Chap017 Project Management

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17-1 Project Management

William J. Stevenson

Operations Management

8th edition


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CHAPTER

17

ProjectManagement

McGraw-Hill/Irwin

Operations Management, Eighth Edition, by William J. StevensonCopyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved.


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Unique, one-time operations designed to accomplish

a specific set of objectives in a limited time frame.

Bui ld A

A Done

Bui ld B

B Done

Bui ld C

C Done

Bui ld D

Ship

JAN FEB MAR APR MAY JUN

On time!

Projects


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Project Management

How is it different? Limited time frame

Narrow focus, specific objectives

Less bureaucratic Why is it used?

Special needs

Pressures for new or improves products orservices


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Project Management

What are the Key Metrics Time

Cost

Performance objectives What are the Key Success Factors?

Top-down commitment

Having a capable project manager

Having time to plan

Careful tracking and control

Good communications


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Project Management

What are the Major Administrative Issues? Executive responsibilities

Project selection

Project manager selection Organizational structure

Organizational alternatives

Manage within functional unit Assign a coordinator

Use a matrix organization with a project leader


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Project Management

What are the tools? Work breakdown structure

Network diagram

Gantt charts Risk management


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Planning and SchedulingMAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Locate new

facil i t ies

Intervi ew staff

Hire and train staff

Select and o rder

furn i ture

Remodel and in stal lphones

Move in /star tup

Gantt Chart


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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


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Project ManagerResponsible for:

Work Quality

Human Resources TimeCommunications Costs

17 11 P M


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Temptation to understate costs

Withhold information

Misleading status reports

Falsifying records

Comprising workers safety

Approving substandard work

Ethical Issues

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Project Life Cycle

Concept

Feasibility

Planning

Execution

Termination

Manag

ement

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Work Breakdown StructureProject X

Level 1

Level 2

Level 3

Level 4

Figure 17.2

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PERT and CPMPERT: Program Evaluation andReview 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

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The Network Diagram

Network (precedence) diagram

Activity-on-arrow (AOA)

Activity-on-node (AON)

Activities

Events

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The Network Diagram (contd)

Path Sequence of activities that leads from the starting

node to the finishing node

Critical path

The longest path; determines expected project

duration

Critical activities

Activities on the critical path Slack

Allowable slippage for path; the difference the

length of path and the length of critical path

17 17 Project Management


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Project NetworkActivity on Arrow

1

2

3

4

5 6

Locate

facilities

Orderfurniture

Furniture

setup

InterviewHire and

train

Remodel

Move

in

Figure 17.4

AOA



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Project NetworkActivity on Node

1

2

3

5

6

Locate

facilities

Order

furniture

Furniture

setup

Interview

Remodel Movein

4

Hire andtrain

7S

Figure 17.4

AON



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Network Conventionsa

b

c ab

c

a

b

c

d

a

b

c

Dummy

activity



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Time Estimates

Deterministic Time estimates that are fairly certain

Probabilistic

Estimates of times that allow for variation



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Example 1

1

2

3

4

5 6

8 weeks

6 weeks

3 weeks

4 weeks 9 weeks

11 weeks

1 week

Move

in

Deterministic

time estimates

Figure 17.5



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Example 1 Solution

Path Length(weeks)

Slack

1-2-3-4-5-61-2-5-61-3-5-6

182014

206

Critical Path



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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



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Probabilistic Time Estimates

Optimistic time Time required under optimal conditions

Pessimistic time

Time required under worst conditions

Most likely time

Most probable length of time that will berequired



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Probabilistic Estimates

Activity

start

Optimistic

time

Most likely

time (mode)

Pessimistic

time

to tptm te

Figure 17.8



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Expected Time

te =to + 4tm +tp

6

te = expected time

to = optimistic time

tm

= most likely time

tp = pessimistic time



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j g

Variance

2 =(tp to)

2

36

2= variance

to = optimistic time

tp = pessimistic time



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j g

Example 5

3-4-5

d

3-5-7

e

5-7-9

f

2-4-6

b

4-6-8

h

Optimistictime Most likelytime Pessimistictime



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j g

Path Probabilities

Z =Specified time Path mean

Path standard deviation

Z indicates how many standard deviations

of the path distribution the specified tine

is beyond the expected path duration.



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j g

17

Weeks

Weeks

Weeks

Weeks

10.0

16.0

13.5

1.00

1.00

a-b-c

d-e-f

g-h-i

Example 6



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j g

Time-cost Trade-offs: Crashing

Crashshortening activity duration Procedure for crashing

Crash the project one period at a time

Only an activity on the critical path

Crash the least expensive activity

Multiple critical paths: find the sum ofcrashing the least expensive activity on each

critical path



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Time-Cost Trade-Offs: CrashingTotal

cost

Shorten

Shorten

Cumulative

cost ofcrashing

Expected indirect costs

Optimum

CRASH

Figure 17.11



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4d

2f

Example 7



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Advantages of PERT Forces managers to organize Provides graphic display of activities

Identifies

Critical activities

Slack activities1

2

3

4

5 6



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Limitations of PERT Important activities may be omitted Precedence relationships may not be correct

Estimates may include

a fudge factor

May focus solely

on critical path 1

2

3

4

5 6

142 weeks



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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 for Managing Projects



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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



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Risk: occurrence of events that haveundesirable consequences

Delays

Increased costs

Inability to meet specifications

Project termination

Project Risk Management



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Identify potential risks Analyze and assess risks

Work to minimize occurrence of risk

Establish contingency plans

Risk Management



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Summary

Projects are a unique set of activities Projects go through life cycles

PERT and CPM are two common techniques

Network diagrams

Project management software available



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Additional PowerPoint slides

contributed byGeoff Willis,

University of Central Oklahoma.

CHAPTER

17



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Project Crashing

Crashing a project involves paying moremoney to complete a project more quickly.

Since the critical path determines the length of

a project, it makes sense to reduce the lengthof activities on the critical path.

CP activities should be reduced until theproject is reduced to the desired length or youare paying more per day than you save.

If you have multiple CPs, they should beshortened simultaneously.


j


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ProjectsConcepts

PM1

Chap017 Project Management

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