Idea 37 - Project management (50 Management ideas you really need to know)

Idea 37 - Project management

There are more lawyers, accountants and business school graduates in top management these days, and fewer engineers. The engineer as business manager is in eclipse, along with the shrinking weight of manufacturing in developed economies. Yet there is much that managers can and do learn from the down-and-dirty business of project management, in planning complex projects and forcing them through to conclusion.

A project is very different to a process. A process carries out the same function again and again to yield a product or a service. A project is a one- off undertaking, with a clear beginning and end, usually aimed at creating some useful change or adding value - typically to build a new plant or create a new product. The skills needed to complete a project successfully are not those required to manage a process, and so project management has evolved as a discipline of its own.

Projects bring together resources such as people, money and material, and these must be organized and managed to produce a defined result. The hard part is to bring the project to completion within a specified time, at no more than a specified cost. Various tools have been created to help project managers pull off this invariably challenging feat. The most enduring were developed within the US chemical and defence industries.

The father of project management is generally regarded to be Henry Gantt, a colleague of Frederick Taylor, the creator of scientific management. He is most famously remembered for the Gantt chart, a bar chart plotted against days, weeks or months that even today tells supervisors at a glance whether their project is on schedule or not. But it was not until the 1950s that two of the best known project management tools came into being - the critical path method (CPM) and the programme evaluation and review technique (PERT).

Critical path method This was devised by researchers at DuPont and Remington-Rand to manage the complex business of shutting down plants for maintenance and then restarting them. CPM begins by providing a diagramatic view of the project, showing the time required to complete each of its component activities. The diagram will then reveal which activities are critical to keeping the project on schedule - and which are not. It works like this:
Define the individual activities.
Ø  List them in the order they must be performed - some can't be started until others have been completed
Ø  Create an activity diagram or flowchart showing each activity in relation to the others.
Ø  Estimate the time needed to carry out each activity.
Ø  Identify the critical path. This is the route through the network - the diagram - that will take the longest amount of time. None of the activities lying along this path can be delayed without delaying the entire project.
Tasks which are not on the critical path can fall behind schedule - up to a point - without blowing the whole project's completion date. This leeway for slippage in non-critical activities is called 'slack' or 'float'. The activities on the critical path have no slack at all. It often happens that the activity diagram reveals more than one critical path - in fact, project managers like to say that the perfectly balanced project is all critical path. Armed with a CPM diagram, project managers know how long their complex project will take to complete, and which tasks are absolutely vital to staying on schedule. In the diagram the critical path is task 1, followed by task 3 and then task 5. This gives three days' slack in the path of task 2, followed by task 4 and then task 5.

Program evaluation and review technique PERT is a product of the US defence industry, developed by management consultants Booz Allen Hamilton in the mid-1950s for work on the Polaris nuclear submarine. It has similarities with CPM and incorporates the idea of the critical path, but it allows for randomness in the completion times of individual tasks.

Like CPM, PERT hinges on a diagram, the PERT network chart. This portrays activities, represented by lines called 'arcs', and milestones, represented by small circles called 'nodes'. Milestones (sometimes called 'events') mark the completion of an activity. The milestones are numbered sequentially in 10s - 10, 20,30 and so on - so that new ones can be inserted without having to renumber the whole chart. The chart  is drawn up in much the same way as the CPM diagram, with one key difference: the model allows three different time estimates. They are:
Ø  Optimistic time - the shortest time in which the task can be completed, if all goes better than expected (0).
Ø  Pessimistic time - the longest time to completion, assuming everything goes wrong (P).
Ø  Most likely time - just that (M).
The project manager can then calculate the expected time, which is the average time if the task were repeated again and again over an extended period. The formula is that expected time = (0 + 4M + P)/6. The project's critical path is again determined by adding the times for the activities in each sequence to see which the longest path is. These are the tasks that have to be done on time if the project is to end on schedule.

As a weapon in the project management arsenal, the critical path is as important as it ever was, not least for those in the software industry. The main difference is that, while critical path calculations were once done with pencil and paper, these days a software package will do it for you.

Reference: 50 Management Ideas You Really Need to Know

Book by Edward Russell-Walling

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