Applications of program management information systems

FACULTE DES SCIENCES

THESE

Présentée

A l'Ecole des Gradues De l'Université Laval Pour obtenir le grade

de

Maîtrise es Sciences

Karl Walter Keirstead B.Sc.A. (Université Laval)

APPLICATIONS OF PROGRAM MANAGEMENT INFORMATION SYSTEMS Février 1969

ACKNOWLEDGEMENTS

The présent study originated in February of 1966 with a requirement to establish a research project on program management techniques within the Meter and Instrument Section of the Canadian General Electric Company

Limited. The author is parficularly indebted to M.r. Guy Babineau and Mr. Max Drouin of this organization for their encouragement during the

initial stages of the project.

I should also Iike to thank the members of the Electrical Engineering Department of Laval University for their expression of confidence in grant- ing approval to undertake a somewhat unconventional study. They will be pleased to learn that the expérience has been most rewarding.

The author deeply appréciâtes the support and interest of Mr. T. Wildi, who graciously consented to supervise this study.

iii

ABSTRACT

During recent years, management's ability to direct special-purpose programs to completion has been greatly enhanced as a resuit of the introduction of new management techniques such as PERT and CPM. Analysis of the

state-/

of-the -art indicates that whereas these techniques hâve enjoyed widespread usage in planning and scheduling operations, their potential in the area of program control has been largely Jgnored. Failure to make effective usage of PERT and CPM may be attribuled, not to the techniques themselves, but rather to deficiencies in methods of acquisition of data and représentation of project status information.

The présent study outlines a methodology for program management

through formulation of a theoretical Systems model, development of a set of operational procedures and discussion of two case studies.

TABLE OF CONTENTS

Abstract... iii List of Figures... vii

PART I INTRODUCTION

CHAPTER I THE NATURE OF MODERN PROGRAMS

1.1 Introduction 002

1.2 The Administrative Problem 003

1.2.1. The Rand Study 003

1.2.2. The Harvard Study 004

1.3 Effects on Milifary and Industrial Programs 005

1.4 Contents of the Thesis 007

CHAPTER II DEVELOPMENT OF PERT AND CPM

2.1 Introduction 008

2.2 The Gantt Chart 008

2.3 The Milestone M.ethod 009

2.4 PERT and the Polaris Program 009

2.5 CPM and the DuPont Company 014

2.6 PERT/CPM 015

PART II THEORY

CHAPTER III PROGRAM MANAGEMENT - A THEORETICAL STUDY

3.1 Introduction 018

V

3.3 The Management Process Cycle 019

3.3.1 Strategie Program Planning 019

3.3.2 Operational Program Planning 019

3.3.3 Resource Allocation 021

3.3.4 Measurement and Evaluation of Progress 021

3.3.5 Decision-making 021

3.4 Management Organizational Structures 022 3.4.1 Functional Organizational Structure 023 3.4.2 Program Organizational Structure 024 3.4.3 Matrix Organizational Structure 027

3.5 Operational Techniques 029

CHAPTER IV ROLE OF PERT/CPM IN PROGRAM MANAGEMENT

4.1 Introduction 030

4.2 Strategie Program Planning 031

4.3 Operational Program Planning 034

4.3.1 The Work Package Concept 034

4.3.2 The Account Code Structure 034

4.3.3 The Network Concept 036

4.4 Resource Allocation 036

4.4.1 Compilation of Activity Time Estimâtes 038 4.4.2 PERT/CPM Network Calculations 043

4.4.3 Replanning 048

4.4.4 Development of a Preliminary Project Schedule 049 4.4.5 Compilation of Cost Estimâtes 052 4.4.6 Evaluation and Refinement of the Project 052

Schedule

4.5 Measurement and Evaluation of Progress 053 4.5.1 Acquisition of N onitoring Information 054

4.5.2 Processing of Data 055

4.5.3 Interprétation of Data 055

4.5.4 Représentation of Status Information 059

4.6 Decision-making Q62

4.6.1 System Configuration Studies q

^2

vi

PART III PRACTICAL CONSIDERATIONS

CHAPTERV CASE STUDY I

5.1 Introduction 071

5.2 Background Information 071

5.3 Description of the M & I Section Program Management 073 System

5.4 Development of a Modified Organizational Structure 074

CHAPTER VI CASE STUDY II

6.1 Introduction 081

6.2 ACB Organizational Structure 081

6.3 Description of the Project 082

6.4 Program Management within ACB o.-.d CFLCo 084 6.4.1 Project Définition (Strategie Program Planning) 084 6.4.2 Operational Planning and Resource Allocation 085

6.4.3 Program Control 085

6.5 Description of the Schedule Control 086 System

6.5.1 System Operating Philosophy 087

6.5.2 System Input 088

6.5.3 Data Processing 092

6.5.4 System Output 094

PART IV RESULTS

CHAPTER VII CONCLUSIONS

PARTV SUPPLEMENTARY INFORMATION

APPENDIXA 108

APPENDIXB 114

vii

L1ST OF FIGURES

Number Title Pagi

2 - 1 Comparison of Gantt and Milestone Techniques with PERT/CPM

010

3 - 1 The Management Process Cycle 020

3-2 Functional Organizational Structure 025

3-3 Prograrn Organizational Structure 026

3-4 Matrix Organizational Structure 028

4 - 1 Work Breakdown Structure 033

4-2 Work Package Représentation 035

4-3 Account Code Structure 037

4-4 Program Cost Factors vs Time 039

4-5 Activity Time Estimâtes 042

4-6 Relationship Between t and a, m, &b 044

4-7 Cost of Data Processing vs Number of Activities 056 4-8 Spécifications for Design Alternâtes X|Z X z X , Y z Y

2 3 1 2 064

4-9 Figures of Merit for Design Alternâtes X , X , X , Y , Y 1 2 3 1 2

065 4-10 Combined Figures of Merit for System XY Alternâtes 067 5 - 1 Organizational Structure of the M.eter and Instrument

Section

071

viii

5-3 PERT/T1ME Project Calendar - Form QW-II40 ₀₇₆

5-4 PERT/TIME Status Report

077

5-5 Modified Matrix Organizational Structure ₀₇₉

6 - 1 Organizational Structure of ACB of CF 081

6-2 Churchill Falls Power Project Work Breakdown Structure 083

6-3 Schedule Coritrol System Plug Dates 095

7 - 1 Mîlestone Configuration Chart 102

C H A P T E R I

THE NATURE OF MODERN PROGRAMS

l.l INTRODUCTION

During recent years, management's ability fo direct special-purpose or once- through type programs to completion has been greatly enhanced as a resuit of the introduction of new program management techniques such as PERI and CPM. Despite the obvious simplicity of these techniques, efforts to implement and make effective use of PERT/CPM information Systems hâve been largely unsuccessful.

