OMG 402 - Operations ManagementSpring 1997

CLASS 16:

Project Management

Harry Groenevelt

March 1997 2

Agenda

1. Introduction

2. Planning and scheduling– Scheduling with network diagrams– Scheduling resources

3. Planning for risky projects

4. Reducing project time– ‘Crashing’ and changing the project structure– Monitoring and control

5. Summary and comments on Boeing

3

1. Introduction: What is a Project?

A project is...a business within a business, designed to go out of business when the goals are met

Distinguishing attributes:– low volume

– high labor costs, specialization

– customized

project job shop batch line flow continuous flow

4

A Few Examples

• Installation of automatic readers on 1/2-million RG&E gas and electric

meters

• Development of the Advanced Automation System (AAS) for U.S. air traffic control

• Launch of an on-line banking service

• My daughter’s birthday party

5

Introduction: Why Project Management?

• Effective project management of new product development is a competitive priority in markets with short life-cycles

• Poor project management can be financially (and emotionally) destructive to the firm

• Project management is the core business for some firms

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Introduction: Project Management Stages

Stage Decision Level

Evaluation strategic

Planning tactical

Scheduling operational

Monitoring and control operational

Termination all

Post-project assessment strategic

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2. Planning and Scheduling

• MacroTemp precedence relationshipsTask Name Duration Predecessors

Notify 1.5 weeks –Mover Appt. 1 –

Phones 1 –Network 1 Phones

Mover walk 0.5 NotifyMover Appt

Move Equip 1 Mover walkPeople move 0.5 NotifySet up people 1 Move people

Move equip

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earliest start

activity, duration, slack

earliestfinish

latestfinish

latest start

Note: you may see a variety of formats in books and software packages

Planning and Scheduling with Project Networks

(how to represent ‘dependent events’)

_____

activity, duration, ____

_____

__________

This activity ends …

Before this one begins

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Calculating start dates, stop dates, slack

Notify1.5, _____

Ppl move0.5, _____

Set up ppl1.0, _____

Appt1.0, _____

Walk0.5, _____

Move Equip1.0, _____

Phones1.0, _____

Network0.5, _____

Begin End

Activityduration, slack

earlieststart

earliestfinish

latestfinish

lateststart

10How long will the project take?

Critical Activities and Path(s)

Notify1.5, 0

Ppl move0.5, 1.0

Set up ppl1.0, 0

Appt1.0, 0.5

Walk0.5, 0

Move Equip1.0, 0

Phones1.0, 2.0

Network1.0, 2.0

Begin End

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Comments on the Critical Path Method (CPM)

• Critical path = longest ‘path’ of activities from start to finish

• Activities on the critical path have slack = 0• Duration of project = duration of critical path (CP)• “CPM” says: focus attention on critical activities

BUT: ignoring other activities may not be wise …

Why?

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Scheduling Resources

• Scarce resources may be shared between activities Examples:– engineers and programmers for a new electronics product

– trucks and crew for a touring rock concert

• Method for resource scheduling:– determine time and resource needs for each activity

– determine resource availability

– derive schedule and adjust to fit available resources

• Is encoded in software (e.g. Microsoft Project)

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Task Time Required ImmediatePredecessors

ProgrammersNeeded(approx.)

A. Perform market survey 3 weeks – 0B. Design graphic icons 4 weeks A 0C. Develop flow chart 2 weeks A 10D. Design input/output screens 6 weeks B, C 10E. Module 1 coding 5 weeks C 10F. Module 2 coding 3 weeks C 10G. Module 3 coding 7 weeks E 10H. Module 4 coding 5 weeks E, F 10I. Merge modules and

graphics and test program8 weeks D, G, H 20

Scheduling Resources

Example: a software development project (20 programmers available)

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AC

TIV

ITIE

S

TIME (IN WEEKS FROM PROJECT START)

0 5 10 15 20 25

ABCDEFGHI

Software Development Project Schedule

GANTT chart with all activities at earliest start date

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TIME (IN WEEKS FROM PROJECT START)

NR

OF P

RO

GR

AM

MER

S

0

10

20

30

1 3 5 7 9 11 13 15 17 19 21 23 25

Resource Consumption

number of programmers according to earliest start schedule

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Scheduling Resources

What can be done to satisfy 20-programmer resource constraint?

