heizer om10 ch03

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10/16/2010 1 3 Project Management Project Management PowerPoint presentation to accompany PowerPoint presentation to accompany 3 - 1 © 2011 Pearson Education, Inc. publishing as Prentice Hall PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8e Principles of Operations Management, 8e PowerPoint slides by Jeff Heyl Outline Outline Global Company Profile: Bechtel Group The Importance of Project Management 3 - 2 © 2011 Pearson Education, Inc. publishing as Prentice Hall Management Project Planning The Project Manager Work Breakdown Structure Project Scheduling Outline Outline - Continued Continued Project Controlling Project Management Techniques: PERT and CPM 3 - 3 © 2011 Pearson Education, Inc. publishing as Prentice Hall The Framework of PERT and CPM Network Diagrams and Approaches Activity-on-Node Example Activity-on-Arrow Example Outline Outline - Continued Continued Determining the Project Schedule Forward Pass Backward Pass 3 - 4 © 2011 Pearson Education, Inc. publishing as Prentice Hall Calculating Slack Time and Identifying the Critical Path(s) Variability in Activity Times Three Time Estimates in PERT Probability of Project Completion Outline Outline - Continued Continued Cost-Time Trade-Offs and Project Crashing A Critique of PERT and CPM 3 - 5 © 2011 Pearson Education, Inc. publishing as Prentice Hall Using Microsoft Project to Manage Projects Learning Objectives Learning Objectives 1. Use a Gantt chart for scheduling 2 D AOA d AON t k When you complete this chapter you When you complete this chapter you should be able to: should be able to: 3 - 6 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2. Draw AOA and AON networks 3. Complete forward and backward passes for a project 4. Determine a critical path

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Page 1: Heizer om10 ch03

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1

33 Project ManagementProject Management

PowerPoint presentation to accompanyPowerPoint presentation to accompany

3 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall

PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

OutlineOutline

Global Company Profile: Bechtel GroupThe Importance of Project Management

3 - 2© 2011 Pearson Education, Inc. publishing as Prentice Hall

ManagementProject Planning

The Project ManagerWork Breakdown Structure

Project Scheduling

Outline Outline -- ContinuedContinued

Project ControllingProject Management Techniques: PERT and CPM

3 - 3© 2011 Pearson Education, Inc. publishing as Prentice Hall

The Framework of PERT and CPMNetwork Diagrams and ApproachesActivity-on-Node ExampleActivity-on-Arrow Example

Outline Outline -- ContinuedContinued

Determining the Project ScheduleForward PassBackward Pass

3 - 4© 2011 Pearson Education, Inc. publishing as Prentice Hall

Calculating Slack Time and Identifying the Critical Path(s)

Variability in Activity TimesThree Time Estimates in PERTProbability of Project Completion

Outline Outline -- ContinuedContinued

Cost-Time Trade-Offs and Project CrashingA Critique of PERT and CPM

3 - 5© 2011 Pearson Education, Inc. publishing as Prentice Hall

Using Microsoft Project to Manage Projects

Learning ObjectivesLearning Objectives

1. Use a Gantt chart for scheduling2 D AOA d AON t k

When you complete this chapter you When you complete this chapter you should be able to: should be able to:

3 - 6© 2011 Pearson Education, Inc. publishing as Prentice Hall

2. Draw AOA and AON networks3. Complete forward and backward

passes for a project4. Determine a critical path

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2

Learning ObjectivesLearning Objectives

5. Calculate the variance of activity times

When you complete this chapter you When you complete this chapter you should be able to: should be able to:

3 - 7© 2011 Pearson Education, Inc. publishing as Prentice Hall

activity times6. Crash a project

Bechtel ProjectsBechtel ProjectsBuilding 26 massive distribution centers in just two years for the internet company Webvan Group ($1 billion)Constructing 30 high-security data centers worldwide for Equinix, Inc. ($1.2 billion)

3 - 8© 2011 Pearson Education, Inc. publishing as Prentice Hall

Building and running a rail line between London and the Channel Tunnel ($4.6 billion)Developing an oil pipeline from the Caspian Sea region to Russia ($850 million)Expanding the Dubai Airport in the UAE ($600 million), and the Miami Airport in Florida ($2 billion)