Failure to achieve desired results may be attributed to a number of factors - the problems hâve very little to do with the techniques themselves, a fair amount to do with application of these techniques,and much to do wilh methods of

acquisition of data and représentation of project status information.

The objectives of this study will be to establish the rôle of PERT and CPM in program management and to demonstrate how PERT/CPM-based information

Systems may be effective in the management of an important class of programs. The initial step in this process will be to examine the general characteristics of modem programs, and in particular, the problems of directing these programs to completion.

003 1.2 THE ADMINISTRATIVE PROBLEM

We now live in an era which many refer to as the "Age of Technology." There has been more technological knowledge gained in the last fifty years than in ail previous history and the ramifications of this progress hâve had far-reaching

effects on our society.

Following World War II, a myriad of technological innovations were rendered practicable as a resuit of the development of automatic control, decision-making théories and electronic computing devices. During the 1950's this activity gave rise to a significant increase in the number of large aerospace, military and industrial programs characterized largely by their heavy engineering content. The complexity of directing such programs began to challenge conventior.al management techniques at an early stage. Efforts to implement these programs using existing management

techniques gave rise to ptoblems which were later to assume national proportions. The significance of these problems was pointed out by two studies;

"Predictability of the Costs, Time,and Success of Development" - by A.W. Marshall and W,H. Meckling of the Rand Corporation,and "The Weapons Acquisition Process: An Economie Analysis" - by A/.J. Peck and F.M>. Schere” of Harvard University.

1.2.1 The Rand Study

In 1959, the Rand Corporation published a report which dealt with the implications of uncertainties in the prédiction of schedule, cost and technical performance factors as they affected decision-making,and established orders of magnitude for prédiction of these factors.

004

The report found cost increases to be in the order of 200-300%,with extensions in development time of 1/3 to 1/2. Performance factors, on the other hand, were

found to be achieved to a much greater extent than cost or time factors, primarily as a resuit of the interrelated nature of these variables which had enabled decision- makers to favor performance at the expense of cost and time. (I)

1.2.2. The Harvard Study

The Harvard study was primarily concerned with the économies of advanced weapons development programs but also dealr briefly with the cost and schedule aspects of a number of commercial development programs. Cost increases of 70% and schedule slippages of 40% were observed on the average.

The following conclusions were reached:

"The occurrence of cost overruns and schedule slippages apparently due to unexpected technical difficulties is by no means unique to the weapons acquisition process. Several of the commercial development projects

included in our case studies sought advances in the state of the art as great as in the less-advanced weapons developments we studied, even though on a more limited scale. In these commercial programs schedule slippages and cost overruns were as common as in the weapons progrems . . . These results cast doubt on the widespread belief that in the commercial world,weapons-like variances do not occur. " ( 2)

005

1.3. EFFECTS ON MiLITARY AND INDUSTRIAL PROGRAMS

The problems of managing complex weapons programs are obviously quite different from those encountered in industrial programs. Weapons programs, for example, are usually characterized by high risk and uncertainty and are implemented in a distinctive non-market environment.

The nature of this study is such, however, that it will be unnecessary to distinguish between military and commercial-type programs. We need therefore concern ourselves only with a generalized type of program, the effectiveness of which may be described in terms of three factors; schedule, cost and technical performance. The relationship between these factors is, unforturately, complex and will be unique to each program,with the resuit that itbecomes difficult to propose trade-offs between factors.

Whereas the ultimate objective in progrcm management would be to optimize program effectiveness, first for individual programs and subséquent!/ on an overall basis within an organization, the results of the Rand and Harvard studies indicate that efforts to achieve such results had not been overly successful.

The administrative problem"has existed primarily as a resuit of the relative state of development of management science with respect to engineering science . Whereas engineering tended to be an empirical art prior to 1935, management science fou.nd itself somewhat in the same position in I960. There was thus a twenty-five year gap between the states-of-the-art of these fields.

006

J.W. Forrester, in his volume entitled "Industrial Dynamics", summarizes the évolution of management science in the following marner:

"Management of countries and industries developed over the centuries as an empirical art. During the last half century, a management science has begun to develop, but it is not yet an effective basis for dealing with top- management problems. Just as the merging of physical science and engineer­ ing in lhe last twenty-five years became the basis for ihe modem upsurge in technology,so will the development of a foundation structure of industrial and économie behavior provide a new dimension in management effectiveness

in the next twenty-five years." (3)

The effects of inadéquate administrative techniques on modem programs are easily recognized. S lippages in'availability of weapons Systems, for example, could threaten national defense, whereas significant cost overruns in the presence of overall budget limitations could mean cancellation of "offending" programs and also prevent implémentation of compelïng andequally important programs.

In 1963, Dr Harold Brown, Director of Defense Research and Engineering, listed fifty-seven programs that had been cancelled in the U.S.A. from 1953 to 1963. Total expenditures for these programs reached 6.2 bi11 ion dollars.

In the case of i ndustrial programs, the effects are somewhat different, though equally disastrous. Automation has tranformed many industries into gigantic machines wherein the margin for error has become unmercifully small - in today's

compétitive markets the ability to manage programs efficiently ir.variably constitutes the différence behveen success and bankruptcy.

007 .4 CONTENTS OF THE THESIS

The thesis has been divided into five parts:

Part I provides an historical account of the problems encountered in the management of programs during the 1950's and early l960's,and traces the development of PERT and CPM .

Part II describes a theoretical model for program management and establishes the rôle of PERT/CPM;

in the various processes inhérent to this model.

Part III deals wiih applications of program management information Systems through analysis of fwo case studies.

Case Study I has been included primarily for historical reasons - the application wqs interrupted during the implémentation phase and could not be evaluated. The procédural details of the System are, however, interesting. Case Study II may be classified as a major application and deals with the use of PERT/CPM management information Systems on the Churchill Fa Ils Power Project in Labrador.

Part IV concludes the study.

Part V contains copies of procedures and reports referred to in Case Studies I and II.

DEVELOPMENT OF PERT AND CPM

2.1 INTRODUCTION

We hâve seen that the efïectiveness of a program may be described in terms of schedule, cost and technical performance fa ctorszand that efforts to control these factors during the 1950's were not overly sucessful. There were, nonetheless, important exceptions to this, particularily in those areas where two new management techniques, PERT and CPM, were being used to plan and control operations.

PERT and CPM hâve been used extensively during the past ten years and are now considered as hîghly effective program management techniques . The objectives of this chapter are to trace the development of these techniques and to outline their essential characteristîcs.

