OPSM 301 Operations Management Class 8: Project Management: Introduction and CPM Koç University Zeynep Aksin [email protected].

OPSM 301 Operations Management

Class 8:

Project Management:

Introduction and CPM

Koç University

Zeynep [email protected]

New module: outline

Chapter 3 from textbook: will skip parts on AOA networks

Two sessions on theory Two sessions applications and Microsoft

Project MS Project available in SOS Z15

computer lab

Why project management?

Competition through new product development

Information-intensive products: costly to produce, cheap to reproduce

Flatter organizations Systems approach Project approach

Project

A single “product” is obtained from the completion of a project

The differentiating characteristic of projects from processes is the intense uncertainty in projects

Two types of project– With absolute deadline: olympic stadium

– With relative deadline : new product development project

Successful project management: To finish on time without going over budget and without sacrificing from the scope of the project

Project Management

Examples– Construction– R & D– Computer system implementation– Product development– Advertising campaign– Business Plan

Project Life Cycle:A Facility Construction Example

Feasibility: project formulation, feasibility studies, strategy design etc. A go/no-go decision is made at the end of this phase

Planning and design: base design, cost and schedule, contract terms, and detailed planning

Production: manufacturing, installation and testing. The facility is substantially completed at the end of this phase

Turnover and start-up: final testing and maintenance. The facility is in full operation at the end of this phase

Project Management

Resources

BudgetSco

pe

Schedule

Some observations

Most projects – Either go over time– or over budget– or the promised content cannot be delivered

Little’s law: more projects in the system (WIP), longer completion times

Modern Project Management

The process of project management has two dimensions: the “science” and the “art” of project management– Technical: defining, planning and controlling– Socio-Cultural:

• stimulating teamwork and personal motivation• identifying and resolving problems• shaping customer expectations• sustaining political support of top management• monitoring subcontractors• negotiating with functional managers

Project Planning, Scheduling, and Controlling

Structuring Projects:Pure Project

The project manager has full authority over the project.

Team members report to one boss.

Shortened communication lines.

Team pride, motivation, and commitment are high.

Duplication of resources.

Organizational goals and policies are ignored.

Lack of technology transfer.

Team members have no functional area "home."

Advantages

Disadvantages

Structuring Projects Functional Project

President

Research andDevelopment

Engineering Manufacturing

ProjectA

ProjectB

ProjectC

ProjectA

ProjectB

ProjectC

ProjectA

ProjectB

ProjectC

Structuring Projects Functional Project

A team member can work on several projects.

Technical expertise is maintained within the functional area.

The functional area is a “home” after the project is completed.

Critical mass of specialized knowledge.

Aspects of the project that are not directly related to the functional area not done well enough.

Motivation of team members is often weak.

Needs of the client are secondary and are responded to slowly.

Advantages

Disadvantages

Structuring Projects Matrix Project: Organization Structure

President

Research andDevelopment

Engineering Manufacturing Marketing

ManagerProject A

ManagerProject BManagerProject C

Structuring Projects Matrix

Enhanced interfunctional communications.

Pinpointed responsibility.

Duplication of resources is minimized.

Functional “home” for team members.

Policies of the parent organization are followed.

Too many bosses.

Depends on project manager’s negotiating skills.

Potential for suboptimization.

Advantages

Disadvantages

Work Breakdown Structure

1. Project 2. Major tasks in the project 3. Subtasks in the major tasks 4. Activities (or work packages)

to be completed

The Work Breakdown Structure

1. House

1.2 Heating System

WP-F1WP-F2

WP-P1WP-P2WP-P3

1.2.3 Fuel Tank

1.2.2 Furnace

1.2.1 Piping

1.3 Interior Design

1.1 Building/Structure

1.4 Garden/Parking

1.2.4 Solar Panels

WP-FT1WP-FT2WP-FT3

WP-SP1 WP-SP4 WP-SP2 WP-SP5WP-SP3

Time planning: activity list

Activity

A

B

C

D

E

F

Predecessor

--

A

B, D

--

D

E

Activity-on-node network diagram (or PERT diagram)

