You will first examine the basics of project budgeting and costing. There is
nothing unique to project management about these tools; they are adapted from
accounting, finance, and related disciplines. You will discover how the project
manager establishes the baseline against which the project will be evaluated
relative to one of the main tenets of the triple constraint—cost. Then you will
discuss project scheduling. In complete contrast to the pedigree of budgeting
and costing, the pedigree of scheduling owes a lot of credit to the historical
evolution of managing projects. As part of project scheduling, the project manager
also evaluates other aspects of the triple threat, schedule or time. This week,
you will also learn about resource loading and leveling. These topics are related
both to the project cost and the project schedule. These techniques help in the
allocation of predetermined resources against the project budget and the project
schedule to see whether the project will operate smoothly without fits and starts
because of resource limitations.
Your Learning Objectives for the Week:

• Analyze requirements and scope for a project

• Organize elements of a project into a comprehensive plan that includes

both resource and time budgets

Project Scheduling Techniques

Project scheduling techniques continue to be developed today. Consider how some types of projects just never seem to be completed on time, and they get delayed time

and again to everyone’s frustration. Despite schedule constraints often being the hardest to deal with in any given project, delays seem rampant in some �elds.

Before discussing project scheduling techniques, let’s visit the idea of an activity. While discussing the work breakdown structure (WBS) in Week 3, you would have

noted the WBS represents the project scope in the form of a hierarchy of the project deliverables. A WBS is further elaborated by the speci�cation of the activities to
produce the deliverables.

Do not confuse an activity with a deliverable. As simple as it sounds, one way to keep the idea of an activity clear from the idea of a deliverable is that activities are

expressed with action verbs like “Build . . .,” “Write . . .,” or “Produce . . .,” whereas deliverables are not. Deliverables are outputs, not actions.

Once the activities needed to accomplish all WBS deliverables are de�ned, they can be scheduled by putting them all together in their logical, complex sequences,

according to how they are sequentially dependent.

Two project scheduling techniques are critical path method (CPM) and program evaluation and review technique (PERT). Though the CPM is a deterministic technique
and PERT is a probabilistic technique, both have almost become one, as they share similarities. They both assume that a small activity which makes the longest path

control the entire project. However, your assignments focus more on deterministic activity estimates and CPM. Though the terms PERT and CPM are often used

interchangeably, it is important for you to have complete clarity about them.

CPM is a deterministic technique. For any given activity, it assumes only one estimate of time with no estimated variation around it. Therefore, the overall length of any

activity, path, or project can be easily determined through some simple math – though doing a “backward pass” and a “forward pass” may get tedious. The CPM is a pure

scheduling technique, and its purpose is to build a project schedule based on deterministic estimates of each activity’s time.

PERT is a probabilistic technique. It uses the laws of probability and three different estimates of a project’s duration – an optimistic estimate, a most likely estimate, and a
pessimistic estimate. Getting these estimates can be fraught with human frailty, but when the data is put together, project schedules can be evaluated in accordance with

the likelihood of success or failure. Therefore, PERT is a pure risk management technique, as risk deals with probabilities of failure.

Resource Loading and Leveling

So far in this course, the assumption has been that the project manager determines the activity time estimates in ways discussed earlier.

The project manager uses several techniques to directly estimate how much time every activity in the project scope will take.

Once the schedule is set, resources can be allocated for various activities. Resources include money, labor, material, and information. However, so many projects are

mainly driven by the cost of available labor that labor hours often are used as the single most useful measure of choice. The problem with this approach is that it is only at
this point when the project manager may realize to allocate resources to the schedule. This can result in huge gaps of labor hours in some periods of time and huge

overages in others. When that happens, it is wise to level resources by rearranging the schedule. Rather than having half the project’s allocated people remain mostly idle

for a week and then work overtime the next week, it would be wise to schedule things in a way so that everyone has a level load of work to do each week and everyone

works at an even rate. You can imagine the same kind of thing happening whether you are scheduling labor or materials, but human problems are especially troublesome

to manage.

Another common problem occurs when the critical path becomes longer than the time originally allowed for the completion of the project. For example, in the original
project charter there may be a deadline stipulated before the planning even started. When that happens, either as part of the planning process or later during the

execution phase, a common solution is to crash the project.

Crashing the project is the idea that assigning more labor to critical project activities will reduce the project duration. Crashing will shorten the scheduled project

completion time. However, crashing involves spending more money to get something done quickly in anticipation of reducing time or resource cost elsewhere. The smart

thing to do is to look for the most economical ways to integrate crashing, one step at a time. As this is done, the cost of crashing can rise exponentially. Imaginative ways of

rearranging precedence relationships are needed.

Resource-constrained scheduling starts with project schedules being constrained by available resources, not available on time. When project schedules are made, it is
possible to actually miss the point and estimate activity duration expressing how long it will take to complete the activity.

An activity’s duration is constrained by the amount and type of resources available for completion and the rate at which resources are consumed. Resources are

independent variables, and time is the outcome or dependent variable. Simple mathematics transforms resource consumption into an estimate of time as the dependent

variable.

For example Microsoft Project consists of software wizards to be used in correct order, instead of shortcutting the wizards and entering time estimates directly into

Gantt charts, which can be done easily. The software wizards will not prompt you for an estimate of how long, in increments of time, an activity would take. The wizards
ask what resources are available and their rates of consumption. The wizards never ask for a duration estimate, because that is not the input (independent) variable.