2.2.

THE

The origin of present-day PERT/CPM techniques dates back to World War I with the introduction of the Gantt Chart, a technique which contributed heavily to accélération of the production of ships during this period. The Gantt Chart was perhaps the first scheduling technique to consider time as a common framework

009

by which progress could be evaluated. As shown in figure 2-1, the technique consists in a représentation of individual activities or groups of activities on a time-scaled diagram in order to establish a basis for évaluation of progress. It is significant to note that very little information is given regarding the time relationships between the activities.

In spite of this shortcoming, the Gantt Chart has continued to be of value in the préparation of master program plans and as an alternative means of representing PERT/CPM status information. Prior to 1957, the technique constituted the basic approach to planning in ail types of industrial effort.

2.3 THE MILESTONE METHOD

A refinement of the Gantt Chart, known as the Milestone Method, was developed by the U.S . Navy following World War II.

As shown in figure 2-1, the technique enables users to evaluate progress in terms of selected "milestones" or significant points in time. Here again, constraints are not indicated. The Milestone Method continues to be useful in the préparation of master program plans and as a summary reporting technique.

2.4 PERT AND THE POLARIS PROGRAM

Early in 1957, the Department of the U.S. Navy embarked upon one of the most

complex R&D programs in ail hîstory. The objectives of the program were to: "Design, develop and evaluate a Fleet BalIîstic Missile Weapon System to provide a national deterrent agair.st surprise attack by means of an immédiate and substantial Fleet Bal Iistic Missile retaliation capability against pre- selected strategie land targets of an aggressor." (4)

010 MILESTONE CliART A TA3 K C TAS K D TUS

COMPAR1SON OF GANTT AND MILESTONE TECiiJlJUES

011

The program was of an un-precedented complexity and required the coordination and control of work efforts between 250 prime contractors and some 9000 sub-contrac- tors across the nation.

The Spécial Projects Office of the Navy, having sensed that existing program management techniques would prove ineffective in the management of the FBN

research program, sought to. /

"... develop methodology for providing the Director, Spécial Projects Office (SP) and the top SP managers with continuous program évaluation, i.e., the integrated évaluation of

(1) The progress to date and the progress outlook toward accomplish- ing the objectives of the Fleet Ballistîc Missile (FBN') program.

(2) The changes in the validity of the established plans for accomplishing the program objectives, and

(3) The effect of changes proposed for established plans, . . . eslablish procedures for applying the methodology as designed and tested to the overall FB/v program." (5)

With the help of consultants from the Lockheed Missile Systems Division and Booz, Allen and Hamilton, a methodology referred to as PER T (Program Evaluation Research Task)* was developed during the period from January 1958 to July 1958.

012

As shown in figure 2-1, PERT makes use of a task flow diagram or network which depicts the activities and events that must be accomplished in order to

attain the objectives of a program, sets forth the sequence in which they are planned to be accomplished and defines their interdependencies and interrelationships. In basic terms, PERT provides the user with a facility of determining the duration of a program and establishing the relative criticality of operations.

The original PERT was designed for use on an R&D program and included provision for determining the probability P(t), of reaching a particular event within a time "t" . The probobiIiîtic feature has always been associated with PERT and is considered by many as being fundamental to the technique although it is essentially an optional feature.

Whereas the PERT research term recognized that effective program management requires a balancing of the three variables of time, cost and technical performance, a decision to exclude cost and technical performance aspects from the original methodology was rendered. The group reasoned that establishment of a criterion that would give rise to a meaningful integrotion of ail three variables would hâve been time-co.nsuming to the extent of jeopardizing implémentation of the Polaris program itself. Thus the original PERT methodology scheduled time as a fonction of cost and performance.

PERT was first used in the management of the propulsion component of the Polaris program and was extended to the full FBNZ program shortly thereafter. In spite of the seemingly unsurmountable problems, the Polaris (FBA/) program was

013

completed more thon two years ahead of schedule.

Following announcement of the effectiveness of thîs new technique by the Novy, various branches of the governnre nt, industry and NASA proceeded to make use of PERT. Dissémination of the technique within these organizations for various types of special-purpose programs gave rise to a seemingly endless number of variations of PERT bearing such imaginative titles as PEP, LESS, TOPS, SCANS, etc. Many of these Systems were developed during the period from 1959 to 1962 ar.d inciuded provision for program cost considérations in one manner or another. A need for greater uniformity in nomenclature was however felt;

"It has become apparent that a multiplicity of such procedures is emerging which, if allowed to continue, will place a costly and confusing adminis­ trative burden on our contractors and detract from the most efficient use of these important new management control techniques." (6)

The preceedirtg statement outlines the theme of the "DOD and NASA Guide PERT COST Systems Design", a joint publication issued by the Office of the Secretary of Defense and the National Aeronautics and Space Administration in June 1962. The report was influential in bringing about a high degree of uniformity in the approach to the introduction of costs in an explicit relation- shipwith the network.

The extension of PERT to PERT/COST was mode possible through introduction

of the concept of a "Work Breakdown Structure" and "Cost Work Package". The DOD/NASA PERT/COST System developed into a thoroughly documented System

014

and has enjoyed wîdespread usage in government and industry. Many of the alterna-ive techniques developed prior to 1962 hâve been discontinued in favor of the DOD/NASA technique.

PERT/COST is essentially analytic in concept and was designed to provide management with an overall view of the status of a program at various levels of summary. The technique is.event-oriented and is best suited to management of large programs. A similar technique, the "Critical Path Technique", or more commonly, the "Critical Path Method (CPM)",as applied to construction programs, developed in parailel with PERT.

2.5 CPM AND THE DUPONT COMPANY

In 1956, the E.l. duPont de Nemours Company initiated a study, the objectives of which were to consider the possibiIities of improving the company's engineering functions through the implémentation of new management techniques.

The engineering department sought to evaluate the feasibility of using

computers in the planning and scheduling of construction projects. A marhematical model of the problem at hand was formulated, and in 1958, a controlled experiment was initiated in order to ossess the profitability of the new technique. The group referred to the technique as the "Critical Path Merhod."

015

"... the Louisville test proved so successful that the technique is now being used as a regular part of their maintenance planning and scheduling procedure on this and other plant work. It has been introduced to maintenance organ- izations throughout DuPont. By itself, the Louisville application has paid for the whole development of the Critical Path Method five times over by making available thousands of pounds of additional production capacity." (7) CPM is essentially a detailed planning and scheduling tool designed for the individual who is directly responsible for performance of work. Whereas the net-work concept is common both to PERT and CPM, the latter is activity-oriented rather than event-oriented.