Bechtel ProjectsBechtel ProjectsBuilding liquid natural gas plants in Yemen $2 billion) and in Trinidad, West Indies ($1 billion)Building a new subway for Athens, Greece ($2.6 billion)Constructing a natural gas pipeline in Thailand

3 - 9© 2011 Pearson Education, Inc. publishing as Prentice Hall

Constructing a natural gas pipeline in Thailand ($700 million)Building 30 plants for iMotors.com, a company that sells refurbished autos online ($300 million)Building a highway to link the north and south of Croatia ($303 million)

Strategic Importance ofStrategic Importance ofProject ManagementProject Management

Bechtel Project Management:Iraq war aftermathInternational workforce, construction professionals, cooks, medical personnel,

3 - 10© 2011 Pearson Education, Inc. publishing as Prentice Hall

professionals, cooks, medical personnel, securityMillions of tons of supplies

Hard Rock Cafe Rockfest Project:100,000 + fansplanning began 9 months in advance

Single unitMany related activitiesDifficult production planning and

Project CharacteristicsProject Characteristics

3 - 11© 2011 Pearson Education, Inc. publishing as Prentice Hall

Difficult production planning and inventory controlGeneral purpose equipmentHigh labor skills

Examples of ProjectsExamples of Projects

Building Construction

3 - 12© 2011 Pearson Education, Inc. publishing as Prentice Hall

Research Project

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Management of ProjectsManagement of Projects1. Planning - goal setting, defining the

project, team organization2. Scheduling - relates people, money,

and supplies to specific activities

3 - 13© 2011 Pearson Education, Inc. publishing as Prentice Hall

pp pand activities to each other

3. Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands

PlanningObjectivesResourcesWork break-down structure

SchedulingProject activitiesStart & end timesN t k

Project Management Project Management ActivitiesActivities

3 - 14© 2011 Pearson Education, Inc. publishing as Prentice Hall

structureOrganization

Network

ControllingMonitor, compare, revise, action

Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

3 - 15© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.1Before Start of project Duringproject Timeline project

Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

3 - 16© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.1Before Start of project Duringproject Timeline project

Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

3 - 17© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.1Before Start of project Duringproject Timeline project

Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

3 - 18© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.1Before Start of project Duringproject Timeline project

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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling

BudgetsDelayed activities report

Time/cost estimatesBudgetsEngineering diagramsCash flow chartsMaterial availability details

3 - 19© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.1Before Start of project Duringproject Timeline project

Slack activities report

CPM/PERTGantt chartsMilestone chartsCash flow schedules

Establishing objectivesDefining projectCreating work b kd t t

Project PlanningProject Planning

3 - 20© 2011 Pearson Education, Inc. publishing as Prentice Hall

breakdown structure Determining resourcesForming organization

Often temporary structureUses specialists from entire companyHeaded by project manager

C di t ti iti

Project OrganizationProject Organization

3 - 21© 2011 Pearson Education, Inc. publishing as Prentice Hall

Coordinates activities Monitors scheduleand costs

Permanent structure called ‘matrix organization’

Project OrganizationProject OrganizationWorks Best WhenWorks Best When

1. Work can be defined with a specific goal and deadline

2. The job is unique or somewhat unfamiliar to the existing organization

3 - 22© 2011 Pearson Education, Inc. publishing as Prentice Hall

3. The work contains complex interrelated tasks requiring specialized skills

4. The project is temporary but critical to the organization

5. The project cuts across organizational lines

A Sample Project A Sample Project OrganizationOrganization

Marketing FinanceHumanResources Design Quality

Mgt Production

President

3 - 23© 2011 Pearson Education, Inc. publishing as Prentice Hall

TestEngineer

MechanicalEngineer

Project 1 ProjectManager

Technician

Technician

Project 2 ProjectManager

ElectricalEngineer

Computer Engineer

Figure 3.2

Matrix OrganizationMatrix OrganizationMarketing Operations Engineering Finance

Project 1

P j t 2

3 - 24© 2011 Pearson Education, Inc. publishing as Prentice Hall

Project 2

Project 3

Project 4

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The Role ofThe Role ofthe Project Managerthe Project Manager

