18-1 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management PROJECT MANAGEMENT PART SIX • Chapter Eighteen • Project Management
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18-1
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
PROJECT MANAGEMENTPART SIX
•Chapter Eighteen•Project Management
18-2
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Chapter 18
Project Management
18-3
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame.
Build A
A Done
Build B
B Done
Build C
C Done
Build D
Ship
JAN FEB MAR APR MAY JUN
On time!
Projects
18-4
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
• Deciding which projects to implement• Selecting a project manager• Selecting a project team• Planning and designing the project• Managing and controlling project
resources• Deciding if and when a project should be
terminated
Key Decisions
18-5
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Project Manager
Responsible for:
Work QualityHuman Resources TimeCommunications Costs
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
• Temptation to understate costs
• Withhold information
• Misleading status reports
• Falsifying records
• Comprising workers’ safety
• Approving substandard work
Ethical Issues
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Project Life Cycle
Concept
FeasibilityFeasibility
PlanningPlanning
ExecutionExecution
TerminationTermination
Man
agem
ent
18-8
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
• Risk: occurrence of events that have undesirable consequences– Delays– Increased costs– Inability to meet specifications– Project termination
Project Risk
18-9
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
• Identify potential risks
• Analyze and assess risks
• Work to minimize occurrence of risk
• Establish contingency plans
Risk Management
18-10
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Work Breakdown Structure
Project XProject X
Level 1
Level 2
Level 3
Level 4
Figure 18-3
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Locate new facilities
Interview staff
Hire and train staff
Select and order furniture
Remodel and install phones
Move in/startup
Planning and Scheduling
Gantt Chart
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
PERT and CPM
PERT: Program Evaluation and Review Technique
CPM: Critical Path Method
• Graphically displays project activities• Estimates how long the project will take• Indicates most critical activities• Show where delays will not affect project
18-13
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Project Network – Activity on Arrow
1
2
3
4
5 6
Locatefacilities
Orderfurniture
Furnituresetup
InterviewHire andtrain
Remodel
Move in
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Project Network – Activity on Node
1
2
3
5
6
Locatefacilities
Orderfurniture
Furnituresetup
Interview
RemodelMove in
4
Hire andtrain
7S
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Network Conventions
a
b
c ab
c
a
b
c
d
a
b
c
Dummyactivity
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Example 1
1
2
3
4
5 6
8 weeks
6 weeks
3 weeks
4 weeks9 weeks
11 weeks
1 week
Locate
facilities
Order
furniture Fu
rnitu
re
setup
InterviewHire
and train
Remodel Move in
18-17
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Example 1 Solution
P a t h L e n g t h( w e e k s )
S l a c k
1 - 2 - 3 - 4 - 5 - 61 - 2 - 5 - 61 - 3 - 5 - 6
1 82 01 4
206
Critical PathCritical Path
18-18
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
• Network activities– ES: early start– EF: early finish– LS: late start– LF: late finish
• Used to determine– Expected project duration– Slack time– Critical path
Computing Algorithm
18-19
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Probabilistic Estimates
Activitystart
Optimistictime
Most likelytime (mode)
Pessimistictime
o pm te
Figure 18-8
18-20
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Example 5
1-3-4a
3-4-5d
3-5-7e
5-7-9f
2-4-6b
4-6-8h
2-3-6g 3-4-6
i
2-3-5c
Optimistictime
Most likelytime
Pessimistictime
18-21
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
17Weeks
Weeks
Weeks
Weeks
10.0
16.0
13.5
1.00
1.00
a-b-c
d-e-f
g-h-i
Example 6
18-22
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
• Computer aided design (CAD)• Groupware (Lotus Notes)• Project management software
– CA Super Project– Harvard Total Manager– MS Project– Sure Track Project Manager– Time Line
Technology
18-23
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
• Imposes a methodology• Provides logical planning structure• Enhances team communication• Flag constraint violations• Automatic report formats• Multiple levels of reports• Enables what-if scenarios• Generates various chart types
Advantages of PM Software
18-24
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Time-Cost Trade-Offs: Crashing
TotalcostTotalcost
ShortenShorten
ShortenShorten
Cumulativecost of crashing
Cumulativecost of crashing
Expected indirect costsExpected indirect costs
Optimum
CRASHCRASH
Figure 18-11
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McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
6a
4d
5c
10b
9 e
2f
Example 7
18-26
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Advantages of PERT
• Forces managers to organize
• Provides graphic display of activities
• Identifies
– Critical activities
– Slack activities
1
2
3
4
5 6
18-27
McGraw-Hill/IrwinOperations Management, Seventh Edition, by William J. StevensonCopyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Project Management
Limitations of PERT• Important activities may be omitted
• Precedence relationships may not be correct
• Estimates may include a fudge factor
1
2
3
4
5 6
142 weeks
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