Start

A, 3

D, 2

C, 3

E, 2

B, 5

Finish

F, 5

Developing Project Network

1

2 4

5

6

7

3

8

9

10

110

Rules:

• Draw networks from left to right

• Each activity has a unique identification number

• An activity’s identification number should be larger than that of the activities’ preceding it

• Loops (cycles) are not allowed

• Conditional statement (e.g., if this happens then …) are not allowed

• If there are multiple start or finish activities, a common start or finish node is used

Gantt chart: Early start

Time

Act

ivity

A

D

B

E

C

F

Start

A, 3

D, 2

C, 3

E, 2

B, 5

Finish

F, 5

Gantt chart: Late start

Time

Act

ivity

A

D

B

E

C

F

Start

A, 3

D, 2

C, 3

E, 2

B, 5

finish

F, 5

PERT/CPM Network Diagrams

Advantages– Allows visualization of task relationships– Facilitates calculation of critical path– Clarifies impact of decisions on downstream activities

Disadvantages– Complex, not easy to comprehend at a glance– Charts don’t readily depict durations, dates, and

progress

Gantt Charts

Advantages– Easy to understand– Easy to show progress and status– Easy to maintain– Most popular view to communicate project status to

client and/or senior management Disadvantages

– Can be superficial– Not always easy to visualize precedence relationships

JAN FEB MAR

1 8 15 22 29 5 12 19 26 5 12 19 26

Terminology

The early start (ES) time for an activity is equal to

the maximum early finish (EF) times of all of its

predecessor activities

– ES=max (EF) of predecessors

The early finish (EF) time for an activity is equal to

the early start (ES) time plus the expected activity

duration (ET) for the activity

EF=ES+ET

Terminology

The late finish (LF) time for an activity is equal to the minimum late start (LS) times of all of its successor activities– LF=min(LS) of successors

The late start (LS) time for an activity is equal to the late finish (LF) time minus the expected activity duration (ET) for the activity– LS=LF-ET

Total slack (TS) time of an activity:– TS = LS-ES=LF-EF

Latest Start and Finish Steps

Latest Finish

ES

LS

EF

LF

Earliest Finish

Latest Start

Earliest Start

Activity Nam

eActivity Duration

Finding the Critical Path

A D

C

B

4

3

5

20 4

4

4

7

9

9 11

119

9

9

6

4

40

Activity Slack:S = LS-ES, orS = LF-EF

Start attime t=0

ES

LS

EF

LF

Finding the Critical Path

A D

C

B

4

3

5

20 4

4

4

7

9

9 11

119

9

9

6

4

40

S=0S=0

S=0

S=2

Critical Path: Path with zero activity slacks

Activity Slack:S = LS-ES, orS = LF-EF

Finding the Critical Path

1. Start from the left (start node). For node 0: ES=0,EF=02. For each activitity find Early Start (ES) by checking all immediate

predecessors Early Finish times. ES of activitiy=max(EF) of all predecessors.

EF of activity=ES+Activity time3. For the late start and late finish, start calculations from the end

node.4. For each activity find Late Finish(LF) by checking all immediate

successors of the activity:LF of activity=min(LS) of all successorsLS=LF-Activity time

5. Find Slack times for all activities, S=EF-ES=LF-LS6. All activities with S=0 are on the critical path (there can be more

than one critical paths)

AON Network for Milwaukee General Hospital

Slack=0

Start

A

B

C

D

F

F

G

HH

1313

2

1515

HG

88

5

1313

HF

410

3

713

HC

22

2

44

HE

44

4

88

HD

34

4

78

HB

01

3

34

HA

00

2

22

H00

0

00

Slack=0 Slack=0

Slack=0

Slack=0

Slack=6

Slack=1Slack=1

Start