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ChaPter 3 • ProjeCt management 77

Figure 3.22
20
A completed PERT diagram for
A, 3 B, 4
the analysis phase of a systems
C, 4 D, 8 G, 3 H,2 I, 2 project.
10 30 50 60 70 80

E, 5 F,3

40

IDENTIFYING THE CRITICAL PATH. Once the PERT diagram is drawn, it is possible to identify the
critical path by calculating the sum of the activity times on each path and choosing the longest
path. In this example, there are four paths: 10–20–30–50–60–70–80, 10–20–30–40–60–70–80,
10–30–50–60–70–80, and 10–30–40–60–70–80. The longest path is 10–20–30–50–60–70–80,
which takes 22 days. It is essential that the systems analyst carefully monitor the activities on the
critical path so as to keep the entire project on time or even shorten the project length, if warranted.

Controlling a Project

No matter how well a systems analyst plans a project, things can go wrong. In this section, we’ll
discuss how to estimate cost and prepare a budget, how to predict and prepare for risk, how to
make up time, and how to react when the team falls behind or experiences cost overruns.
Estimating Costs and Preparing the Budget
Keeping a project on time is important, but it is also essential that the cost of a project be man-
aged properly. Once a work breakdown structure is created and a schedule is planned, the analyst
needs to:

1. Estimate costs for each activity in the work breakdown structure
2. Prepare a budget for the project and have it approved by the organization or client
3. Manage and control the costs throughout the project

Earlier we discussed cost estimates for equipment and off-the-shelf software. These are
resources that we need to complete the project. Now we are concerned with other types of
resources needed to complete each task in the work breakdown structure. The main resources for
this part of the project are the time of the team members and the type of special equipment and
tools needed to finish each of the activities.
Many approaches to cost estimation are available to a systems analyst. They are similar to
the estimates used for time estimates. Some are:
1. Basing estimates on similar projects, also called the top-down approach
2. Building bottom-up estimates
3. Using parametric modeling

THE TOP-DOWN APPROACH TO COST ESTIMATION. Previous experience with estimating costs
means a great deal, especially if the project you are attempting to estimate resembles a project
you have previously worked on. If you’ve developed a website with similar features, then you can
reliably estimate the costs of developing a new website.
Customization is possible. The new website may feature a different number of products for
sale, but it is possible to adjust the costs according.

THE BOTTOM-UP APPROACH TO COST ESTIMATION. Often, an analyst is faced with a project that
requires something unique, such as development in a different programming language. In this
case, the analyst needs to use a bottom-up approach.
A systems analyst can take the work breakdown structure and ask each responsible project
team member to estimate the cost involved with completing the activity he or she is responsible
for. This method, however, yields estimates that are good or bad, depending on the abilities of