Highly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:

3 - 25© 2011 Pearson Education, Inc. publishing as Prentice Hall

1. All necessary activities are finished in order and on time

2. The project comes in within budget3. The project meets quality goals4. The people assigned to the project receive

motivation, direction, and information

The Role ofThe Role ofthe Project Managerthe Project Manager

Highly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:Project managers should be:

3 - 26© 2011 Pearson Education, Inc. publishing as Prentice Hall

1. All necessary activities are finished in order and on time

2. The project comes in within budget3. The project meets quality goals4. The people assigned to the project receive

motivation, direction, and information

Good coachesGood communicatorsAble to organize activities from a variety of disciplines

Ethical IssuesEthical IssuesProject managers face many ethical decisions on a daily basisThe Project Management Institute has established an ethical code to deal with problems such as:

3 - 27© 2011 Pearson Education, Inc. publishing as Prentice Hall

1. Offers of gifts from contractors2. Pressure to alter status reports to mask delays3. False reports for charges of time and expenses4. Pressure to compromise quality to meet

schedules

problems such as:

Work Breakdown StructureWork Breakdown Structure

Level1. Project2 Major tasks in the project

3 - 28© 2011 Pearson Education, Inc. publishing as Prentice Hall

2. Major tasks in the project3. Subtasks in the major tasks4. Activities (or work packages)

to be completed

Level 3 Develop GUIs Planning Module

Testing1.1.1 1.3.11.2.1

Work Breakdown StructureWork Breakdown Structure

Level 2 Software Design

Project Management

System Testing1.1 1.2 1.3

Level 1 Develop Windows 7 Operating System 1.0

3 - 29© 2011 Pearson Education, Inc. publishing as Prentice Hall

Level 4 Compatible with Windows ME

Compatible with Windows Vista

Compatible with Windows XP 1.1.2.3

1.1.2.2

1.1.2.1(Work packages)

Ensure Compatibility with Earlier Versions

Cost/Schedule Management

Defect Testing1.2.2 1.3.21.1.2

Figure 3.3

Project SchedulingProject SchedulingIdentifying precedence relationships Sequencing activitiesDetermining activity

3 - 30© 2011 Pearson Education, Inc. publishing as Prentice Hall

Determining activity times & costsEstimating material & worker requirementsDetermining critical activities

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Purposes of Project Purposes of Project SchedulingScheduling

1. Shows the relationship of each activity to others and to the whole project

2. Identifies the precedence relationships among activities

3 - 31© 2011 Pearson Education, Inc. publishing as Prentice Hall

among activities3. Encourages the setting of realistic time

and cost estimates for each activity4. Helps make better use of people, money,

and material resources by identifying critical bottlenecks in the project

Scheduling TechniquesScheduling Techniques

1. Ensure that all activities are planned for

2. Their order of performance is accounted for

3 - 32© 2011 Pearson Education, Inc. publishing as Prentice Hall

accounted for3. The activity time estimates are

recorded4. The overall project time is developed

Gantt chartCritical Path Method (CPM)

Project Management Project Management TechniquesTechniques

3 - 33© 2011 Pearson Education, Inc. publishing as Prentice Hall

(CPM)Program Evaluation and Review Technique (PERT)

A Simple Gantt ChartA Simple Gantt Chart

TimeJ F M A M J J A S

Design

3 - 34© 2011 Pearson Education, Inc. publishing as Prentice Hall

es gPrototypeTestReviseProduction

Service For a Delta JetService For a Delta JetPassengers

Baggage

Fueling

Cargo and mail

Galley servicing

Lavatory servicing

DeplaningBaggage claimContainer offloadPumpingEngine injection waterContainer offloadMain cabin doorAft cabin doorAft center for ard

