted Average Forecast ................................ 410
Weighted T-Period Moving Average Forecast ................ 411
Exponential Smoothing Forecast ........................... 411
Regression Analysis ........................................ 412
Description of Regression Relationship ................... 412
Prediction ............................................... 413
Control .................................................. 413
Procedure for Regression Analysis .......................... 413
Coefficient of Determination ............................... 414
Residual Analysis .......................................... 415
Time Series Analysis ....................................... 416
Stationarity and Data Transformation ....................... 418
Moving Average Processes ................................. 421
Autoregressive Processes ................................. 422
Classical Inventory Management ............................. 424
Economic Order Quantity Model .............................. 425
Quantity Discount .......................................... 426
Calculation of Total Relevant Cost ......................... 427
Evaluation of the Discount Option .......................... 427
Sensitivity Analysis ....................................... 429
Wagner-Whitin Algorithm .................................... 430
Notations and Variables .................................... 431
Propositions for the Wagner-Whitin Algorithm ............... 432
Computational Example of Wagner-Whitin Algorithm ........... 432
Silver-Meal Heuristic ...................................... 434
Seasonal Pattern Modeling .................................. 437
Modeling Approach .......................................... 437
Standard Cyclic PDF ...................................... 438
Expected Value ........................................... 439
Variance ................................................. 439
Cumulative Distribution Function ......................... 440
General Cyclic PDF ....................................... 440
Application Examples ..................................... 441
Exercises .................................................. 445
10 Advanced Techniques for Multiresource Scheduling ........... 447
Notations Used in the Methodology .......................... 447
Analysis of Project Resources .............................. 448
Resource Modeling Background ............................... 449
Multiresource Methodology .................................. 450
Representation of Resource Interdependencies and
Multifunctionality ....................................... 450
Modeling of Resource Characteristics ....................... 452
Resource Mapper ............................................ 454
Activity Scheduler ......................................... 456
Model Implementation and Graphical Illustrations ........... 462
Sequence-Based Scheduling and Function-Based Scheduling .. 465
References ................................................. 466
11 Case Examples and Applications ............................. 467
Case Example: Project Systems View of World Economy ........ 467
Global Systems View of the World ........................... 469
Economic Interdependence Model ............................. 469
Hybridization of Cultures .................................. 470
Market Integration as a Factor of Deterrent ................ 471
Pursuit of Global Awareness for the Sake of Deterrent ...... 471
Questions for Overseas Economic Engagement ................. 471
Questions for Assessing Local Conditions ................... 472
Questions for Economic-Cultural Nuances .................... 472
Questions for Geographic Awareness ......................... 472
Questions for General Assessment ........................... 473
Labor as a Vehicle of Mutual Development ................... 473
Awareness of Overseas Workforce Constraints ................ 474
Hierarchy of National Needs ................................ 475
Prevention Is Better than Correction ....................... 476
Empathy, Sympathy, and Compassion Instead of Apathy ........ 476
Educate .................................................. 477
Engage ................................................... 477
Empower .................................................. 477
Sustainability of Global Alliances ......................... 477
Summary of the Case Example ................................ 477
References ................................................. 478
Case Application: Coordination of Multinational Projects ... 479
Project Setting .......................................... 479
Technical Requirements ................................... 479
Organizational Relationships ............................. 480
Safety and Environmental Considerations .................. 481
Analysis of Project Scenario ............................. 481
Sources of Possible Problems and Solutions ............... 481
Strategic Planning ..................................... 483
Cost/Benefit Analysis .................................. 483
Technology Assessment .................................. 484
Acquisition ............................................ 484
Trade Agreements ....................................... 484
Different Labor Practices .............................. 484
Different Governmental and Political Ideologies ........ 484
Information Management ................................. 484
Recommendations ............................................ 485
Appendix A: Project Formulas .................................. 487
Appendix B: Project Management Acronyms ....................... 517
Appendix C: Project Terms and Definitions ..................... 527
Index ......................................................... 559
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