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17-1 Project Management

William J. Stevenson

Operations Management

8th edition


CHAPTER

17

Project

Management

McGraw-Hill/IrwinOperationsManagement, Eighth Edition, by WilliamJ. Stevenson

Copyright 2005 by The McGraw-Hill Companies, Inc. Allrights reserved.


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

J AN FEB MAR AP R 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 or

services


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


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


Planning and Scheduling

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 installphones

Move in/startup

Gantt Chart


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 Manager

Responsible for:

Work QualityHuman Resources TimeCommunications Costs


Temptation to understate costs

Withhold information

Misleading status reports

Falsifying records

Comprising workers safety

Approving substandard work

Ethical Issues


Project Life Cycle

Concept

Feasibility

Planning

Execution

Termination

Manag

ement

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Work Breakdown Structure

Project X

Level 1

Level 2

Level 3

Level 4

Figure 17.2


PERT and CPM

PERT: 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


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


Project Network Activity on Arrow

1

2

3

4

5 6

Locate

facilities

Orderfurniture

Furniture

setup

InterviewHire and

train

Remodel

Movein

Figure 17.4

AOA


Project Network Activity on Node

1

2

3

5

6

Locatefacilities

Orderfurniture

Furniture

setup

Interview

Remodel Movein

4

Hire andtrain

7S

Figure 17.4

AON

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Network Conventions

a

b

c ab

c

a

b

c

d

a

b

c

Dummyactivity


Time Estimates

Deterministic

Time estimates that are fairly certain

Probabilistic

Estimates of times that allow for variation


Example 1

1

2

3

4

5 6

8 weeks

6 weeks

3 weeks

4 weeks9 weeks

11 weeks

1 week

Locate

facilit

ies

Orde

r

furnit

ureFurnitu

re

setup

Interview

Hire

andtra

in

Remodel 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


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


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 be

required

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Probabilistic Estimates

Activity

start

Optimistic

time

Most likely

time (mode)

Pessimistic

time

to tptm te

Figure 17.8


Expected Time

te =to + 4tm +tp

6

te = expected time

to = optimistic time

tm = most likely time

tp = pessimistic time


Variance

2 =(tp to)

2

36

2 = varianceto = optimistic time

tp = pessimistic time

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Example 5

1-3-

4

a

3-4-5

d

3-5-7

e

5-7-9

f

2-4-6

b

4-6-8

h

2-3-6g 3-4-

6

i

2-3-5c

Optimistic

time

Most likely

time

Pessimistic

time


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.


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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Time-cost Trade-offs: Crashing

Crash shortening 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 of

crashing the least expensive activity on each

critical path


Time-Cost Trade-Offs: Crashing

Totalcost

Shorten

Shorten

Cumulativecost of

crashing

Expected indirect costs

Optimum

CRASH

Figure 17.11


6a

4

d

5c

10b

9e

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


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


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


Risk: occurrence of events that have

undesirable consequences

Delays

Increased costs

Inability to meet specifications

Project termination

Project Risk Management


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


Additional PowerPoint slidescontributed byGeoff Willis,University of Central Oklahoma.

CHAPTER

17


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.

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