3 - 35© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.4

Lavatory servicingDrinking waterCabin cleaning

Cargo and mail

Flight services

Operating crewBaggagePassengers

Aft, center, forwardLoadingFirst-class sectionEconomy sectionContainer/bulk loadingGalley/cabin checkReceive passengersAircraft checkLoadingBoarding

0 10 20 30 40Time, Minutes

Project Control ReportsProject Control ReportsDetailed cost breakdowns for each taskTotal program labor curvesCost distribution tablesFunctional cost and hour summaries

3 - 36© 2011 Pearson Education, Inc. publishing as Prentice Hall

Functional cost and hour summariesRaw materials and expenditure forecastsVariance reportsTime analysis reportsWork status reports

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Network techniquesDeveloped in 1950’s

CPM by DuPont for chemical plants (1957)PERT by Booz Allen & Hamilton with the

PERT and CPMPERT and CPM

3 - 37© 2011 Pearson Education, Inc. publishing as Prentice Hall

PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)

Consider precedence relationships and interdependenciesEach uses a different estimate of activity times

Six Steps PERT & CPMSix Steps PERT & CPM

1. Define the project and prepare the work breakdown structure

2. Develop relationships among the ti iti d id hi h ti iti

3 - 38© 2011 Pearson Education, Inc. publishing as Prentice Hall

activities - decide which activities must precede and which must follow others

3. Draw the network connecting all of the activities

Six Steps PERT & CPMSix Steps PERT & CPM

4. Assign time and/or cost estimates to each activity

5. Compute the longest time path th h th t k thi i ll d

3 - 39© 2011 Pearson Education, Inc. publishing as Prentice Hall

through the network – this is called the critical path

6. Use the network to help plan, schedule, monitor, and control the project

1. When will the entire project be completed?

2 What are the critical activities or tasks in

Questions PERT & CPM Questions PERT & CPM Can AnswerCan Answer

3 - 40© 2011 Pearson Education, Inc. publishing as Prentice Hall

2. What are the critical activities or tasks in the project?

3. Which are the noncritical activities?4. What is the probability the project will be

completed by a specific date?

5. Is the project on schedule, behind schedule, or ahead of schedule?

6. Is the money spent equal to, less than, or

Questions PERT & CPM Questions PERT & CPM Can AnswerCan Answer

3 - 41© 2011 Pearson Education, Inc. publishing as Prentice Hall

y p qgreater than the budget?

7. Are there enough resources available to finish the project on time?

8. If the project must be finished in a shorter time, what is the way to accomplish this at least cost?

A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network Conventions

Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)

A comes before B, which comes b f C

(a) A B CBA C

3 - 42© 2011 Pearson Education, Inc. publishing as Prentice Hall

before C. BA C

A and B must both be completed before C can start.

(b)A

CCB

A

B

B and C cannot begin until A is completed.

(c)B

AC

AB

CFigure 3.5

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A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network Conventions

Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)

C and D cannot begin until both A C A C

3 - 43© 2011 Pearson Education, Inc. publishing as Prentice Hall

gA and B are completed.

(d)B D B D

C cannot begin until both A and B are completed; D cannot begin until B is completed. A dummy activity is introduced in AOA.

(e)CA

B D

Dummy activityA

B

C

D

Figure 3.5

A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network Conventions

Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)

B and C cannot begin until A is

3 - 44© 2011 Pearson Education, Inc. publishing as Prentice Hall

begin until A is completed. D cannot begin until both B and C are completed. A dummy activity is again introduced in AOA.

(f)A

C

DB A B

C

D

Dummy activity

Figure 3.5

AON Example AON Example

Activity DescriptionImmediate

PredecessorsA Build internal components —B Modify roof and floor —

Milwaukee Paper Manufacturing'sMilwaukee Paper Manufacturing'sActivities and PredecessorsActivities and Predecessors

3 - 45© 2011 Pearson Education, Inc. publishing as Prentice Hall

yC Construct collection stack AD Pour concrete and install frame A, BE Build high-temperature burner CF Install pollution control system CG Install air pollution device D, EH Inspect and test F, G

Table 3.1

AON Network for AON Network for Milwaukee PaperMilwaukee Paper

A Activity A(Build Internal Components)

