Table Of ContentSpringer Texts in Business and Economics
Gündüz Ulusoy
Öncü Hazır
An Introduction
to Project Modeling
and Planning
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Gündüz Ulusoy Öncü Haz r
An Introduction to Project
Modeling and Planning
GündüzUlusoy ÖncüHazır
FacultyofEngineeringandNatural RennesSchoolofBusiness
Sciences Rennes,France
SabancıUniversity
Orhanlı,Tuzla,Istanbul,Turkey
ISSN2192-4333 ISSN2192-4341 (electronic)
SpringerTextsinBusinessandEconomics
ISBN978-3-030-61422-5 ISBN978-3-030-61423-2 (eBook)
https://doi.org/10.1007/978-3-030-61423-2
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Preface
Althoughalargenumberofprojectshavebeenconceived,planned,andcompleted
since the times of ancient civilizations, it was only in the 1950s that project
management emerged as a discipline with the introduction of the Critical Path
Method(CPM)andtheProjectEvaluationandReviewTechnique(PERT).Drawing
upon theoretical developments contributed by numerous researchers and practice
overawidespectrumofapplicationareasdistributedglobally,theknowledgebase
of project management has been growing ever since at an increasing rate. The
advances in Operation Research methods and the capabilities of the optimization
solvers have contributed considerably to the theoretical development of project
management. Interest and activity in areas like resource constrained project sched-
uling,uncertainty,androbustnesshavebeengrowingrapidlyasattestedbythelarge
number of journal papers published globally each year. The practice of project
management in organizations has also been growing steadily, supported by the
emergenceofmatrixtype andproject-based organizations. Theorganizationsdeal-
ing with new technologies and business models emerging in the last decades
organize many of their activities such as new product development, innovation
management,andappdevelopmentasprojects.
Project management offers a promising field for theoretical and practical
applications and developing related software and Decision Support Systems. It
attracts not only academicians and software providers, but also professionals who
take part in project management activities. Considering this diverse audience, this
book aims at explaining the basic concepts and methods of project management,
especially project planning and scheduling with an emphasis on mathematical
modeling.
The motivation for this textbook is based on two observations: First, courses
dealing with project management in some context are proliferating in engineering
schoolsandbecomingattractiveforengineeringstudentsasithasbeenthecasefor
some time now for business students. Second, particularly the developments in
quantitative methods achieved in the last decades, especially the very significant
increaseinthepowerofoptimizationandsimulationsoftware,needtofindtheirway
into undergraduate and master’s classrooms to become in due time part of routine
professionalpractice.
v
vi Preface
This textbook is intended to provide theoretical and practical aspects of project
planning, modeling, and scheduling to undergraduates and first year graduate
students in engineering programs, as well as to practitioners seeking to solidify
their knowledge of project management. Most of the material covered in this
textbookemergedfromtheclassnotessharedwiththestudentsatbothundergradu-
ateandgraduatelevelsandhasbeenimprovedovertheyearsbytheirremarksand
suggestions,forwhichwearegrateful.
Themodelsandalgorithmspresentedinthefollowingchaptersestablishagood
starting point to study the relevant literature and pursue academic work in related
fields. Theory is discussed at the introductory and moderate levels, and related
referencesaregivenforthosewhowanttopursuemoredetailedanalysis.Acentral
feature of the book is the support provided for the theoretical concepts through
models with detailed explanations, application examples, and case studies.
Discussionsandanalysesarebasedonreal-lifeproblems.
Allchaptersincludeexercisesthatrequirecriticalthinking,interpretation,analyt-
ics, and making choices. A solution manual for these exercises will be provided
online.Thetextbookisorganizedtoenableinterdisciplinaryresearchandeducation,
interactivediscussions,andlearning.Learningoutcomesaredefined,andthecontent
ofthebookisstructuredinaccordancewiththesegoals.
Chapter 1 introduces the basic concepts, methods, and processes in managing
projects. This chapter constitutes the base for defining and modeling project man-
agementproblems.
