Bechtel Projects þ Building 26 massive distribution centers

Bechtel Projects þ Building 26 massive distribution centers in just two years for the internet company Webvan Group ($1 billion) þ Constructing 30 high-security data centers worldwide for Equinix, Inc. ($1. 2 billion) þ Building and running a rail line between London and the Channel Tunnel ($4. 6 billion) þ Developing an oil pipeline from the Caspian Sea region to Russia ($850 million) þ Expanding the Dubai Airport in the UAE ($600 million), and the Miami Airport in Florida ($2 billion)

Bechtel Projects þ Building liquid natural gas plants in Yemen $2 billion) and in Trinidad, West Indies ($1 billion) þ Building a new subway for Athens, Greece ($2. 6 billion) þ Constructing a natural gas pipeline in Thailand ($700 million) þ Building 30 plants for i. Motors. com, a company that sells refurbished autos online ($300 million) þ Building a highway to link the north and south of Croatia ($303 million)

Strategic Importance of Project Management þ Microsoft Windows Vista Project: þ hundreds of programmers þ millions of lines of code þ hundreds of millions of dollars cost þ Hard Rock Cafe Rockfest Project: þ 100, 000 + fans þ planning began 9 months in advance

Project Characteristics þ Single unit þ Many related activities þ Difficult production planning and inventory control þ General purpose equipment þ High labor skills

• A sequence of unique, complex and connected activities having one goal or purpose and that must be completed by a specific time, within budget, and according to specification.

Project Management Activities þ Planning þ Objectives þ Resources þ Scheduling þ Work break-down schedule þ Organization þ Controlling þ Monitor, compare, revise, action þ Project activities þ Start & end times þ Network

Project Planning, Scheduling, and Controlling Figure 3. 1 Before project Start of project Timeline During project

Time/cost estimates Project Planning, Scheduling, Budgets Engineering diagrams and Controlling Cash flow charts Material availability details Budgets Delayed activities report Slack activities report CPM/PERT Gantt charts Milestone charts Cash flow schedules Figure 3. 1 Before project Start of project Timeline During project

Project Planning þ Establishing objectives þ Defining project þ Creating work breakdown structure þ Determining resources þ Forming organization

Project Organization þ Often temporary structure þ Uses specialists from entire company þ Headed by project manager þ Coordinates activities þ Monitors schedule and costs

A Sample Project Organization President Human Resources Project 1 Project 2 Figure 3. 2 Finance Design Quality Mgt Production Mechanical Engineer Marketing Test Engineer Technician Electrical Engineer Computer Engineer Technician Project Manager

Project Organization Works Best When 1. Work can be defined with a specific goal and deadline 2. The job is unique or somewhat unfamiliar to the existing organization 3. The work contains complex interrelated tasks requiring specialized skills 4. The project is temporary but critical to the organization 5. The project cuts across organizational lines

The Role of the Project Manager Highly visible Responsible for making sure that: þ All necessary activities are finished in order and on time þ The project comes in within budget þ The project meets quality goals þ The people assigned to the project receive motivation, direction, and information

The Role of the Project Manager Highly visible Project managers Responsible for making sure that: should be: þ Good coaches þ All necessary activities are finished in order þ Good communicators and on time þ Able to budget þ The project comes in withinorganize activities from a variety of disciplines þ The project meets quality goals þ The people assigned to the project receive motivation, direction, and information

Ethical Issues þ Bid rigging – divulging confidential information to give some bidders an unfair advantage þ “Low balling” contractors – try to “buy” the project by bidding low and hope to renegotiate or cut corners þ Bribery – particularly on international projects þ Expense account padding þ Use of substandard materials þ Compromising health and safety standards þ Withholding needed information þ Failure to admit project failure at close

Work Breakdown Structure Level 1. Project 2. Major tasks in the project 3. 4. Subtasks in the major tasks Activities (or work packages) to be completed

Work Breakdown Structure Level ID Number Activity 1 1. 0 Develop/launch Windows Vista OS 2 1. 1 Develop of GUIs (g. RA 2 1. 2 Ensure compatibility with earlier Windows versions 3 1. 21 Compatibility with Windows ME 3 1. 22 Compatibility with Windows XP 3 1. 23 Compatibility with Windows 2000 4 1. 231 Ensure ability to import files Level Figure 3. 3

Project Scheduling þ Identifying precedence relationships þ Sequencing activities þ Determining activity times & costs þ Estimating material & worker requirements þ Determining critical activities

Purposes of Project Scheduling 1. Shows the relationship of each activity to others and to the whole project 2. Identifies the precedence relationships among activities 3. Encourages the setting of realistic time and cost estimates for each activity 4. Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project

Scheduling Techniques 1. Ensure that all activities are planned for 2. Their order of performance is accounted for 3. The activity time estimates are recorded 4. The overall project time is developed

Project Management Techniques þ Gantt chart þ Critical Path Method (CPM) þ Program Evaluation and Review Technique (PERT)