3 - 46© 2011 Pearson Education, Inc. publishing as Prentice Hall

Start

BStart Activity

Activity B(Modify Roof and Floor)

Figure 3.6

AON Network for AON Network for Milwaukee PaperMilwaukee Paper

CA

Activity A Precedes Activity C

3 - 47© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.7

D

Start

B

Activities A and B Precede Activity D

AON Network for AON Network for Milwaukee PaperMilwaukee Paper

FCA

3 - 48© 2011 Pearson Education, Inc. publishing as Prentice Hall

G

EHStart

DB

Arrows Show Precedence Relationships Figure 3.8

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AOA Network for AOA Network for Milwaukee PaperMilwaukee Paper

4C(Construct

Stack)

2

3 - 49© 2011 Pearson Education, Inc. publishing as Prentice Hall

H(Inspect/

Test)

7Dummy Activity

6

5D

(Pour Concrete/

Install Frame)

1

3

Figure 3.9

Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path AnalysisThe critical path is the longest path through the network

3 - 50© 2011 Pearson Education, Inc. publishing as Prentice Hall

The critical path is the shortest time in which the project can be completedAny delay in critical path activities delays the projectCritical path activities have no slack time

Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path AnalysisActivity Description Time (weeks)

A Build internal components 2B Modify roof and floor 3

3 - 51© 2011 Pearson Education, Inc. publishing as Prentice Hall

Table 3.2

B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25

Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

Activity Description Time (weeks)A Build internal components 2

Earliest start (ES) = earliest time at which an activity can start, assuming all predecessors have been completed

3 - 52© 2011 Pearson Education, Inc. publishing as Prentice Hall

Table 3.2

pB Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25

been completedEarliest finish (EF) = earliest time at which an activity can

be finishedLatest start (LS) = latest time at which an activity can

start so as to not delay the completion time of the entire project

Latest finish (LF) = latest time by which an activity has to be finished so as to not delay the completion time of the entire project

Determining the Project Determining the Project ScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

A

Activity Name or Symbol

3 - 53© 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 3.10

AEarliest Start ES

Earliest FinishEF

Latest Start

LS Latest Finish

LF

Activity Duration

2

Forward PassForward Pass

Begin at starting event and work forwardBegin at starting event and work forwardEarliest Start Time Rule:

If an activity has only a single immediate d it ES l th EF f th

3 - 54© 2011 Pearson Education, Inc. publishing as Prentice Hall

predecessor, its ES equals the EF of the predecessorIf an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors

ES = Max {EF of all immediate predecessors}

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Forward PassForward Pass

Begin at starting event and work forwardBegin at starting event and work forwardEarliest Finish Time Rule:

The earliest finish time (EF) of an activity i th f it li t t t ti (ES)

3 - 55© 2011 Pearson Education, Inc. publishing as Prentice Hall

is the sum of its earliest start time (ES) and its activity time

EF = ES + Activity time

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

Start0

ES

0

EF = ES + Activity time

3 - 56© 2011 Pearson Education, Inc. publishing as Prentice Hall

0

0 0

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

A2

EF of A = ES of A + 2

0

ESof A

3 - 57© 2011 Pearson Education, Inc. publishing as Prentice Hall

Start0

0

0

2

20

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

A

2

20

EF of B = ES of B + 3ES

3 - 58© 2011 Pearson Education, Inc. publishing as Prentice Hall

B

3

Start0

0

0

3

ES of B + 3

0

of B

C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

A

2

20

3 - 59© 2011 Pearson Education, Inc. publishing as Prentice Hall

B

3

0 3

Start0

0

0

C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

A

2

20

3 - 60© 2011 Pearson Education, Inc. publishing as Prentice Hall

B

3

0 3

Start0

0

0D

4

73= Max (2, 3)

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C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

