project management dr. ron lembke operations management

Project Management

Dr. Ron Lembke

Operations Management

What’s a Project?What’s a Project?

• Changing something from the way it is to the desired state

• Never done one exactly like this• Many related activities• Focus on the outcome• Regular teamwork focuses on the

work process

Examples of Projects

• Building construction• New product introduction• Software implementation• Training seminar• Research project

Why are projects hard?• Resources-

– People, materials• Planning

– What needs to be done?– How long will it take?– What sequence?– Keeping track of who is supposedly doing

what, and getting them to do it

IT Projects

• Half finish late and over budget• Nearly a third are abandoned before

completion– The Standish Group, in Infoworld

• Get & keep users involved & informed• Watch for scope creep / feature creep

Pinion Pine Power Plant• DOE Clean Coal

– Air-blown Integrated Gasification Combined Cycle

– Kellogg/Rust/Westinghouse gasifier

– GE Frame 6FA combustion turbine

– $335.9m, half DOE, half SPP

Coal Gasification

• Coal Gasification (new)– Coal into Low Heat

Value (LHV) gas 130 btus/standard foot

– Crushed coal and limestone absorbs sulfur

– Hot gas desulfirized– Particulate removal

• Gas Fed into turbine– Tested fine on nat gas

Technology Development

• Ash created in gasification, collected• Hot-gas cleanup (new technology)

– SO2 in collected in calcium sulfate– Hot-gas filter, then to combustion turbine– Fines combustor burns particles bottom of filter

• Main problem was filter-fines removal• Never operated more than 24 hrs.• Tried 24 times to start it. Eventually

mothballed

Project SchedulingProject Scheduling

• Establishing objectives• Determining available resources• Sequencing activities• Identifying precedence relationships• Determining activity times & costs• Estimating material & worker

requirements• Determining critical activities

Work Breakdown Structure –Fig 17.2• Hierarchy of what needs to be done, in

what order• For me, the hardest part

– I’ve never done this before. How do I know what I’ll do when and how long it’ll take?

– I think in phases– The farther ahead in time, the less detailed– Figure out the tricky issues, the rest is details– A lot will happen between now and then– It works not badly with no deadline

Mudroom

Mudroom Remodel

• Big-picture sequence easy:– Demolition– Framing– Plumbing– Electrical– Drywall, tape & texture– Slate flooring– Cabinets, lights, paint

• Hard: can a sink fit?

D

W

DW

Before:

After:

Project Scheduling TechniquesProject Scheduling Techniques

• Gantt chart• Critical Path Method (CPM)• Program Evaluation &

Review Technique (PERT)

Gantt ChartGantt Chart

J F M A M J J

Time PeriodActivity

Design

Build

Test

J F M A M J J

Time PeriodActivity

Design

Build

Test

ACTIVITY

9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29 1

permit application

permit in hand

foundation

roll floor joist

under floor - plumb

under floor - hvac

under floor - insulation

framing rough

doors-exterior

roof joist - deliver

roof joist - install

roof penetrations - plumb

roofingHVAC rough

9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29 1

plumb rough

electric rough

shingling

insulation

drywall install

drywall tape & texture

finish carpentry

paint interior

linolium

cabinets

HVAC finish

electric finishplumb finish

9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29 1

carpet

cleaning

stucco

paint exterior

rain gutters

decks

stair pad

stairs

concrete

utiliity mains

asphalt

utilities tie-intemp c of o

9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29 1

JULY AUGUST SEPTEMBER OCTOBER

BUILDING 19 -- BUILDING SCHEDULE

PERT & CPMPERT & CPM• Network techniques• Developed in 1950’s

• CPM by DuPont for chemical plants• PERT by U.S. Navy for Polaris

missile• Consider precedence relationships

& interdependencies• Each uses a different estimate of

activity times

• Completion date?• On schedule? Within budget?• Probability of completing by ...?• Critical activities?• Enough resources available?• How can the project be finished early at

the least cost?

Questions Answered by PERT & CPMQuestions Answered by PERT & CPM

PERT & CPM StepsPERT & CPM Steps

• Identify activities• Determine sequence• Create network• Determine activity times• Find critical path

• Earliest & latest start times • Earliest & latest finish times • Slack

Activity on Node (AoN)Activity on Node (AoN)

2

4? Years

EnrollReceive diploma

Project: Obtain a college degree (B.S.)

1 month

Attend class, study etc.

1

1 day

3

Activity on Arc (AoA)Activity on Arc (AoA)

4,5 ? Years

Enroll

Receive diploma


1 month

Attend class, study,

etc.1

1 day

2 3 4

AoA Nodes have meaningAoA Nodes have meaning

GraduatingSenior

Applicant


1

Alum

2 3 4

Student

Network ExampleNetwork Example

You’re a project manager for Bechtel. Construct the network.