Costs hâve always been explicît to CPM, primarily because of the activity-oriented nature of the technique. To many, the parametric-dua I linear pr o-gramming option* used to optimize network cost/time relatîonships is fundamental

* Often referred to as the "Resource Allocation Technique

to CPM although it is actually an optional feature as in the case of the PERT probability feature.

2.6 PERT/CPM

During recent years it has become obvious that the informational requirements of modem programs could best be served through a combined approach to PERT and CPM. The resulting methodology is commonly referred to as PERT/CPM and con-

sists essentially in a basic activity-oriented technique upon which has been super- imposed an event-oriented summary capability.

016

PERT/CPM provides management with an effective means of directing programs

to completion in accordance with their schedule, cost, and technical performance ob­ jectives. These techniques must not, however, be considered as a panacea for the prob­ lems facing the manager, for there are many areas in which PERT/CPM is of little use-

fulness.

In order to make effective usage of PERT/CPM it is necessary to acquire a full

understanding of the various processes inhérent to program management and of the rôle that such techniques play in the management of special-purpose programs. These will be the objectives of Part II of this study.

C H A P T E R III

PROGRAM MANAGEMENT - A THEORETICAL STUDY

3.1 INTRODUCTION

Management is the process of converting information into action. The conversion process is called decision-making. Successful management dépends not only upon the manner in which the conversion process takes place, but also upon the quality and timeliness of the information received.

3.2 THE NATURE OF MANAGEMENT

Management is concerned with the analysis of complex, intangible,and often unpredictable factors, many of which appear to be uncontrollabié as well.

The atmosphère has been well described by Dr. R.L. /vlartino, in the introduction to his volume entitled "Project Management and Control: Volume I":

"Management is a tough business. Not only is the margin for error shrinking between success and failure, between profit and loss, but the thingswe manage often appear unmanageable . Rapid technological change, decreased profit margins, increased compétition, a shorter lifespan for new products, and a faster tempo combine to make management more difficult

019

3.3 THE MANAGEMENT PROCESS CYCLE

The complexity of implementing modem programs, and this includes not only large complex programs, but also smaller programs that may be undertaken within large organizations, is such that considération of the separate activities comprised within these programs ‘is by no means sufficient. These activities are inte.'dependent to the extent that management of the interconnections and interactions between activities becomes more important than management of the activities themselves.

Program management may be described as a cyclic process comprising a planning sequence and an opérât ing sequence. Figure 3-1 depicts the various éléments inhérent to this process.

3.3.1. Strategie Program Planning

The objectives of an organization are its sole motivation for existence. Strategie planning is concerned with the détermination, définition, organization and représentation of the prime and supporting objectives of programs and of the underlying strategy for attaining such objectives. This is a top-management responsibility.

3.3.2 Operational Program Planning

Prior.to implémentation of any program, ail functions must be mindful of, and in agreement with, their required efforts and skills. Operational planning

F

IG

U

R

E

021

involves détermination of the necessary operations or tasks required to carry out the strategie plan and outlining the manrier ard sequence in which tasks within the program are to be accompliiied.

3.3.3. Resource Allocation

Translation of the operational plan into a project schedule is accomplished through an allocation of resources. In so doing, i t becomes necessary to consider the

availability of resources (materials, machines, men, money and time) and to make provision for an appropriate balancing of such resources within each

progra m.

3.3.4 Measurement and Evaluation of Progress

Following resource al local ion, implémentation of the approved

authoritative scheduled plan may commence. The dynamic and unpredictable nature of most programs is such that déviations from operational plans will be inévitable. The progress évaluation process provides the means whereby management may détermine the degree of compliance of the actual program with respect to project objectives at any given moment in time. A means of anticîpating future program status is also required.

3.3.5 Decision-making

As déviations are observed, management action (decision-making),

022

with pre-deter mined objectives or to establish new goals for the program.

Decision-making for programs may involve: a) Réallocation of resources.

b) Replanning at the operational planning level. c) Replanning at the strategie planning level.

Déviations from established plans occur for many reasons, some of which are outlined below:

a) Inadequacy of plans.

b) Insufficient définition of plans.

c) Inaccurate estimate of required resources. d) Inability to apply resources as planned. e) Necessary or désirable technical redirection f) Unanticipated technical difficulties.

g) Unforseen adverse everits (strikes, fires, etc.).

3.4 MANAGEMENT ORGANIZATIONAL STRUCTURES

The management process cycle sets forth a logical and efficient procedure for program management. Practical implémentation of programs requires a définition of responsibiIities for performance of work éléments by means of an appropriate organizational structure.

The three types of organizational structure generally encountered are: a) Functional Organizational Structure.

b) Program Organizational Structure. c) Matrix Organizational Structure.

023

3.4.1 Functional Organizational Structure

The functional or vertical organizational structure enjoys widespread usage in businesses having slowly-varying product environments. In this structure, the organization is divided into units based upon technicai specialties (accounting, marketing, engineering, procurement, manufacturing, etc.). Each unit is responsîble for those aspects of ail programs which fall within its technicai specîalty.

Coordination between the various phases of a program is carried out at the

top management level and decision-making is accompanied by an "upward" and "downward" flow of information.

Advantages

The major advantage of this structure lies in a centralization of special- ized knowledge and skills. Each of the functional units is required to develop and maintain a group which will hâve the compétence to solve problems in one area. The functional organizational structure conseque.ntly tends to favor the

long -range aspects of a business.

Disadvantages

The structure is effective in those organizations where the number of levels is limited and where informai latéral coopération is encouraged and exercised. As the number of levels increases, so does the risk of prolonging the decision-making process and distorting information.

024

The nature of this structure is such that top management is called upon to (> résolve ail conflicts which cannot be settled at a lower level. In the absence of a cooperative atmosphère for problem-solving at lower levels, the structure ceases

to be efficient.

The basic objection to the functional structure , of course, is that it destroys the "identity" of programs through a sub-dîvisîon of work éléments according to responsibility. The lack of a distinguishable project organization renders program control difficult.

Fi gure 3-2 depicts the functional organizational structure.

3.4.2 Program Organizational Structure

The program, or horizontal organizational structure, as shown in figure 3-3, has been used primarily in the management of fixed-price programs where program control is of the utmost importance. In this structure, the organization is divided into independent groups, each of which is exclusively concerned with

the management of a spécifie program or group of programs.

Advantages

The structure emphasizes program efficiency, thereby giving rise to tight schedule and cost control. In co.ntrast with the functional structure, the program structure tends to facilitate communications since the responsibility for ail aspects of a program lies within a single unit.

