project management managing the transformation process

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Project Management Project Management Managing the Transformation Process Managing the Transformation Process

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Page 1: Project Management Managing the Transformation Process

Project ManagementProject Management

Managing the Transformation ProcessManaging the Transformation Process

Page 2: Project Management Managing the Transformation Process

What is a project ?What is a project ?

A project is a series of tasks (jobs) performed sequentially or in parallel aiming to achieve an important goal, and requiring a significant amount of resources and time

Page 3: Project Management Managing the Transformation Process

Some examples of projects …Some examples of projects …

• The adoption of an ERP system by a manufacturer (new process)

• The construction of the new management building at Tech Square (new product)

• The group assignment that you have to write for this course (new product)

• The development of an Unmanned Aerial Vehicle - UAV (new product)

Page 4: Project Management Managing the Transformation Process

What is project management about ?What is project management about ?

Project management is about the administrative tasks that determine the planning, directing, and controlling of resources in order to meet the technical, cost, and time constraints of the project

Page 5: Project Management Managing the Transformation Process

Project ManagementProject Management

• Project-Based

• Functional-Based

• Matrix Organization

A Project can be organized in different ways (based on who is managing the project) …

Page 6: Project Management Managing the Transformation Process

Project-Based OrganizationProject-Based Organization

Marketing R&D Operations

Project Manager

Project Manager

Project Managers have

more power

“Heavy Weight” Project Manager

Project 1

Project 2

Page 7: Project Management Managing the Transformation Process

Functional-Based OrganizationFunctional-Based Organization

Marketing manager R&D manager

Functional managers have more power

Operations manager

Project 1

Project 2

Project 3

Project 1

Project 2

Project 1

Project 2

Project 3

Project 4

Page 8: Project Management Managing the Transformation Process

Matrix OrganizationMatrix Organization

Marketing manager R&D manager

Project 1

Project 2

Operations manager

Proj

ect M

anag

erPr

ojec

t Man

ager

Page 9: Project Management Managing the Transformation Process

Project Control ToolsProject Control Tools

1. Gantt charts

2. Overall cost breakdown

3. Divisional cost breakdown

4. Stage-Gate (milestone chart)

5. Cost-Performance tracking schedule

Page 10: Project Management Managing the Transformation Process

Gantt ChartGantt Chart

0 5 10 15 20 25 30 35 40 45 50 55 60

Time (Days)

A10

A9

A8

A7

A6

A5

A4

A3

A2

A1

Acti

vit

y

A Gantt chart shows each activity with time lengths and precedence relationships.

Page 11: Project Management Managing the Transformation Process

Overall Cost BreakdownOverall Cost Breakdown

Time

Cost ($)

Labor cost

Material cost

Overall cost Overall cost breakdown can be used to control which resources are being used effectively

Page 12: Project Management Managing the Transformation Process

Stage-Gate (Milestones)Stage-Gate (Milestones)

Phase 0

Planning

Phase 1Concept Development

Phase 2System-level Design

Phase 3Detail Design

G1 G2 G3 …

In every development process formal stage-gates (milestones) contribute to the timely completion of the project.

Page 13: Project Management Managing the Transformation Process

Project ManagementProject Management

How can we plan the evolution of a project ?

• Activity-on-arrow diagrams (AOA)

• Activity-on-node diagrams (AON)

We need to represent precedence relationships, showing the sequence

and interdependence of activities!