Activity PredecessorsA --B AC AD BE BF CG DH E, F

Network Example - AONNetwork Example - AON

A

C

E

F

BD

G

H

Z

Network Example - AOANetwork Example - AOA

2

4

51

3 6 8

7 9A

C F

EBD

H

G

AOA Diagrams

2 31A

C

BD

A precedes B and C, B and C precede D

2 41A C

B

D

3

5

4

Add a phantom arc for clarity.

Critical Path AnalysisCritical Path Analysis• Provides activity information

• Earliest (ES) & latest (LS) start• Earliest (EF) & latest (LF) finish• Slack (S): Allowable delay

• Identifies critical path• Longest path in network• Shortest time project can be

completed• Any delay on activities delays project• Activities have 0 slack

Critical Path Analysis ExampleCritical Path Analysis Example

Event ID

Pred. Description Time (Wks)

A None Prepare Site 1 B A Pour fdn. & frame 6 C A Buy shrubs etc. 3 D B Roof 2 E D Do interior work 3 F C Landscape 4 G E,F Move In 1

Network SolutionNetwork Solution

AA

EEDDBB

CC FF

GG

1

6 2 3

1

43

Earliest Start & Finish StepsEarliest Start & Finish Steps

• Begin at starting event & work forward• ES = 0 for starting activities

• ES is earliest start• EF = ES + Activity time

• EF is earliest finish• ES = Maximum EF of all predecessors for

non-starting activities

Activity ES EF LS LF SlackA 0 1BCDEF

Activity AEarliest Start Solution

Activity AEarliest Start Solution

For starting activities, ES = 0.For starting activities, ES = 0.

AAEEDDBB

CC FF

GG

1

6 2 3

1

43

Activity ES EF LS LF Slack A 0 1 B 1 7 C 1 4 D 7 9 E 9 12 F 4 8 G 12 13

Earliest Start SolutionEarliest Start Solution

AAEEDDBB

CC FF

GG

1

6 2 3

1

43

Latest Start & Finish StepsLatest Start & Finish Steps

• Begin at ending event & work backward• LF = Maximum EF for ending activities

• LF is latest finish; EF is earliest finish• LS = LF - Activity time

• LS is latest start• LF = Minimum LS of all successors for

non-ending activities

Activity ES EF LS LF SlackA 0 1B 1 7C 1 4D 7 9E 9 12F 4 8G 12 13 13

Earliest Start SolutionEarliest Start Solution

AAEEDDBB

CC FFGG

1

6 2 31

43

Activity ES EF LS LF Slack A 0 1 0 1 B 1 7 1 7 C 1 4 5 8 D 7 9 7 9 E 9 12 9 12 F 4 8 8 12 G 12 13 12 13

Latest Finish Solution

Latest Finish Solution

AAEEDDBB

CC FF

GG

1

6 2 3

1

43

Activity ES EF LS LF Slack A 0 1 0 1 0 B 1 7 1 7 0 C 1 4 5 8 4 D 7 9 7 9 0 E 9 12 9 12 0 F 4 8 8 12 4 G 12 13 12 13 0

Compute SlackCompute Slack

Critical PathCritical Path

AA

EEDDBB

CC FF

GG

1

6 2 3

1

43

New notation

• Compute ES, EF for each activity, Left to Right

• Compute, LF, LS, Right to Left

C 7C 7LS LF

ES EF

Example #2

A 21A 21

E 5E 5D 2D 2B 4B 4

C 7C 7 F 7F 7

G 2G 2

21 28 28 35

35 37

28 3325 2721 25

0 21

Example #2

A 21A 21

E 5E 5D 2D 2B 4B 4

C 7C 7 F 7F 7

G 2G 2

21 28 28 35

35 37

28 3325 2721 25

0 21

F cannot start until C and D are done.G cannot start until both E and F are done.

Example #2

A 21A 21

E 5E 5D 2D 2B 4B 4

C 7C 7 F 7F 7

G 2G 2

22 26

0 21

26 28 30 35

35 37

21 28 28 35

21 28 28 35

35 37

28 3325 2721 25

0 21

E just has to be done in time for G to start at 35, so it has slack.D has to be done in time for F to go at 28, so it has no slack.

Gantt Chart - ES

0 5 10 15 20 25 30 35 40

A

B

C

D

E

F

G

Solved Problem 1

A 1A 1

B 4B 4

C 3C 3

D 7D 7

E 6E 6

F 2F 2

H 9H 9

I 4I 4

G 7G 7

Solved Problem 1

A 1A 10 1

0 1

B 4B 41 5

1 5

C 3C 36 9

1 4

D 7D 72 9

1 8

E 6E 65 11

5 11

F 2F 29 11

8 10

H 9H 99 18

8 17

I 4I 418 22

18 22

G 7G 711 18

11 18

Can We Go Faster?