Chapter 2 discusses project management from an organizational perspective,
dealing with the fundamentals of organizing and managing projects. Project-based
organizationshavegainedincreasingimportanceinthelastdecades.Manyfirmsare
organizedaroundprojectsandoperateinamulti-projectenvironment.Issuesrelated
toprojectteamformation,theroleofprojectmanagers,andmatrixorganizationare
discussed.Recentdevelopmentsintheorganizationofprojects,suchastheadoption
ofagiletechniquesandestablishingprojectmanagementoffices,arediscussed.
Chapter 3 is devoted to project planning and network modeling of projects,
covering fundamental concepts such as project scope, Work Breakdown Structure
(WBS), Organizational Breakdown Structure (OBS), Cost Breakdown Structure
(CBS), project network modeling, activity duration and cost estimating, activity-
basedcosting(ABC),anddataandknowledgemanagement.
Schedulesdeterminewhenprojectscanbedelivered,intervalswheneachactivity
needs to be performed, and how resources are assigned to activities and present
multipledecisionproblems.InChap.4,wedealwithadecisionenvironmentwhere
weassumethatthedecision-makersknowtheproblemparameterspreciselyandno
constraints are imposed on the resource usage. Models employing time-based and
finance-basedobjectivesareintroduced.WeuseOperationsResearchtechniquesto
formulateandsolvethesedeterministicschedulingmodelsforconstructingthetime
schedules as mathematical programming problems. The CPM is covered, resulting
inabaselineprojectschedule,theprojectduration,thecriticalpath,andthecritical
activities.TheunconstrainedversionofmaximizingNetPresentValue(NPV)isalso
treated here together with the case of time-dependent cash flows. Continuous
Preface vii
tracking of the project plan and associated data and relationships allow it to be
revisedthroughreplanningwheneverdeemednecessary.Acasestudyoninstallinga
plantbiotechnologylabispresented.
In project management, it is often possible to reduce the duration of some
activities and expedite the completion of the project by incurring additional costs.
The resulting time/cost trade-off problem has been widely studied in the literature,
and Chap. 5 addresses this important topic for both the continuous and discrete
cases.
Chapter4introducedprojectschedulinginadeterministicdecisionenvironment.
However, in reality, project managers have at best limited information on the
parameters of the decision environment in many cases. For this reason, Chap. 6
discusses models and methods of scheduling under uncertain activity durations.
PERT is introduced for minimizing the expected project duration and extended to
the PERT-Costing method for minimizing the expected project cost. Simulation is
presentedasanotherapproachfordealingwiththeuncertaintyinactivitydurations
and costs. To demonstrate the use of the PERT, a case study on constructing an
earthquakeresistantresidentialhouseispresented.
Another important topic for a more realistic representation of the decision
environment is the integration of the resource constraints into the mathematical
models since in almost all projects, activities compete for scarce resources.
Classifications of resource and schedule types are given in Chap. 7, and exact and
heuristic solution procedures for the single- and multi-mode resource constrained
project scheduling problem (RCPSP) are presented. The objective of maximizing
NPV under resource constraints is addressed, and the capital constrained project
schedulingmodelisintroduced.
In Chap. 8, resource leveling and further resource management problems are
introduced. Two problems associated with resource levelingare discussed, namely
totaladjustmentcostandresourceavailabilitycostproblems.Variousexactmodels
areinvestigated.Aheuristicsolutionprocedurefortheresourcelevelingproblemis
presented in detail. In addition, resource portfolio management policies and the
resource portfolio management problem are discussed. A case study on resource
levelingdealingwiththeannualauditprojectofamajorcorporationispresented.
Project contract types and payment schedules constitute the topics of Chap. 9.
Contractsarelegaldocumentsreflectingtheresultsofsomeformofclient–contrac-
tornegotiationsandsometimesofabiddingprocess,whichdeservecloserattention.
Identificationandallocationofriskincontracts,projectcontrolissues,disputes,and
resolutionmanagementarefurthertopicscoveredinthischapter.Abiddingmodelis
presentedtoinvestigateclient–contractornegotiationsandthebiddingprocessfrom
differentaspects.