A Simple Gantt Chart J Design Prototype Test Revise Production F M Time A M J J A S

Service For A Delta Jet Passengers Baggage Fueling Cargo and mail Galley servicing Lavatory servicing Drinking water Cabin cleaning Cargo and mail Flight services Operating crew Baggage Passengers Figure 3. 4 Deplaning Baggage claim Container offload Pumping Engine injection water Container offload Main cabin door Aft, center, forward Loading First-class section Economy section Container/bulk loading Galley/cabin check Receive passengers Aircraft check Loading Boarding 0 10 20 30 Time, Minutes 40

Project Control Reports þ þ þ þ Detailed cost breakdowns for each task Total program labor curves Cost distribution tables Functional cost and hour summaries Raw materials and expenditure forecasts Variance reports Time analysis reports Work status reports

PERT and CPM þ Network techniques þ Developed in 1950’s þ CPM by Du. Pont for chemical plants (1957) þ PERT by Booz, Allen & Hamilton with the U. S. Navy, for Polaris missile (1958) þ Consider precedence relationships and interdependencies þ Each uses a different estimate of activity times

Six Steps PERT & CPM 1. Define the project and prepare the work breakdown structure 2. Develop relationships among the activities - decide which activities must precede and which must follow others 3. Draw the network connecting all of the activities

Six Steps PERT & CPM 4. Assign time and/or cost estimates to each activity 5. Compute the longest time path through the network – this is called the critical path 6. Use the network to help plan, schedule, monitor, and control the project

Questions PERT & CPM Can Answer 1. When will the entire project be completed? 2. What are the critical activities or tasks in the project? 3. Which are the noncritical activities? 4. What is the probability the project will be completed by a specific date?

Questions PERT & CPM Can Answer 5. Is the project on schedule, behind schedule, or ahead of schedule? 6. Is the money spent equal to, less than, or greater than the budget? 7. Are there enough resources available to finish the project on time? 8. If the project must be finished in a shorter time, what is the way to accomplish this at least cost?

AON Example Milwaukee Paper Manufacturing's Activities and Predecessors Activity Description Immediate Predecessors A Build internal components — B Modify roof and floor — C Construct collection stack A D Pour concrete and install frame A, B E Build high-temperature burner C F Install pollution control system C G Install air pollution device D, E H Inspect and test F, G Table 3. 1

AON Network for Milwaukee Paper F A C E Start B D H G Arrows Show Precedence Relationships Figure 3. 8

Determining the Project Schedule Perform a Critical Path Analysis þ The critical path is the longest path through the network þ The critical path is the shortest time in which the project can be completed þ Any delay in critical path activities delays the project þ Critical path activities have no slack time

Determining the Project Schedule Perform a Critical Path Analysis Activity A B C D E F G H Description Time (weeks) Build internal components 2 Modify roof and floor 3 Construct collection stack 2 Pour concrete and install frame 4 Build high-temperature burner 4 Install pollution control system 3 Install air pollution device 5 Inspect and test 2 Total Time (weeks) 25 Table 3. 2

Trade-Offs And Project Crashing It is not uncommon to face the following situations: þ The project is behind schedule þ The completion time has been moved forward Shortening the duration of the project is called project crashing

Factors to Consider When Crashing A Project þ The amount by which an activity is crashed is, in fact, permissible þ Taken together, the shortened activity durations will enable us to finish the project by the due date þ The total cost of crashing is as small as possible

Steps in Project Crashing 3. If there is only one critical path, then select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost period. If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest. Note that the same activity may be common to more than one critical path.

Steps in Project Crashing 4. Update all activity times. If the desired due date has been reached, stop. If not, return to Step 2.

Determining the Project Schedule Perform a Critical Path Analysis Earliest start (ES) = earliest time at which an activity can Activity Description assuming all predecessors (weeks) Time have start, A Build internal components 2 been completed Modify roof and floor 3 Earliest. B finish (EF) = earliest time at which an activity can be finished C Construct collection stack 2 D Pour latest time at which an activity can 4 Latest start (LS) =concrete and install frame start so as to not burner E Build high-temperature delay the completion 4 F Install time of the entire project pollution control system 3 Latest. G finish (LF) = latest time bydevice an activity has to Install air pollution which 5 be finished so as to not delay the H Inspect and test 2 completion time of the entire project Table 3. 2 Total Time (weeks) 25

Determining the Project Schedule Perform a Critical Path Analysis Activity Name or Symbol A Earliest Start ES EF Latest Start LS LF Figure 3. 10 2 Earliest Finish Latest Finish Activity Duration

Forward Pass Begin at starting event and work forward Earliest Start Time Rule: þ If an activity has only a single immediate predecessor, its ES equals the EF of the predecessor þ If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors ES = Max {EF of all immediate predecessors}

Forward Pass Begin at starting event and work forward Earliest Finish Time Rule: þ The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time EF = ES + Activity time