Page 14: Project Management Managing the Transformation Process

Project ManagementProject Management

EXAMPLE: Planning for a vacation…

Activity Description Dependence

A1 Determine continent -

A2 Check for possible spots within continent A1

A3 Find out how many days can take off A1

A4 Submit request for vacation permission A1, A3

A5 Approval of request A2, A4

A6 Comparison for tickets and lodging A2, A4

A7 Final choice of destination A6

A8 Final confirmation for all checks A5, A7

Page 15: Project Management Managing the Transformation Process

Project ManagementProject Management

The activity-on-arrow diagram

A1A2

A3

A4

A5

A6A7

A8

Page 16: Project Management Managing the Transformation Process

Project ManagementProject Management

The activity-on-node diagram

A1

A3

A2

A4

A5

A6

A8

A7

Page 17: Project Management Managing the Transformation Process

Project ManagementProject Management

Activity Description Dependence

A1 Ground studies -

A2 Do a geological analysis for a bridge A1

A3 Study the required traffic changes A1

A4 Subcontractor conducts the bridge plans A1, A2

A5 Auction for main constructing company A1, A2

A6 Construction company presents full plan A1, A2, A5

A7 Capital raising activity A1, A2, A4

A8 Auction for subcontracting roads company A1, A3

A9 Presentation for new traffic arrangements A1, A3, A8

A10 Finalization of funding percentages A1, A2, A4, A5, A6, A7

A11 Construction approval A9, A10

EXAMPLE: Bridge Construction…

Page 18: Project Management Managing the Transformation Process

Project ManagementProject Management

The activity-on-arrow diagram

A1A2

A3

A4

A5

A8

A7

A6

A10

A9

A11

Page 19: Project Management Managing the Transformation Process

Project ManagementProject Management

1. They show precedence relationships among activities

2. They can be solved in order to identify the key steps for the completion of the project…

Why are project networks useful?

The Critical Path

Page 20: Project Management Managing the Transformation Process

Critical PathCritical Path

What is a critical path?

The critical path of a project is a series of tasks that determine the amount of time it will take to

complete the project. The critical path of activities forms the longest chain of tasks in order

to complete the project.

Page 21: Project Management Managing the Transformation Process

Critical PathCritical Path

Example…

What is the longest path to get from the starting node…

… to the completion node?

2

3

5

3

1

Page 22: Project Management Managing the Transformation Process

Critical PathCritical Path

Let’s work it out…

2

3

5

3

1

0 /

2 /

3/

7 / 8 /

Forward completion (early start/finish) analysis: find out how long will it take to complete the

project IF WE START TODAY

Page 23: Project Management Managing the Transformation Process

Critical PathCritical Path

… and …

Backward completion (late start/finish) analysis: find out when to start given that the project

must be done in 10 weeks!

2

3

5

3

1

/ 2

/ 4

/ 6

/ 9 / 10

Page 24: Project Management Managing the Transformation Process

Critical PathCritical Path

2

3

5

3

1

0 / 2

2 / 4

3 / 6

7 / 9 8 / 10

The difference between the two values at each node is called a slack time!

The critical path is the sequence of tasks with the SMALLEST slack time!!

Page 25: Project Management Managing the Transformation Process

Critical PathCritical Path

Another way to find it…

2

3

5

3

1

0 / 0

2 / 2

3 / 4

7 / 7 8 / 8

Set the early completion time as the available time for the project!

Page 26: Project Management Managing the Transformation Process

Critical PathCritical Path

The critical path is…

2

3

5

3

1

What does this actually mean?

One day of delay on the critical path is one day of delay for the entire project!

Page 27: Project Management Managing the Transformation Process

Critical PathCritical Path

1. The Critical Path Method (CPM) determines the set of activities that impact the project completion time.

2. CPM applies only in cases where times are deterministic.

3. Management should concentrate effort on monitoring activities on the critical path.

Page 28: Project Management Managing the Transformation Process

Back to the construction example…

33

4

5

4

6

6

5

2

3

1

What is the critical path?