Along with planning and scheduling, project monitoring and control are impor-
tant responsibilities of project managers. Whereas monitoring the project includes
actions to collect, record, and present project realization data, control covers the
analysisofthedatawiththepurposeofpreparationofactionplanstoeliminatethe
deviationsfromthecurrentplan.Chapter10focusesonprocessesandmethodsfor
viii Preface
monitoringandcontrol.EarnedValueManagementisstudiedtomeasuretheproject
performancethroughoutthelifeofaprojectandtoestimatetheexpectedprojecttime
andcostbasedonthecurrentstatusoftheproject.Howtoincorporateinflationinto
theanalysisispresented.
Risk management is essential for effective project management. In Chap. 11,
qualitative and quantitative techniques including decision trees, simulation, and
software applications are introduced. Risk phases are defined and building a risk
registerisaddressed.Anexampleriskbreakdownstructureispresented.Thedesign
of risk management processes is introduced, and risk response planning strategies
arediscussed.Attheendofthechapter,thequantitativeriskanalysisisdemonstrated
atthehandofateamdiscussioncasestudy.
Uncertainty in project schedules has been a topic of great interest for both
researchers and practitioners, accumulating a rich literature over the last decades.
Chapter 12 covers several models and approaches dealing with various stochastic
aspects of the decision environment. Stochastic models, generation of robust
schedules, and use of reactive and fuzzy approaches are presented. Sensitivity and
scenario analysis are introduced. In addition, simulation analysis, which is widely
usedtoanalyzetheimpactsofuncertaintyonprojectgoals,ispresented.
Chapter13addressesrepetitiveprojectsthatinvolvetheproductionorconstruc-
tionofsimilarunitsinbatchessuchasrailwaycarsorresidentialhouses.Particularly
intheconstructionindustry,repetitiveprojectsrepresentalargeportionofthework
accomplished in this sector of the economy. A case study on the 50 km Gebze–
OrhangaziSectionoftheGebze–IzmirMotorwayProjectisusedfordemonstrating
thehandlingofrepetitiveprojectmanagement.
Howbesttoselectoneormoreofasetofcandidateprojectstomaintainaproject
portfolio is an important problem for project-based organizations with limited
resources. The project selection problem is inherently a multi-objective problem
and is treated as such in Chap. 14. Several models and solution techniques are
introduced. Amulti-objective,multi-periodprojectselectionandschedulingmodel
ispresented.Acasestudythataddressesaprojectportfolioselectionandscheduling
problemfortheconstructionofasetofdamsinaregionispresented.
Chapter 15 discusses three promising research areas in project management in
detail:(i)SustainabilityandProjectManagement,(ii)ProjectManagementintheEra
of Big Data, and (iii) the Fourth Industrial Revolution and the New Age Project
Management. We elaborate on the importance of sustainability in project manage-
mentpractices,discusshowdevelopmentsindataanalyticsmightimpactprojectlife
cyclemanagement,andspeculatehowtheinfinitepossibilitiesoftheFourthIndus-
trial Revolution and the new technologies will transform project management
practices.
In the several years of teaching and research on project management, we are
indebtedtomanyresearchersandpractitionerswhoseworkmotivatedandguidedus
in our efforts to write this book. We are particularly grateful to Professor Reha
Uzsoy,whohasbeenextremelygenerouswithhistimegoingoverseveralversions
ofthemanuscriptandmakingalargenumberofsuggestionsforimprovement.We
have also benefited greatly from the critical remarks made by Professor Kuban
Preface ix
Altınelandthankhimforthat.WealsowouldliketothanktwoPhDstudents,Nozir
Shokirov and Ahmed Faran, for their contributions to the case studies and the
SolutionManual.Theresponsibilityforanyremainingerrorsobviouslyrestssolely
withus.
Istanbul,Turkey GündüzUlusoy
Rennes,France ÖncüHazır
September2020