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3. Planning for Risky Projects

Example: the Air Traffic Control Technology Project• Financial Risk• Risk to On-Time Delivery

What aspects of the project increased these risks?

How could the risks have been managed?

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RADAR TRACKINGSOFTWARE DEVELOPMENT 6 months

USER INTERFACE4 months

AIRCRAFT HANDOFFSOFTWARE4 months with probability 1/28 months with probability 1/2

INTEGRATION1 month

Duration of HANDOFF

4 months 8 months

Probability

1/2

Planning for Risky Projects

Quantifying on-time delivery risk.

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Task Duration Uncertainty

Expected duration of HANDOFF = _______

Expected project duration using expected activity times = ________

Expected project duration = _______

To find the expected task of a project, can we ‘plug in’ the expected duration of each activity?

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Task Duration Uncertainty

FACT: when large projects are subject to variability:

Expected project duration > Project duration calculated from expected activity times of individual tasks

Typically managers ‘plug in’ expected values and under-estimate project duration

Does this concept sound familiar?

21

0

• A project may have many random (or unknown) activity times and critical paths

• Use simulation to find distributions of project duration, slack times, probabilities that activities lie on critical paths

• Schedules and probabilities updated asproject progresses

0.5

1

3 4 5

Project Duration (weeks)

Cu

mu

lativ

eP

rob

ab

ility

Task Duration Uncertainty

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4. Reducing Project Time

Direct costs from ‘crashing’ a new product development program:

Indirect costs from (not) crashing:

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Project time

Pro

ject

cost

Direct CostIndirect Cost

Total Cost

Normaltime

Optimaltime

Expeditedtime

Reducing Project Time: Time/cost Trade-off

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Reducing Project Time,Using Project Networks as a Guide

1. Construct project network.

2. Select least expensive speed-ups along critical paths until … – Deadline is met– No more speed-up is possible– Other paths become critical

3. If other paths have become critical, return to step 1

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A B

A

B

Reducing Project Time: Changing the Structure of the Project

• Do things in parallel– simultaneous engineering– multiple test facilities

Note that this can create ‘coupled’ tasks, where eachtask depends on the output of the otherCommunication is vital!

How can communication be encouraged?

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Changing the Structure

• Shorten or eliminate error correction loops– increase communication and

information accuracy(when are problems in an activity usually reported?)

– use multi-functional teams

– clearly define specifications

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Changing the Structure

• Do it faster– remove start-up delays

– remove ‘waiting delays’ due to busy resources (especially for activities on the critical path)

– use proven technology and improve communication from project to project

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Reducing Project Time:Monitoring and Control

• While the project is running:– Progress against schedule

– Cost against scheduled expenditures

– Earned Value = budgeted cost of work performed

29Earned Value ($)

Actu

al C

ost

of

Work

Perf

orm

ed

($)

0

5000

10000

15000

20000

25000

30000

0 5000 10000 15000 20000 25000 30000

earned value = budgeted cost of work performed

cost variance

Monitoring and Control: Earned Value

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5. Project Management Summary

• Manage effectively to remain competitive

• Project planning:– tools to schedule and balance resources– planning for and managing risk

• Speeding up projects:– examine the project structure– consider multiple performance measures– encourage communication

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Comments on Boeing

• Consider risks Boeing facesHow does Boeing manage those risks?

• Define criteria for choosing among production options (in-line vs. off-line conversion)

• Consider pros and cons of each choice

• Do not try to draw a project network (at Boeing, they cover walls)