Critical PathCritical Path

Page 29: Project Management Managing the Transformation Process

33

4

5

4

6

6

5

2

3

1

/

/

/

/

/

/

/ / / /

Critical PathCritical Path

Page 30: Project Management Managing the Transformation Process

33

4

5

4

6

6

5

2

3

1

0/

7/

3/

6/

13/

11/

10/ 17/ 19/ 20/

Critical PathCritical Path

Page 31: Project Management Managing the Transformation Process

33

4

5

4

6

6

5

2

3

1

0/0

7/10

3/3

6/6

13/16

11/11

10/12 17/17 19/19 20/20

Critical PathCritical Path

So, what is the critical path?…

Page 32: Project Management Managing the Transformation Process

The critical path is…

33

4

5

4

6

6

5

2

3

1

Critical PathCritical Path

Page 33: Project Management Managing the Transformation Process

Developing an Unmanned Aerial Vehicle (UAV)

Activity Description Duration Dependence

A1 Study aerodynamics of a small plane 2 -

A2 Identify the telecom guidance system 1 -

A3 Test on the reliability of Tele-guidance 3 A2

A4 Conduct air-tunnel dynamics test 4 A1

A5 Determine the base guidance installation 2 A2

A6 Construct phase I flying prototype 4 A2, A3

A7 Integrate guidance on phase I prototype 2 A1, A2, A3, A4, A6

A8 Determine ranges and location of base 2 A2, A5

A9 Phase II prototype flight 5 A1, A2, A3, A4, A6, A7

A10 Final prototype in coordination with base 2 A8, A9

Critical PathCritical Path

Page 34: Project Management Managing the Transformation Process

1 3

2

24

2

2

5

24

The project network is…

Critical PathCritical Path

What is the critical path ?…

Page 35: Project Management Managing the Transformation Process

1 3

2

24

2

2

5

24

The critical path is…

Critical PathCritical Path

Page 36: Project Management Managing the Transformation Process

Time-Cost Trade-offTime-Cost Trade-off

• Two concerns:– Time to complete the project– Cost to complete the project

• Costs:– Activity direct costs – costs directly associated with

activities– Project indirect costs – costs associated with sustaining the

project• We can shorten tasks (“crash” them). This would

– Increase activity direct costs– Decrease indirect costs if the project finishes earlier

Page 37: Project Management Managing the Transformation Process

Time/Cost Tradeoff DataTime/Cost Tradeoff Data

• Normal time: original time estimate for activity• Normal cost: cost to complete activity in normal time• Crash time: the shortest possible activity time• Crash cost: the cost to complete activity in crash time• Unit crash cost: cost to shorten activity time by one

time unit• Example:

– normal time = 5 days, normal cost =10– crash time = 2 days, crash cost = 16– Unit crash cost = (16-10)/(5-2) = 2/day

Page 38: Project Management Managing the Transformation Process

1. Prepare the CPM network diagram

2. Determine the cost per unit time to “crash” activities.

3. Compute the critical path

4. If possible, shorten the critical path at the least cost (one day at a time).

5. Repeat steps 3 and 4.

Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off

Page 39: Project Management Managing the Transformation Process

Consider the following project…

“Crashing” projects

Assume that it takes $1000 per day to crash A3, and $500 per day to crash A2. Total available budget to spend on crashing activities is $4000.

Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off

A1(2)

A2(3)

A3(5)

A4(3) A5(1)

Page 40: Project Management Managing the Transformation Process

Which activities would you “crash” to minimize the project duration with the

available budget?By how many days ?

Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off

Page 41: Project Management Managing the Transformation Process

Resource Allocation & Cost/Time Trade-OffResource Allocation & Cost/Time Trade-Off

Decision: Total $ Spent:

Crash A3 by 1 day $1000

Crash A2 and A3 by 1 day $1000+$1500 = $2500

Crash A2 and A3 by 1 day $2500+$1500 = $4000

Summary of steps:

Crash A3 by 3 days

Crash A2 by 2 days

Before: 8 days

After: 5 days (at a cost of $4000)

Page 42: Project Management Managing the Transformation Process

ExampleExample

A

B

C

D

Act. NT NC CT CC Max redn Unit crash costA 2 6 1 10 1 (10-6)/(2-1)=4 B 5 9 2 18 3 (18-9)/(5-2)=3 C 4 6 3 8 1 2D 3 5 1 9 2 2

Project indirect cost: $10 up to 8 days, $5 more per day beyond that