A

2

20

3 - 61© 2011 Pearson Education, Inc. publishing as Prentice Hall

D

4

3 7B

3

0 3

Start0

0

0

F

3

4 7C

2

2 4

ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper

A

2

20

3 - 62© 2011 Pearson Education, Inc. publishing as Prentice Hall

E

4

G

5

H

2

4 8 13 15

8 13D

4

3 7B

3

0 3

Start0

0

0

Figure 3.11

Backward PassBackward Pass

Begin with the last event and work backwardsBegin with the last event and work backwards

Latest Finish Time Rule:

If an activity is an immediate predecessor f j t i l ti it it LF l th

3 - 63© 2011 Pearson Education, Inc. publishing as Prentice Hall

for just a single activity, its LF equals the LS of the activity that immediately follows itIf an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it

LF = Min {LS of all immediate following activities}

Backward PassBackward Pass

Begin with the last event and work backwardsBegin with the last event and work backwards

Latest Start Time Rule:

The latest start time (LS) of an activity is th diff f it l t t fi i h ti (LF)

3 - 64© 2011 Pearson Education, Inc. publishing as Prentice Hall

the difference of its latest finish time (LF) and its activity time

LS = LF – Activity time

LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

F

3

4 7C

2

2 4A

2

20

3 - 65© 2011 Pearson Education, Inc. publishing as Prentice Hall

E

4

G

5

H

2

4 8 13 15

8 13D

4

3 7B

3

0 3

Start0

0

0

LF = EF of Project

1513

LS = LF – Activity time

LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

F

3

4 7C

2

2 4A

2

20

10 13

3 - 66© 2011 Pearson Education, Inc. publishing as Prentice Hall

E

4

G

5

H

2

4 8 13 15

8 13

13 15

D

4

3 7B

3

0 3

Start0

0

0 LF = Min(LS of following activity)

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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

F

3

4 7

10 13

C

2

2 4A

2

20

LF = Min(4, 10)

42

3 - 67© 2011 Pearson Education, Inc. publishing as Prentice Hall

E

4

G

5

H

2

4 8 13 15

8 13

13 15

8 13

4 8

D

4

3 7B

3

0 3

Start0

0

0

LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

F

3

4 7

10 13

C

2

2 4A

2

20

4220

3 - 68© 2011 Pearson Education, Inc. publishing as Prentice Hall

E

4

G

5

H

2

4 8 13 15

8 13

13 15

8 13

4 8

D

4

3 7B

3

0 3

Start0

0

0

8441

00

Computing Slack TimeComputing Slack Time

After computing the ES, EF, LS, and LF times for all activities, compute the slack or free time for each activity

3 - 69© 2011 Pearson Education, Inc. publishing as Prentice Hall

Slack is the length of time an activity can be delayed without delaying the entire project

Slack = LS – ES or Slack = LF – EF

Computing Slack TimeComputing Slack Time

Earliest Earliest Latest Latest OnStart Finish Start Finish Slack Critical

Activity ES EF LS LF LS – ES Path

A 0 2 0 2 0 YesB 0 3 1 4 1 No

3 - 70© 2011 Pearson Education, Inc. publishing as Prentice Hall

Table 3.3

C 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesF 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes

Critical Path for Critical Path for Milwaukee PaperMilwaukee Paper

F

3

4 7

10 13

C

2

2 4A

2

20

4220

3 - 71© 2011 Pearson Education, Inc. publishing as Prentice Hall

E

4

G

5

H

2

4 8 13 15

8 13

13 15

8 13

4 8

D

4

3 7B

3

0 3

Start0

0

0

8441

00

ES ES –– EF Gantt ChartEF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

A Build internal components

B Modify roof and floorC Construct collection

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

3 - 72© 2011 Pearson Education, Inc. publishing as Prentice Hall

C Construct collection stack

D Pour concrete and install frame

E Build high-temperature burner

F Install pollution control system

G Install air pollution device

H Inspect and test

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LS LS –– LF Gantt ChartLF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

A Build internal components

B Modify roof and floorC Construct collection

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

3 - 73© 2011 Pearson Education, Inc. publishing as Prentice Hall

C Construct collection stack

D Pour concrete and install frame

E Build high-temperature burner

F Install pollution control system

G Install air pollution device

H Inspect and test

CPM assumes we know a fixed time estimate for each activity and there is no variability in activity times