T

ei

n

i.

O

n

H

J.

S

'lV

.'!

G

I

J.

V

Z

I

’

0

q

'O

IJ

,D

M

f)

PRO GRAM

O

R

G

A

N

IZ

A

T

IO

N

A

L

S

T

R

U

C

T

U

R

E

027

Disadvantages

Although the program organizational structure provides an effective means of controlling individual programs, the structure is visibly inflexible insofar as inter- program technical and resource exchanges are concerned. As might be expected, the cost of implementing programs within this structure is general ly greater than that required with the functional structure.

3.4.3 Matrix Organizational Structure

Thus far we hâve seen that the functional structure stresses the acquisition and application of technical knowledge to présent and future business whereas

the program structure emphasizes program efficiency in internai program control. The matrix organizational structure attempts to capitalize upon the assets of both

structures.

As shown in figure 3-4, the matrix structure is essentially a functional organizational structure with a superimposed program organizational structure.

Advantages

The matrix organizational structure provides the organization with the type of balanced environment that is conducive to the attainment of overall business objectives.

V

K

G

Iï

W

Z

I?

029

3.5 OPERATIONAL PROCEDURES

Given a theoretical model for program management, along with a suitable type of organizational structure within which to operate this model, the next require- ment is to develop a set of operational procedures that will enable the organization to carry out work in accordance with the objectives of programs.

/

Operational procedures for program management must be concerned not only with techniques such as PERT/CPM but also various accessory techniques, some of

which will be considered as we proceed with a more detailed review of the Management Process Cycle.

C H A P TE R IV

ROLE OF PERT/CPM IN PROGRAM MANAGEMENT

4.1 INTRODUCTION

Management of a business requires a balancing of a variety of objectives and requirements wiihin a dynamic environment characterized by risk and un- certainty.

The présent chapter purports toestablish the rôle of PERT/CPM techniques

in program management through a detailed analysis of the various éléments inhérent to the Management Process Cycle. The following analogy table will be used:

Management Process Cycle PERT/CPM

Strategie Planning a) Define Program

b) DevelopWBS

Operational Planning a) Define Work Packages b) Develop Networks Resource Allocation a) Compile Time Estimâtes

b) Schedule Program c) Review and Recycle d) Compile Cost Estimâtes e) Review and Recycle Measurement and Evaluation of

Progress

a) Monitor Program, Préparé and Submit Status Reports.

Decision-making a) Define and Implement Corrective Actions.

031 4.2 STRATEGIC PROGRAM PLANNING

Top-management is primarily concerned with the attainment of overall business objectives and as such, displays but an indirect interest in spécifie programs.

Individual programs must consequently be considered as but a means of attaining objectives of a more fundamental nature.

The process whereby a decision to undertake a spécifie program is reached is a complex one and will not be considered in detail here. In order to arrive at such a decision, it is tirst necessary to détermine and define the prime and supporting objectives of the program along with the underlying strategy for attainment of these objectives.

PERT/CPM Systems are of limited usefulness during this phase of development.

Concept of the Work Breakdown Structure (WBS)

Given a set of project objectives, the next step is to organize and represent these objectives in a manner that will be conducive to development of operational networks. PERT/CPM makes use of a Work Breakdown Structure (WBS) to achieve this end.

By définition, the WBS is:

" a family-tree subdivision of a project beginning with the end objectives and then sub-dividing these objectives into successively smaller end-item subdivisions.11 * (9)

032

The Work Breakdown Structure is the common framework for ail aspects of program management and establishes the basis for:

a) defining the work to be accomplished in terms of successively greater detail.

b) representing the interrelationships between end-items.*

c) developing operational networks at the desired level of detail. d) identifying organizgtional responsibiIity for work efforts.

e) integrating and summarizing schedule, cost and technicai performance data related to the program for progressively higher levels of management.

* The term end-item represents hardware, services, equipment or facilities which are deliverable to customers or which constitute a commitment on

the part of a contractor.

Development of the WBS begins at the highest level of the program with identification of primary program objectives expressed in terms of end-items which are divided into their component parts (i.e. Systems, sub-systems,

components). The fragmentation process continues to successively lower levels of detail, reducing the dollar value and complexity of the units at each level and terminâtes when a level is reached wherein the end-item subdivisions finally become manageable units for planning and control purposes. Figure 4-1 depicts a sample WBS pertaining to a process control instrumentation System program.

The Work Breakdown Structure is a product or hardware-oriented structure depicting the master program plan.

M O c zj >-1 41-I F-1

PROCuSb COMTROL IMSTRU21ENTATION SYSTEM

z J L~ O 0 3 3 'J

034

4.3 OPERATIONAL PROGRAM PLANNING

Operational program planning with PERT/CPM consists in a functional

breakout of the lowest end-item WBS subdivisions into "Work Packages" and in construction of detailed netv>orks.

4.3.1 The Work Package Concept

The Work Package is the basic cost planning and control element in the Work Breakdown Structure and may be defined as:

"the unit of work required to complété a spécifie job or process, such as a report, a design, a document, a piece of hardware, or a service" (10)

In summary, the Wark Package serves as a basis for: a) estimating costs and establishing budgets.

b) accumulating actual costs.

c) comparing actual costs and estimâtes with budgets. d) predicting schedule slippages and cost overruns .

Figure 4-2 depicts the functional breakout of the end-item subdivisions of a WBS into Work Packages.

4.3.2. T he Account Code Structure

The Account Code Structure is a framework of numbers used to identify ail items for which cost data is to be estimated, compiled, summarized and

reported.

Development of the Account Code Structure is accomplished through assignment of summary numbers to end-item subdivisions of the WBS.

M U J c w

r-i

DESIGel EL'GI.UEERIMG- LLECTR.

DL/SIGij iii iGX<’Ji-,'LG\ZiG* “ l’i-Cxi• : ) xAr’ 1‘ 1 : ;G

r ROC U RE. '■.E.\ï' JOCuAEGTATIOl-j

TAaUFACTUP.IzjG

0

3

036

A sériés of charge numbers i s generated to identify individual Work Packages as shown in figure 4-3.

4.3.3. The Network Concept

A shred-out of individual end-item subdivisions into activities or work éléments gives rise to a sériés of operational networks which:

a) provide the basic information required to establish work schedules. b) integrate the schedule and cost information at the lowest level

of the WBS.

c) establish a means of representing program data in a form which is easily interpreted by management.

d) serve as a basis for program status reporting.

The network is most effective in depicting a feasible plan for attainment of a spécifie set of lechnical performance objectives. This plan is, however, deterministic in that it represents but one of the many ways of attaining these objectives.