Time-Cost Models

1. Identify the critical path

2. Find cost per day to expedite each node on critical path.

3. For cheapest node to expedite, reduce it as much as possible, or until critical path changes.

4. Repeat 1-3 until no feasible savings exist.

Time-Cost Example

• ABC is critical path=30

Crash cost Crashper week wks

availA 500 2B 800 3C 5,0002D 1,1002

C 10C 10B 10B 10A 10A 10

D 8D 8

Cheapest way to gain 1Week is to cut A

Time-Cost Example



availA 500 1B 800 3C 5,0002D 1,1002

C 10C 10B 10B 10A 9A 9

D 8D 8

Cheapest way to gain 1 wkStill is to cut A

Wks Incremental TotalGained Crash $ Crash $

1 500 500

Time-Cost Example



availA 500 0B 800 3C 5,0002D 1,1002

C 10C 10B 10B 10A 8A 8

D 8D 8

Cheapest way to gain 1 wkis to cut B


1 500 5002 500 1,000

Time-Cost Example



availA 500 0B 800 2C 5,0002D 1,1002

C 10C 10B 9B 9A 8A 8

D 8D 8

Cheapest way to gain 1 wkStill is to cut B


1 500 5002 500 1,0003 800 1,800

Time-Cost Example

• Critical paths=26 ADC & ABC


availA 500 0B 800 1C 5,0002D 1,1002

C 10C 10B 8B 8A 8A 8

D 8D 8

To gain 1 wk, cut B and D,Or cut CCut B&D = $1,900Cut C = $5,000So cut B&D


1 500 5002 500 1,0003 800 1,8004 800 2,600

Time-Cost Example



availA 500 0B 800 0C 5,0002D 1,1001

C 10C 10B 7B 7A 8A 8

D 7D 7

Can’t cut B any more.Only way is to cut C


1 500 5002 500 1,0003 800 1,8004 800 2,6005 1,900 4,500

Time-Cost Example



availA 500 0B 800 0C 5,0001D 1,1001

C 9C 9B 7B 7A 8A 8

D 7D 7

Only way is to cut C


1 500 5002 500 1,0003 800 1,8004 800 2,6005 1,900 4,5006 5,000 9,500

Time-Cost Example



availA 500 0B 800 0C 5,0000D 1,1001

C 8C 8B 7B 7A 8A 8

D 7D 7

No remaining possibilities toreduce project length


1 500 5002 500 1,0003 800 1,8004 800 2,6005 1,900 4,5006 5,000 9,5007 5,000 14,500

Time-Cost Example

C 8C 8B 7B 7A 8A 8

D 7D 7

No remaining possibilities toreduce project length


1 500 5002 500 1,0003 800 1,8004 800 2,6005 1,900 4,5006 5,000 9,5007 5,000 14,500

• Now we know how much it costs us to save any number of weeks

• Customer says he will pay $2,000 per week saved.

• Only reduce 5 weeks.• We get $10,000 from

customer, but pay $4,500 in expediting costs

• Increased profits = $5,500

What about Uncertainty?

PERT Activity TimesPERT Activity Times

• 3 time estimates• Optimistic times (a)• Most-likely time (m)• Pessimistic time (b)

• Follow beta distribution• Expected time: t = (a + 4m + b)/6• Variance of times: v = (b - a)2/36

Example ActivityExample Activity

• a = 2, m = 4, b = 6• E[T] = (2 + 4*4 + 6)/6 = 24/6 = 4.0• σ2 = (6 – 2)2 / 36 = 16/36 = 0.444

ExampleExample

Activity a m b E[T]variance

A 2 4 8 4.33 1

B 3 6.1 11.5 6.48 2

C 4 8 10 7.67 1

Project 18.5 4

Complete in 18.5 days, with a variance of 4.

CCBBAA4.33 6.48 7.67

Sum of 3 Normal Random Numbers

15

202

X

35

302

X

10

102

X

10 20 30 40 50 60

60

602

X

Average value of the sum isequal to the sum of the averages

Variance of the sum is equal to the sum of the variances

Notice curve of sum is more spreadout because it has large variance

Back to the Example: Probability of <= 21 wks

18.5 21

Average time = 18.5, st. dev = 2

21 is how many standard deviationsabove the mean?

21-18.5 = 2.5.St. Dev = 2, so 21 is 2.5/2 = 1.25 standard deviations above the mean

Book Table says area betweenZ=1.25 and –infinity is 0.8944

Probability <= 21 wks= 0.8944 = 89.44%

Benefits of PERT/CPMBenefits of PERT/CPM

• Useful at many stages of project management

• Mathematically simple• Use graphical displays• Give critical path & slack time• Provide project documentation• Useful in monitoring costs

Limitations of PERT/CPMLimitations of PERT/CPM

• Clearly defined, independent, & stable activities

• Specified precedence relationships

• Activity times (PERT) follow beta distribution

• Subjective time estimates• Over emphasis on critical path

ConclusionConclusion

• Explained what a project is• Summarized the 3 main project

management activities• Drew project networks• Compared PERT & CPM• Determined slack & critical path• Found profit-maximizing crash decision• Computed project probabilities

project management dr. ron lembke operations management

Documents

f slide

mudroom slide

student slide

spp slide

mothballed slide

deadline slide

pert cpm slide

nat gas slide