Additional Materials

Project Management Overview (media/week4/SUO_MGT3035%20W4%20L3.pdf?_&d2lSessionVal=aVaTmfHd5UkmjmVnoP1XalSFd&ou=85477)

View a Pdf Transcript of Resource Constrained Scheduling (media/week4/SU_MGT3035_W4_L6_G1.pdf?

_&d2lSessionVal=aVaTmfHd5UkmjmVnoP1XalSFd&ou=85477)

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MGT3035 Fundamentals of Project Management

© 2013 South University

Project Management: Tools and Techniques

There are several cost estimating and budgeting tools and techniques.

Cost Estimating Tools and Techniques:

Analogous Estimating: A way of estimating cost by comparing an activity to a similar
one done in a previous project. This happens when information is scant.

Resource Cost Rates: This technique uses known costs that are published elsewhere.

Parametric Estimating: This technique is used when one cost is known to be a
mathematical function of another. It is expressed as an equation.

Vendor Bid Analysis: This is a “should cost” method based on market pricing.

Reserve Analysis: This technique requires ensuring that care is taken to not confuse
estimates with risk management.

Cost of Quality: This technique refers to the total cost of all efforts related to quality.

Cost Budgeting Tools and Techniques:

Cost Aggregation: This technique sums up the activity estimates bottom-up.

Funding Limit Reconciliation: This technique is especially important when an overall
budget is decreed early in the top-down process.

Project Budget and Costing

Budgets are ubiquitous to all kinds of management. No matter what industry, type of organization, or professional discipline a manager may be involved with, budgeting is

an integral part.

While discussing the traditional value-added tools that project management has brought to the general management toolkit, Meredith and Mantel (2009) advocate the

use of adopting general budgeting and cost estimation techniques to the needs of project environments.

In contrast, a few differences stand out in PMBOK® Guide. Project cost management follows project time management. In other words, the implication is that budgeting

and cost estimation are accomplished after the schedule is made. This makes logical sense. Looking closely at the sequence of processes in the PMBOK® Guide, you will

see it is best to estimate the costs of the individual activities after activities are listed, sequenced, and scheduled. This is close to a bottom-up budgeting technique.

An appropriate example of a top-down process is summary budget which is developed during the planning process. In this case, it is perfectly likely for an overall budget

to be present by the time scheduling starts. Some of the most major project management methods occur in iterative fashion. The sequence in the PMBOK® Guide is

probably the most logical, but reality does not always allow managers to use perfect logic.

PMBOK® Guide provides several speci�c tools in addition to what’s in the textbook. Tool include analogous estimating, resource costs rates, parametric estimating,

vendor bid analysis, reserve analysis, cost of quality, cost aggregation, and funding limit reconciliation. The supplemental media provide descriptions of these tools.

Additional Materials

View a Pdf Transcript of Project Management: Tools and Techniques. (media/week4/SU_MGT3035_W4_L3_G1.pdf?

_&d2lSessionVal=aVaTmfHd5UkmjmVnoP1XalSFd&ou=85477)
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Project Management Process Overview
© 2016 South University

Overview

At some point in time, the idea for a project is born. This may be driven by market need,
technical opportunity, or organizational politics, but the idea must advance through a gauntlet of
management approvals.

The formal approval or go ahead for a project happens when the project charter is developed by
the project sponsor and agreed to by the main members of the project team. That is also about
the time the context of the project should be considered in terms of organizational structure—not
just the organization of the project itself but how the project fits within the existing organization
and its strategy.

Then, the project scope statement is developed. This clearly articulates what the project will and
will not include with respect to what the completed project will look like when it’s done to the
total satisfaction of its customers and other stakeholders.

Next, the project plan is developed, and one of its main deliverables is the WBS, which
graphically defines the scope. Efforts should then be made to relate the WBS to the
organizational breakdown structure (OBS) by using a linear responsibility chart.

At this stage, a budget can then be made for the project. In reality, a finite amount of funds
already may have been determined in the earliest phases of the project. If this is the case, top-
down budgeting will probably continue. Otherwise, bottom-up budgeting has its advantages and
disadvantages, and it may be the better approach.

A schedule can then be developed, clearly showing each activity needed to accomplish the WBS
deliverables, their interdependencies, the critical path, and other important details. This is a good
time to resolve any inconsistencies between foreseen project durations and any externally
mandated deadlines. After this is done, resources can be allocated to the schedule. Labor hours
are the most common unit of allocating resources because labor availability seems to be the
most troubling resource to schedule. To preclude a host of human problems, labor allocation
should be leveled throughout the entire project. This list is the preliminary work that the project
manager is responsible for having in place in order to begin a clearly defined project.

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MGT3035 Fundamentals of Project Management

© 2013 South University

Resource-Constrained Scheduling

A project manager might estimate that the workforce situation constrains the project to using no
more than 100 labor-hours or man-hours. However, the manager may have some choices in the
matter.

Specifying one union-constrained worker, working eight hours a day, five days a week, will result
in a completely different activity estimate than two nonunion workers working 10 hours a day,
seven days a week. That’s simple math.

Extend this thinking to all activities and their precedence relationships. You will find resource
constraints produce such things as completely different schedules, critical paths, and
dependencies.

The key point in resource-constrained scheduling is that time is not the independent variable. It is
the dependent variable in the estimating equation. You do not specify time; you specify resource
constraints, and this mathematically results in a calculation of time.

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MGT3035 Fundamentals of Project Management

© 2013 South University

Network Diagram