4.4. resource ALLOCATION

The operational planning sequence of the Management Process Cycle generates a feasible plan for the attainment of a spécifie set of technicai performance objectives. T his plan or network does not consider time or cost at this stage of development- it is but a topological représentation of the work to beperformed. Resource allocation involves détermination of an

u

,3

n

"

.T

.r

n

co

D

V

038

appropriate cost/time balance for the program or translation of the operational

plan into a project schedule.

The cost of any program may be described in terms of direct, indirect, and penalty cost factors. As shown in figure 4-4, indirect and penalty costs increase linearly whereas direct costs are at a minimum for some intermediate time value but increase both for lower and higher values of time. It will be appreciated that the curve shown in this figure represents an optimum cost /time relation-

ship for a spécifie set of technical performance objectives. A family of curves would be required to depict the situation for higher or lower levels of performance.

Given a set of technical performance objectives, it is theoretically possible to dérivé an optimum cost/time relationship for a program and to schedule the

program in order to obtain minimum overall cost. In practice, however,

it becomes necessary to resort to an itérative procedure which serves to refine pre-determined cost/time relationships.

4.4.1. Compilation of Activity Time Estimâtes

The initial step in the resource allocation process entails a compilation of elapsed time estimâtes for each activity in the network. These estimâtes are used to calculate the duration of the program and to détermine relative

f

039

PP.OGRA ' COST C'XCl'O

040

The quality of the data is a function of:

1) The basis upon which the activity time estimâtes are made. 2) The accuracy of the estimâtes.

Basis for Activity Time Estimâtes

The duration of an activity dépends not only upon the nature of the activity but also upon the type of resource used and the resource application rate for the activity. These factors must be rendered explicit during the estimating process. Activity time estimâtes should be based upon a normal level of resources.

Accuracy of Activity Time Estimâtes

The accuracy of an estimate is highly dépendent upon the expérience of the estimator. If, for example, we were to ask two experienced contractors to estimate the number of days required to pour a foundation for a particular type of building, we would not expect to observe any appréciable différence between these estimâtes. Furthermore, we would expect to find very little différence between the estimated and actual durations.

In many instances, however, activities wilI be characterized by a high degree of uncertainty; such that it becomes difficult to obtain meaningful estimâtes of the expected activity durations. Under such conditions, the

i

accuracy of estimâtes may be improved considerably through the usage of multiple activity time estimâtes.

041

Concept of Multiple Time Estimâtes

The concept of multiple activity time estimâtes is based upon the assumption that the distribution of the values for the probability of completing an activity within a time (t), may be represented by the Beta distribution. An approximation

of this représentation may be obtained by means of three values:

- Optimistic Time ( a ) An estimate of the shortest time that will be required to complété an activity if everything that can go smoothly does go smoothly. It is assumed that the probability of completing the activity prior to th is time is less than 0.01.

- Most Likely Time ( m ) An estimate of the actual time that will be required to complété an activity if the normal amount of difficulties are encountered. It is assumed that the probabil ity*of completing the activity

at any other moment in time will be less thcn that of completing the activity at time "m" .

* as measured between (t+tt/2)a.nd ( t -6t/2 )

-Pessimistic Time ( b ) An estimate of the longest time that will be required to complété on activity if everything that can go wrong does go wrong (excluding u.nforseen disasters) .It is assumed that the probability of

completing the activity after this time is more than 0.99.

f !

042

043

Détermination of Statistical Expected Activity Time and Variance

The optimistic, most likely, and pessimistic activity time estimâtes are used 2

to calculate a statistical expected activity time ( t ) and variance ( v ) for each activity in the network by rre ans of the formulae:

te = a+4m+b 6 2 _ . 2 v = b-a

“6“

where: a= optimistic time

m= most likely time b= pessimistic time

Dérivation of the above requires formulation of an assumption of the relation- ship between the range and the standard déviation and making use of an approxi­ mation between the mean and the mode in the Beta distribution. The relationship between ( t ) and the three time estimâtes a, m and b is shown in figure 4-6.

By définition, ( t ) is the calculated time duration which divides the area beneath the probability curve into two equal parts. In other words, ( t .) has a 50-50 chance of being equalled or exceeded in practice.

4.4.2 PERT/CPM Network Calculations

Having calculated a statistical expected time for each activity in the net­ work, a sériés of network calculations are subsequently performed to détermine:

1) Earliest Expected Event Times 2) Latest Allowable Event Times 3) Event Slack Times (T )

044

e

RELATIONSil'IP BETUELhi tQ and ciz~, s L

045

For purposes of illustration, a network will be considered as havîng "n" events of which:

1) one event lias no predecessor event. This event will be referred to as the starting event.

2) one event has no successor event. This event will be referred to as the objective event.

3) "n-2" events hâve at least one predecessor event and one successor event.

Under the above conditions-, an earliest expected time (T^) may be

calculated for each event in the network through a summation of statistical expected activity times ( t ) from the starting event to the event in question through the

longest time path leading up to this event. It follows that the earliest expected event time for the objective event establishes the duration of the program.

The variance ( V 2 ) of each value is obtained through a summation E

of activity variance values following the same path that was used to obtaîn the T value for the event in question.

Distribution of the Earliest Expected Event Times

046

is ossumed to be a normal distribution characterized by: A mean given by ( T

2 2) A variance given by ( V )

The assumption is justified by the Central Lïmît Theorem which states: 11 In a large number of trials, if individual values are selected from a sériés of various distributions and added together, the résultent values will be normally distributed . "

Détermination of the Latest Allowable Event Time ( T ) --- L'

A latest allowable event time ( ) may be calculated for each event through sub traction of statistical expected activity times ( t ) from the

objective event to the event in question through the longest time path leading back to this event.

The calculation may not be performed until such time as a latest allowable time has been assigned to the objective event. In general, this value will be provided by management.

Détermination of Event Priority Factors

détermine,respectively, the earliest expected time for reaching an event and the latest time at which an event may be reached without causi.ng the program to be late.

047

The amount by which an event may be delayed without causing the program to be late îs given by the expression;

where T = Event Priority Factor *

Concept of the Critical Path

The PERT/CPM network calculations give rise to a set of event parameters;

and T$ by means of a sélective process at each event in the

net-The nature of the sélective process is such that the duration of the program is determined by a single path which is the longest time path through the net­ work. By définition, ail events that lie on the critical path hâve event slack

times that are not only equal, but that are also; I) More négative than values of T

work if T^ < T^

for othcr events in the net-S

2) Equal to zéro if

3) Less positive than values of T

if tl

>

-for other events in the network

s

It follows that a delay in one or more of the activities on the critical path will cause the program to be late by an equal amount. In a similar marner,

048

a time réduction in one or more of these activities will cause the program to be early by an amount equal to the différence between the critical path slack value and the next higher slack value in the network (less négative or more positive) as a maximum.