ES/EF Network for Milwaukee Paper ES EF = ES + Activity time 0 Start 0 0

ES/EF Network for Milwaukee Paper EF of A = ES of A + 2 ES of A 0 Start 0 0 A 0 2 2

ES/EF Network for Milwaukee Paper 0 A 2 0 Start 0 0 2 EF of B = ES of B + 3 ES of B 0 B 3 3

ES/EF Network for Milwaukee Paper 0 A 2 2 0 Start 2 0 0 0 B 3 2 C 3 4

ES/EF Network for Milwaukee Paper 0 A 2 2 0 Start 0 2 C 4 2 = Max (2, 3) 0 D 3 0 B 3 7 3 4

ES/EF Network for Milwaukee Paper 0 A 2 2 2 0 Start C 4 2 0 0 0 B 3 3 3 D 4 7

ES/EF Network for Milwaukee Paper 0 A 2 2 2 0 Start C 4 4 2 F 7 3 0 4 0 E 8 13 4 0 B 3 3 3 D 4 7 H 15 2 8 G 13 5 Figure 3. 11

Backward Pass Begin with the last event and work backwards Latest Finish Time Rule: þ If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it þ If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it LF = Min {LS of all immediate following activities}

Backward Pass Begin with the last event and work backwards Latest Start Time Rule: þ The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time LS = LF – Activity time

LS/LF Times for Milwaukee Paper 0 A 2 2 2 0 Start C 4 4 2 F 7 3 0 4 0 E 8 13 13 4 0 B 3 3 LS = LF – Activity time D G 3 7 4 8 5 H 2 15 15 13 LF = EF of Project

LS/LF Times for Milwaukee Paper 0 A 2 2 2 0 Start C 4 4 10 2 F 3 7 13 E 0 4 8 LF = Min(LS of following activity) 0 13 13 4 0 B 3 3 3 D 4 7 8 G 5 13 H 2 15 15

LS/LF Times for LF = Min(4, 10) Milwaukee Paper 0 A 2 2 2 0 Start 2 C 2 4 4 4 10 0 4 4 0 0 B 3 3 3 D 4 7 E 4 F 3 7 13 8 8 G 5 13 13 H 2 15 15

LS/LF Times for Milwaukee Paper 0 0 Start 0 A 2 2 2 C 2 4 4 4 10 0 4 0 1 B 3 3 3 4 4 D 4 E 4 F 3 7 13 8 13 7 8 8 8 G 5 13 13 H 2 15 15

Computing Slack Time After computing the ES, EF, LS, and LF times for all activities, compute the slack or free time for each activity þ Slack is the length of time an activity can be delayed without delaying the entire project Slack = LS – ES or Slack = LF – EF

Critical Path for Milwaukee Paper 0 0 Start 0 A 2 2 2 C 2 4 4 4 10 0 4 0 1 B 3 3 3 4 4 D 4 E 4 F 3 7 13 8 13 7 8 8 8 G 5 13 13 H 2 15 15

Success of Project Managers Here are some of the very basic yet most important traits that a Project Manager (PM) should cultivate to successfully manage projects. A PM often finds herself being pulled between keeping customer, subordinates, team members and senior people happy. Given these demands, what do the best PMs do that makes them stand out from the crowd?

1. Focus on solutions • Problem solving and breaking through constraints is an essential part of managing projects. Those that excel as project managers have a mindset where they focus on finding solutions to problems. They keep asking themselves how they can overcome whatever barriers arise.

2. Participative and decisive • All the best project managers understand the need to communicate and consult. They also know that lots of talking and procrastination achieves nothing. Finding the right balance between consulting, deciding and acting is what separates the best from the rest.

3. Focus on customer • In every project there are customers. They might be internal or external or a combination of both. The best project managers keep customers at the forefront of their mind. They listen effectively, take on board the feedback they are getting and look for ways of incorporating it whenever they can.

4. Focus on win-win outcomes • In any project there will be many stakeholders, all of whom will see their issues as being the most important. The challenge that the best project managers respond to is finding solutions that address the issues without compromising the overall project structure.

5. Lead from the front • Project managers need to lead by example. The example they set determines how the rest of the team behave and respond to the challenges that arise. Those project managers who want to encourage openness and honesty are open and honest themselves. Those that take risks and learn from their mistakes empower others to do the same.

6. Adapt to what arises • You can set out the best plans in the world, think about the risks, put great tracking in place and even the unexpected will show up from time to time. • Adaptability is a key characteristic of the best project managers. View adaptability in projects a bit like the flight path of an aircraft. It can be off course along the way but it needs to be right on target when it comes to landing.

7. Get the best out of everyone • Those that excel as project managers realise they cannot do it all on their own. They recognise the importance of the collective team effort in getting results. They find and utilise the strengths in everyone and try to ensure that they allocate roles to those best placed to deliver. They learn to keep everyone motivated and pushing the boundaries to get results.