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1 17-1 Project Management Operations Management William J. Stevenson 8 th edition 17-2 Project Management CHAPTER 17 Project Management McGraw-Hill/Irwin Operations Management, Eighth Edition, by William J. Stevenson Copyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved Project Management Projects JAN FEB MAR APR MAY JUN Build A A Done Build B B Done Build C C Done Build D On time! Ship Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame.
2 17-4 Project Management 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 17-5 Project Management 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 17-6 Project Management 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
3 17-7 Project Management Project Management What are the tools? Work breakdown structure Network diagram Gantt charts Risk management 17-8 Project Management Planning and Scheduling Gantt Chart 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 install phones Move in/startup 17-9 Project Management Key Decisions 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
4 17-10 Project Management Project Manager Responsible for: Work Human Resources Communications Quality Time Costs Project Management Ethical Issues Temptation to understate costs Withhold information Misleading status reports Falsifying records Comprising workers safety Approving substandard work Project Management Project Life Cycle Concept Feasibility Planning Execution Termination Management
5 17-13 Project Management Work Breakdown Structure Figure 17.2 Project X Level 1 Level 2 Level 3 Level Project Management PERT and CPM PERT: CPM: Program Evaluation and Review Technique 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 Project Management The Network Diagram Network (precedence) diagram Activity-on-arrow (AOA) Activity-on-node (AON) Activities Events
6 17-16 Project Management The Network Diagram (cont d) 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 Management Project Network Activity on Arrow Figure 17.4 AOA Locate facilities 1 Interview Order furniture 2 3 Remodel 4 Hire and train Furniture setup 5 6 Move in Project Management Project Network Activity on Node Figure 17.4 AON S Locate facilities 1 Order furniture 2 Remodel 5 Furniture setup 6 7 Move in Interview 3 Hire and train 4
7 17-19 Project Management Network Conventions a c a b b c a c a c b d b Dummy activity Project Management Time Estimates Deterministic Time estimates that are fairly certain Probabilistic Estimates of times that allow for variation Project Management Figure 17.5 Example 1 Deterministic time estimates 1 8 weeks 4 weeks Locate facilities Interview weeks Order furniture 11 weeks 4 Remodel Furniture setup 9 weeks Hire and train 3 weeks Move 5 in 6 1 week
8 17-22 Project Management Example 1 Solution Critical Path Path Length (weeks) Slack Project Management Computing Algorithm Network activities ES: early start EF: early finish LS: late start LF: late finish Used to determine Expected project duration Slack time Critical path Project Management 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
9 17-25 Project Management Probabilistic Estimates Figure 17.8 t o t m t e t p Activity start Optimistic time Most likely time (mode) Pessimistic time Project Management Expected Time t e = t o + 4t m +t p 6 t e = expected time t o = optimistic time t m = most likely time t p = pessimistic time Project Management Variance σ 2 = (t p t o )2 36 σ 2 = variance t o = optimistic time t p = pessimistic time
10 17-28 Project Management Example 5 Optimistic time Most likely time Pessimistic time a d g b e h c f i Project Management 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 Project Management Example 6 a-b-c Weeks Weeks d-e-f 16.0 Weeks g-h-i Weeks
11 17-31 Project Management 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 Project Management Time-Cost Trade-Offs: Crashing Figure Total cost Expected indirect costs Shorten Cumulative cost of crashing CRASH Shorten Optimum Project Management Example 7 5 c 6 a 10 b 9 e 2 f 4 d
12 17-34 Project Management Advantages of PERT Forces managers to organize Provides graphic display of activities Identifies Critical activities Slack activities Project Management 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 weeks Project Management Technology for Managing Projects Computer aided design (CAD) Groupware (Lotus Notes) Project management software CA Super Project Harvard Total Manager MS Project Sure Track Project Manager Time Line
13 17-37 Project Management Advantages of PM Software 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 Project Management Project Risk Management Risk: occurrence of events that have undesirable consequences Delays Increased costs Inability to meet specifications Project termination Project Management Risk Management Identify potential risks Analyze and assess risks Work to minimize occurrence of risk Establish contingency plans
14 17-40 Project Management 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 Project Management CHAPTER 17 Additional PowerPoint slides contributed by Geoff Willis, University of Central Oklahoma Project Management Project Crashing Crashing a project involves paying more money to complete a project more quickly. Since the critical path determines the length of a project, it makes sense to reduce the length of activities on the critical path. CP activities should be reduced until the project is reduced to the desired length or you are paying more per day than you save. If you have multiple CPs, they should be shortened simultaneously.
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