Variability in Activity TimesVariability in Activity Times

3 - 74© 2011 Pearson Education, Inc. publishing as Prentice Hall

PERT uses a probability distribution for activity times to allow for variability

Three time estimates are requiredOptimistic time (a) – if everything goes according to plan

Variability in Activity TimesVariability in Activity Times

3 - 75© 2011 Pearson Education, Inc. publishing as Prentice Hall

g g pPessimistic time (b) – assuming very unfavorable conditionsMost likely time (m) – most realistic estimate

Estimate follows beta distributionEstimate follows beta distribution

Variability in Activity TimesVariability in Activity Times

Expected time:

V i f tit = (a + 4m + b)/6

3 - 76© 2011 Pearson Education, Inc. publishing as Prentice Hall

Variance of times: v = [(b – a)/6]2

Estimate follows beta distributionEstimate follows beta distribution

Variability in Activity TimesVariability in Activity Times

Expected time: Expected time:

V i f tiV i f tit = t = ((a + a + 44mm + + bb)/6)/6

Figure 3.12

3 - 77© 2011 Pearson Education, Inc. publishing as Prentice Hall

Variance of times: Variance of times: v = v = [([(b b − − aa)/6]2)/6]2 Probability

of 1 in 100 of > b occurring

Probability of 1 in 100 of < a occurring

Prob

abili

ty

Optimistic Time (a)

Most Likely Time (m)

Pessimistic Time (b)

Activity Time

Computing VarianceComputing Variance

Most ExpectedOptimistic Likely Pessimistic Time Variance

Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 1 2 3 2 .11B 2 3 4 3 .11

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Table 3.4

C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11

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Probability of Project Probability of Project CompletionCompletion

Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivities

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σ2 = Project variance

= ∑(variances of activities on critical path)

p

Probability of Project Probability of Project CompletionCompletion

Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivitiesProject varianceσ2 = 11 + 11 + 1 00 + 1 78 + 11 = 3 11

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σ2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviationσp = Project variance

= 3.11 = 1.76 weeks

p

Probability of Project Probability of Project CompletionCompletion

PERT makes two more assumptions:PERT makes two more assumptions:

Total project completion times follow a

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Total project completion times follow a normal probability distributionActivity times are statistically independent

Probability of Project Probability of Project CompletionCompletion

Standard deviation = 1.76 weeks

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15 Weeks

(Expected Completion Time)Figure 3.13

Probability of Project Probability of Project CompletionCompletion

What is the probability this project can What is the probability this project can be completed on or before the 16 week be completed on or before the 16 week deadline?deadline?

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Z= – /σp

= (16 wks – 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Z is the number of standard deviations the due date or target date lies from the mean or expected date

Probability of Project Probability of Project CompletionCompletion

What is the probability this project can What is the probability this project can be completed on or before the 16 week be completed on or before the 16 week deadline?deadline?

.00 .01 .07 .08.1 .50000 .50399 .52790 .53188.2 .53983 .54380 .56749 .57142

From Appendix I

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Z= − /σp

= (16 wks − 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Z is the number of standard deviations the due date or target date lies from the mean or expected date

.5 .69146 .69497 .71566 .71904

.6 .72575 .72907 .74857 .75175

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Probability of Project Probability of Project CompletionCompletion

Probability(T ≤ 16 weeks)is 71.57%

0.57 Standard deviations

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Time

Figure 3.14

15 16Weeks Weeks

Determining Project Determining Project Completion TimeCompletion Time

Probability

Probability of 0.99

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Probability of 0.01

Z

Figure 3.15

From Appendix I2.33 Standard

deviations0 2.33

Variability of Completion Variability of Completion Time for Noncritical PathsTime for Noncritical Paths

Variability of times for activities on noncritical paths must be considered when finding the

3 - 87© 2011 Pearson Education, Inc. publishing as Prentice Hall

considered when finding the probability of finishing in a specified timeVariation in noncritical activity may cause change in critical path

What Project Management What Project Management Has Provided So FarHas Provided So Far