Slack Paths

The critical path is but one of many network paths which may be identified by inlerconnecting events having equal values of slack. Paths formed in this manner are called "slack paths". A classification of these paths by slack value or "order of criticality" provides important scheduling information.

4.4.3 Replanning

The presence of a significatif quantity of négative slack in a network indicates a need for replanning.

The four main categories of replanning are listed hereunder in order of importance :

1) Elimination

2) Concurrency or Par al lel ing 3) Révision of scope

4) Réallocation of resources

The primary considération in replanning is to eliminate from the net­ work ail activities that are not specifically required for completion of the program. Agaîn,time savings may be obtained by performing certain

049

activities on a concurrent or simultaneous basis although this may lead to increased costs and may add risk to the program. A third alternative vould involve revising the scope of the program. Finally, if ail three of the foregoing methods fait to produce the desired results, a decision to apply additional resources must be made. This approach is the most costly and is consequently the least désirable.

In a similar manner, the presence of excessive amounts of positive slack indicates a need for replanning.

4.4.4 Development of a Preliminary Project Schedule

The objective of replanning is to obtain a program duration that is compatible with the general scheduling requirements for the program. At this point, a preliminary project schedule may be developed.

Development of a time-phased plan requires a considération of both

schedule and cost factors. The complexity of most programs precludes, however, a simultaneous manipulation of both variables. As we hâve indicated , it

becomes more practical to resort to an itérative procedure wherein a time- phased plan is prepared, reviewed for cost compatibility and subsequently

050

Scheduling involves a considération of: 1) Resource loading and availability 2) Vacation periods and holidays 3) Weather restraints

4) Labor or company régulations regarding the use of overtime 5) Activity risk factors

6) Funding limitations

7) Intérim program milestones 8) Program duration

The process of developing a time-phased plan is an exacting one and requires the collaboration of senior personnel. It is obvious that the very nature of this process is such that it precludes extensive usage of machanized techniques, al though planners may use computers for simulation, resource levelling and

information retrieval.

The scheduling process produces a scheduled elapsed time ( t ), an earliest completion date ) and a latest completion date ( S ) for each

L

Be définition, we hâve;

Scheduled Elapsed Time ( t )

The assigned time period for performance of an activity. Earliest Completion Date ( S^)

The earliest date by which an activity can be completed based upon assigned activity ( t ) values.

051

Latest Completion Date ( S )

The latest date an activity may be completed without necessitating a change in the ( t ) values of downstream activities.

Values of (t$) may be less than, equal to, or greater than corresponding ( t ) activity time estimâtes. In general, there will be little advantage in defining values of (t$) for later portions of a program and values of ( t ) are retained until more accurate ( t ) values become available.

Probability of Meeting Scheduled Dates

The decision to replace a statistical expected activity duration ( t ) with a scheduled activity duration ( t$ ) will either increase, if (t ) îs greater

than ( t ), or decrease, if (t$) is less than (t^), the probability of meeting the (f ) value.

It is possible to calculate the probability (P) of meeting a ( t ) value s

by means of the formula:

T T Z (P) = S - E

where: T = Scheduled Event Time S

T^ = Earliest Expected Event Time

S = Event Standard Déviation of Expected Event Time

Values of P are then derived from a normal distribution table. Acceptable values of P range from 0.4 to 0.65.

(H)

052

4.4.5 Compilation of Cost Estimâtes

When a suitable project schedule has been developed, a compilation of cost estimâtes for each work package is mode.

Cost estimâtes for individual charge numbers are compiled through a summation of the following component cost factors:

1) A/anpower costs

2) Material and sub-contract costs

3) Spécial equipment, service and other direct costs 4) Indirect costs

4.4.6 Evaluation and Refinernent of the Project Schedule

Once a set of detailed schedule and cost estimâtes hâve been prepared, the network and summary cost structure may be used to develop a suitable cost/time balance for the program.

As we hâve indicated, this process is essentially itérative as well as manual, and cannot, moreover, give rise to an optimum situation due to the deterministic character of the network. It is possible, nonetheless, to make use of certain network-oriented algorithms, one ofwhich will be discussed

here.

The Resource Allocation Technique

The resource allocation technique is a planning tool designed to mi.nimize the cost of schedule compressions. The technique requires two cost/time values for each activity in the area of the program under considération. The schedule

053

is compressed along the critical path in a manner which results in the lowest cost increase per unit of time saved along the path. The procedure is itérative and must be performed sequentially since changes in duration will give rise to shifts in the critical path and subséquent changes in activities that may be compressed.

The procedure continues until such time as the required program duration has been obtained. At this time, ail activities that hâve been compressed, but which no longer lie on the final critical path, must be relaxed or extended insofar as is possible. The resulting configuration is by no means optimum since additional adjustments are required to account for indirect cost parameters and manpower and equipment utilization rates.

The resource allocation technique is simple in theory yet difficult in application. It is an advanced technique and should never be applied on an

overall basis.

4.5. MEASUREMENT AND EVALUATION OF PROGRESS

The objective of the planning sequence of the Management Process Cycle is to develop an approved authoritative plan for implémentation of a program. The operational sequence of the MPC, which we shall now

discuss, provides a means of directing the program to completion in accordance with this plan by means of a cyclic procedure for:

054

1) Measurement and Evaluation of Progress 2) Decision-making

In complex programs, measurement and évaluation of progress requires manipulation of tremendous quantities of data. The process may be described

in terms of the following data operations:

1) Acquisition,of monitoring information 2) Processing of data

3) Interprétation of data

4) Représentation of status information

4.5.1 Acquisition of Monitoring Information

The initial step in the measurement and évaluation of progress is concerned

with acquisition of the following types of information:

1) Actual schedule and cost data for work that has been completed.

2) Revised schedule and cost data for work which is either in progress or which has not yet been started.

On large programs it becomes vi<-tuaIly impossible to compile the required information without resorting to mechanized Systems that are capable of producing updating reports which are flexible with respect to content, order and format. This aspect will be dealt with in considérable detail in Part III of this study.

055

4.5.2 Processing of Data

Data processing requirements for small programs are relatively simple. As program complexity increases, however, so does the need for automatic data

processing techniques. As shown in figure 4-7, manual processing of networks having in excess of 250 activities is generally prohibitive. (12)

The types of calculations encountered in PERT/CPM may essentially be described as sequentiaI arithmetic . Software packages must, however, include a variety of supporting input/output programs which serve to:

1) Edit and translate input data

2) Sumrrarize and arrange output data

A practical example of a PERT/CPMi software package will be described in Part III of this study.

