Operation management 6e by russel and taylor ch09

Chapter 9
Project Management
Operations
Operations Management
Management -- 66thth Edition
Edition
Roberta Russell & Bernard W. Taylor, III

Copyright 2009 John Wiley & Sons, Inc.

Beni Asllani
University of Tennessee at Chattanooga


Lecture Outline








Project Planning
Project Scheduling
Project Control
CPM/PERT
Probabilistic Activity Times
Microsoft Project
Project Crashing and Time-Cost
Trade-off

Copyright 2009 John Wiley & Sons, Inc.

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Project Management Process
 Project


unique, one-time operational activity or effort

Copyright 2009 John Wiley & Sons, Inc.

9-3


Project Management Process
(cont.)

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9-4


Project Management Process
(cont.)

Copyright 2009 John Wiley & Sons, Inc.

9-5

Project Elements









Objective
Scope
Contract requirements
Schedules
Resources
Personnel
Control
Risk and problem analysis
Copyright 2009 John Wiley & Sons, Inc.

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Project Team and Project Manager
 Project team


made up of individuals from various areas and

departments within a company

 Matrix organization


a team structure with members from functional
areas, depending on skills required

 Project manager


most important member of project team
Copyright 2009 John Wiley & Sons, Inc.

9-7


Scope Statement and Work
Breakdown Structure
 Scope statement


a document that provides an understanding,
justification, and expected result of a project

 Statement of work


written description of objectives of a project

 Work breakdown structure (WBS)


breaks down a project into components,
subcomponents, activities, and tasks

Copyright 2009 John Wiley & Sons, Inc.

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Work Breakdown Structure for Computer Order
Processing System Project

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9-9


Responsibility Assignment Matrix
 Organizational
Breakdown
Structure (OBS)


a chart that
shows which
organizational
units are
responsible for

work items

 Responsibility
Assignment
Matrix (RAM)


Copyright 2009 John Wiley & Sons, Inc.

shows who is
responsible for
work in a
project
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Global and Diversity Issues in
Project Management
 In existing global business environment,
project teams are formed from different
genders, cultures, ethnicities, etc.
 In global projects diversity among team
members can add an extra dimension to
project planning
 Cultural research and communication are
important elements in planning process

Copyright 2009 John Wiley & Sons, Inc.

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Project Scheduling
 Steps






Define activities
Sequence
activities
Estimate time
Develop schedule

 Techniques




Gantt chart
CPM/PERT
Microsoft Project

Copyright 2009 John Wiley & Sons, Inc.

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Gantt Chart
 Graph or bar chart with a bar for each
project activity that shows passage of
time
 Provides visual display of project
schedule
 Slack


amount of time an activity can be delayed
without delaying the project
Copyright 2009 John Wiley & Sons, Inc.

9-13


Example of Gantt Chart
0

|

2

|

Month
4

|

6

|

8

|

10

Activity
Design house
and obtain
financing
Lay
foundation
Order and
receive
materials
Build house
Select paint
Select carpet
Finish work

1

3

Month

5

Copyright 2009 John Wiley & Sons, Inc.

7

9

9-14


Project Control





Time management
Cost management
Quality management
Performance management


Earned Value Analysis


a standard procedure for numerically measuring a
project’s progress, forecasting its completion date and
cost and measuring schedule and budget variation

 Communication
 Enterprise project management
Copyright 2009 John Wiley & Sons, Inc.

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CPM/PERT
 Critical Path Method (CPM)




DuPont & Remington-Rand (1956)
Deterministic task times
Activity-on-node network construction

 Project Evaluation and Review Technique
(PERT)




US Navy, Booz, Allen & Hamilton
Multiple task time estimates; probabilistic
Activity-on-arrow network construction
Copyright 2009 John Wiley & Sons, Inc.

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Project Network
 Activity-on-node (AON)


nodes represent activities,
and arrows show
precedence relationships

Node

 Activity-on-arrow (AOA)


arrows represent activities
and nodes are events for
points in time

 Event


completion or beginning
of an activity in a project

1

2

3

Branch

 Dummy


two or more activities
cannot share same start
and end nodes
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AOA Project Network for
a House
Lay
foundation

1

3
Design house
and obtain
financing

2

3
2

Dummy
0

1
Order and
receive
materials

4
Select
paint

Build
house

6

3
1

1

Finish
work
1

7

Select
carpet

5

Copyright 2009 John Wiley & Sons, Inc.

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Concurrent Activities
Lay foundation

2

Lay
foundation

3

Order material

(a) Incorrect precedence
relationship

3
Dummy
2

0
1

2

4

Order material
(b) Correct precedence
relationship

Copyright 2009 John Wiley & Sons, Inc.

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AON Network for House
Building Project
Lay foundations

Build house

4
3

2
2
Start

Finish work

7
1

1
3

Design house
and obtain
financing

3
1

Order and receive
materials

5
1

6
1
Select carpet

Select paint

Copyright 2009 John Wiley & Sons, Inc.

9-20


Critical Path
4

3

2
2
Start

7
1

1
3
3
1

A:
B:
C:
D:

1-2-4-7
3 + 2 + 3 + 1 = 9 months
1-2-5-6-7
3 + 2 + 1 + 1 + 1 = 8 months
1-3-4-7
3 + 1 + 3 + 1 = 8 months
1-3-5-6-7
3 + 1 + 1 + 1 + 1 = 7 months

6
1

5
1

 Critical path




Copyright 2009 John Wiley & Sons, Inc.

Longest path
through a network
Minimum project
completion time
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Activity Start Times
Start at 5 months

4
3

2
2
Start

Finish at 9 months

7
1

1
3
3
1
Start at 3 months

5
1

Finish

6
1
Start at 6 months

Copyright 2009 John Wiley & Sons, Inc.

9-22


Node Configuration
Activity number

Earliest start

Earliest finish

1

0

3

3

0

3
Latest finish

Activity duration

Latest start

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Activity Scheduling
 Earliest start time (ES)



earliest time an activity can start
ES = maximum EF of immediate predecessors

 Forward pass


starts at beginning of CPM/PERT network to
determine earliest activity times

 Earliest finish time (EF)




earliest time an activity can finish
earliest start time plus activity time
EF= ES + t

Copyright 2009 John Wiley & Sons, Inc.

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Earliest Activity Start and
Finish Times
Lay foundations
Build house

2

Start

3

5
4

2

5

8

3
1

0

3

7

1
Design house
and obtain
financing

8

9

1
6

3

3

4

1
Order and receive
materials

6

7

Finish work

1
5

5

6

1

Select carpet

Select pain

Copyright 2009 John Wiley & Sons, Inc.

9-25