1. The project’s expected completion time is 15 weeks

2. There is a 71.57% chance the equipment will be in place by the 16 week deadline

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will be in place by the 16 week deadline3. Five activities (A, C, E, G, and H) are on

the critical path4. Three activities (B, D, F) are not on the

critical path and have slack time 5. A detailed schedule is available

TradeTrade--Offs and Project Offs and Project CrashingCrashing

The project is behind schedule

It is not uncommon to face the It is not uncommon to face the following situations:following situations:

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The project is behind scheduleThe completion time has been moved forward

Shortening the duration of the project is called project crashing

Factors to Consider When Factors to Consider When Crashing a ProjectCrashing a Project

The amount by which an activity is crashed is, in fact, permissible

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Taken together, the shortened activity durations will enable us to finish the project by the due dateThe total cost of crashing is as small as possible

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Steps in Project CrashingSteps in Project Crashing

1. Compute the crash cost per time period. If crash costs are linear over time:

Crash cost (Crash cost – Normal cost)

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Crash costper period = (Normal time – Crash time)

2. Using current activity times, find the critical path and identify the critical activities

Steps in Project CrashingSteps in Project Crashing3. If there is only one critical path, then

select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period. If there is more than one critical path, then

3 - 92© 2011 Pearson Education, Inc. publishing as Prentice Hall

there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest. Note that the same activity may be common to more than one critical path.

Steps in Project CrashingSteps in Project Crashing

4. Update all activity times. If the desired due date has been reached, stop. If not, return to Step 2.

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Crashing The ProjectCrashing The ProjectTime (Wks) Cost ($)

Crash Cost CriticalActivity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 YesB 3 1 30,000 34,000 2,000 No

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Table 3.5

C 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes

Crash and Normal Times Crash and Normal Times and Costs for Activity Band Costs for Activity B

$34,000 —

$33,000 —

Activity Cost Crash

Crash C t

Crash Cost/Wk = Crash Cost – Normal CostNormal Time – Crash Time

= $34,000 – $30,000

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| | |1 2 3 Time (Weeks)

$32,000 —

$31,000 —

$30,000 —

—Normal

Crash Time Normal Time

Cost

Normal Cost

= 3 – 1

= = $2,000/Wk$4,0002 Wks

Figure 3.16

Critical Path and Slack Times Critical Path and Slack Times for Milwaukee Paperfor Milwaukee Paper

F

3

4 7

10 13

C

2

2 4A

2

20

4220

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Figure 3.17

E

4

G

5

H

2

4 8 13 15

8 13

13 15

8 13

4 8

D

4

3 7B

3

0 3

Start0

0

0

8441

00

Slack = 1 Slack = 1

Slack = 0 Slack = 6

Slack = 0

Slack = 0

Slack = 0

Slack = 0

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Advantages of PERT/CPMAdvantages of PERT/CPM

1. Especially useful when scheduling and controlling large projects

2. Straightforward concept and not mathematically complex

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3. Graphical networks help highlight relationships among project activities

4. Critical path and slack time analyses help pinpoint activities that need to be closely watched

Advantages of PERT/CPMAdvantages of PERT/CPM

5. Project documentation and graphics point out who is responsible for various activities

6. Applicable to a wide variety of projects

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pp y p j7. Useful in monitoring not only schedules

but costs as well

1. Project activities have to be clearly defined, independent, and stable in their relationships

2. Precedence relationships must be specified and networked together

Limitations of PERT/CPMLimitations of PERT/CPM

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specified and networked together3. Time estimates tend to be subjective and

are subject to fudging by managers4. There is an inherent danger of too much

emphasis being placed on the longest, or critical, path

Project Management SoftwareProject Management Software

There are several popular packages for managing projects

Primavera M P j t

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MacProjectPertmasterVisiScheduleTime LineMicrosoft Project

Using Microsoft ProjectUsing Microsoft Project

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Program 3.1

Using Microsoft ProjectUsing Microsoft Project

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Program 3.2

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Using Microsoft ProjectUsing Microsoft Project

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Program 3.3

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