4.5.3 Interprétation of Data

Practical networks differ substantially from the type of model network described earlier.

In a typical situation, the network logic provides only a schematic représentation of the plan,due to the rigidity of the technique used. As work proceeds, déviations will occur for various reasons and invalidate this logic. Again, the'network will rarely be characterized by a single objective - with the resuit that there may be as many as, perhaps, fifty critical and associated

056

COST OF DATA PROCESSIriG

Jhcrc; 100 < X^ < 250

COST OF DATA PROCESSIFS vs du

;

>

057

slack paths. Under such conditions the data will only be meaningful to individuals who are truly familiar with PERT/CPM techniques and the work itself.

The problem of when and how to revise a schedule is apparently a difficult one. In basic terms, schedules should only be revised when:

1) The scope of the program changes

2) The network logic becomes seriously invalidated.

3) Slippages in one area of the program reach the point where recovery is no longer feasible.

The schedule must never bé revised simply because the program is

running late or because the logic may not be entirely appropriate. This aspect of program control has not been understood by the majority of PERT/CPM users.

Détermination of Cost of Work

Decision-making for programs involves a continuai évaluation of cost, time,

and performance tradeoffs. In many instances, however, technical performance characteristics will remain constant and the decision-making process will be limited to cost/time considérations.

Evaluation of the financial status of a program requires an intégration

of schedule and cost data. It will be recognized that independent cost considérations fait to account for the value of work performed.

058

Consider, for example, a program comprising a number of tasks. Préparation of a budget for the program involves a summatîon of costs in accordance with the project schedule. A comparison of total-to-date costs with respect to budget would lead to the erroneous conclusion that the cost picture was acceptable in a situation where on-schedule tasks had exceeded their planned costs whereas other tasks had been delayed. A more detailed analysis of the situation would reveal that the program had a serious built-in cost overrun.

Détermination of cost overruns involves a comparison of actual costs to date with respect to value of work performed to date. The sequence of

calculations is defined below:

1) Value of work performed to date =

Value of cornpleted work packages + Value of work packages in progress. 2) Value of cornpleted work packages =

Planned cost of cornpleted work packages. 3) Value of work packages in progress =

Planned cost of wo>k packages in progress X Percent complété.

4) Percent complété = Actual cost to date for work packages in progress f

Latest revised estimate to completion for work packages in progress.

059

Détermination of Schedule Status

In a similar manner, schedule status cannot be determined by a straight- forward évaluation of slack. What is far more significant is the amount of time remaining within which the négative slack must be recovered. The criticality of an area of the program may be effectively determined by means of a

"recovery ratio" which measures slippage in relation to the time left in which to correct the slippage.

The recovery ratio is calculated by means of the formula: Recovery ratio = Path Slack Value_______

Path Remaining Duration 4.5.4. Représentation of Status Information

The final step in the measurement and évaluation of progress consists in a représentation of status information.

As we hâve indicated earlier in this study, PERT/CPM output information

may be either event-oriented or activity -oriented. The management reports should obviously be event-oriented, whereas those directed to operatîng depart- ments should be activity-oriented.

Software packages hâve been notoriously déficient in their ability to generote flexible reports. The CPM packages, for example, are generally incapable of producing effective event-oriented reports, whereas PERT packages hâve been lorgely unsuitable for detailed program control. The author has developed a simple method of converting a basic CPM package into a highly flexible PERT/CPM

060

package having the capability of producing a variety of activity and event-oriented reports. This will be dealt with in considérable detail in Chapter VI.

PERT/CPM packages are generally capable of producing the following types of

reports:

Machine-generated Reports Management Summory Report

A report which provides management with the current and projected status of the total program and of the major component items or éléments within the program. Program/Project Status Report

A report which provides the analyst with backup moterial for the above. It contains the some information but in greater detaiI .

Organizational Status Report

A report which provides operotî ng-level managers with detailed schedule and cost information sorted by the following categories:

I . Charge Number

2. Responsible Organization 3. Performing Orgonization 4. Responsibility Code

The sort order in specîfied by the user. Financial Plan and Status Report

A report which provides management with a monthly comparison of actual costs and/or latest revised estimâtes against planned costs.

The user spécifiés the le'-el of detail and the time span for the report.

061 Summary Financial Forecast

A report which provides management with actual and planned or budgeted costs for each summary item at a specified level of the WBS.

Manpower Loadîng Report

A report which provides management with actual manpower data and/or latest revised estimâtes against planned man­ power for various levels of summary within the program. The report may be sorted by resource code or by performing organization for each month.

Cost Category Status Report

A report which provides management with actual, latest revised estimâtes, and planned manpower and cost dota for certain groupir.gs of cost éléments not inhérent to the WBS. Manual Reports

Cost of Work Report

A graphie dîsplay of:

-projected cost versus planned cost at completion -value of work performed versus actual cost to dote -planned rate of expendituie versus actual rate to date

-planned rate of expenditure versus estîmated rate to completion. Cost Outlock Report

A graphie dîsplay of costdéviations as a fonction of time for various levels of summory within the program.

Schedule Outlook Report

A graphie display of schedule déviations as a function of time for various levels of summery within the progrom.

Manpower Loadîng Display

A graphie dîsplay of the information contained in the manpower loadîng report.

062 Problem Analysis Report

A narrative report outlining problem areas. Explîcit reference is made as to the nature of, the reasons for, and the impact of such problems along with a recommendation of the corrective actions required to alleviate these problems,

A detailed analysis of several of the abovementionned report types will be made in subséquent sections of this study.

4.6 DECISION-MAKING

l

The final phase in the operational sequence of the MPC is concerned with decision-making, or the process of converting information into action. We hâve seen that the MPC opérâtes much in the saine manner as a servomechanism, with decision-making providing the feedback control.

Decision-making is, howevei , a rather specialized subject and we shall deal but briefly with certain aspects of the process.

4.6.1 System Configuration Studies

The problem of optimizing System configuration is one that must be considered early in the life of each program. As we hâve seen, PERT/CPM is not particularly

useful in preliminary investigations of this nature. Configuration studies may, however , be carried out in an efficient manner using figure of merit matrices wherein System parameters are evaluated for vorious configurations. J.A. Boose, of IBM, refers to the technique as a "non-intuitive" method of evaluating System

configuration. (13)

The effectiveness of any System may be defined, as we hâve seen, in terms of technical performance, cost and schedule parameters. In order to compare one