Operation management 10e heizer render chapter 03

Operations
Management
Chapter 3 –
Project Management
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
© 2008 Prentice Hall, Inc.

3–1


Outline
 Global Company Profile: Bechtel
Group
 The Importance of Project
Management
 Project Planning
 The Project Manager
 Work Breakdown Structure

 Project Scheduling
© 2008 Prentice Hall, Inc.

3–2


Outline - Continued
 Project Controlling
 Project Management Techniques:

PERT and CPM
 The Framework of PERT and CPM
 Network Diagrams and Approaches
 Activity-on-Node Example
 Activity-on-Arrow Example
© 2008 Prentice Hall, Inc.

3–3


Outline - Continued
 Determining the Project Schedule
 Forward Pass
 Backward Pass
 Calculating Slack Time and Identifying
the Critical Path(s)

 Variability in Activity Times
 Three Time Estimates in PERT
 Probability of Project Completion
© 2008 Prentice Hall, Inc.

3–4


Outline - Continued
 Cost-Time Trade-Offs and Project
Crashing
 A Critique of PERT and CPM
 Using Microsoft Project to Manage

Projects
 Creating a Project Schedule Using MS
Project
 Tracking Progress and Managing
Costs Using MS Project
© 2008 Prentice Hall, Inc.

3–5


Learning Objectives
When you complete this chapter you
should be able to:
1. Create a work breakdown
structure
2. Draw AOA and AON networks
3. Complete both forward and
backward passes for a project
4. Determine a critical path

© 2008 Prentice Hall, Inc.

3–6


Learning Objectives
When you complete this chapter you
should be able to:
5. Calculate the variance of activity
times

6. Crash a project
7. Use Microsoft Project software
to create a project

© 2008 Prentice Hall, Inc.

3–7


Bechtel Projects
 Building 26 massive distribution centers in just
two years for the internet company Webvan
Group ($1 billion)
 Constructing 30 high-security data centers
worldwide for Equinix, Inc. ($1.2 billion)
 Building and running a rail line between London
and the Channel Tunnel ($4.6 billion)
 Developing an oil pipeline from the Caspian Sea
region to Russia ($850 million)
 Expanding the Dubai Airport in the UAE ($600
million), and the Miami Airport in Florida ($2
billion)
© 2008 Prentice Hall, Inc.

3–8


Bechtel Projects
 Building liquid natural gas plants in Yemen $2
billion) and in Trinidad, West Indies ($1 billion)

 Building a new subway for Athens, Greece ($2.6
billion)
 Constructing a natural gas pipeline in Thailand
($700 million)
 Building 30 plants for iMotors.com, a company
that sells refurbished autos online ($300 million)
 Building a highway to link the north and south of
Croatia ($303 million)

© 2008 Prentice Hall, Inc.

3–9


Strategic Importance of
Project Management
 Microsoft Windows Vista Project:
 hundreds of programmers
 millions of lines of code
 hundreds of millions of dollars cost

 Hard Rock Cafe Rockfest Project:
 100,000 + fans
 planning began 9 months in advance
© 2008 Prentice Hall, Inc.

3 – 10


Project Characteristics

 Single unit
 Many related activities
 Difficult production planning and
inventory control
 General purpose equipment
 High labor skills

© 2008 Prentice Hall, Inc.

3 – 11


Examples of Projects
 Building Construction

 Research Project
© 2008 Prentice Hall, Inc.

3 – 12


Management of Projects
1. Planning - goal setting, defining the
project, team organization
2. Scheduling - relates people, money,
and supplies to specific activities
and activities to each other
3. Controlling - monitors resources,
costs, quality, and budgets; revises
plans and shifts resources to meet

time and cost demands
© 2008 Prentice Hall, Inc.

3 – 13


Project Management
Activities
 Planning
 Objectives

 Scheduling

 Resources
 Work break-down
schedule
 Organization

 Project activities
 Start & end times
 Network

 Controlling
 Monitor, compare, revise, action
© 2008 Prentice Hall, Inc.

3 – 14


Project Planning,

Scheduling, and Controlling

Figure 3.1
Before
project
© 2008 Prentice Hall, Inc.

Start of project
Timeline

During
project
3 – 15


Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
© 2008 Prentice Hall, Inc.

Start of project
Timeline

During
project
3 – 16

Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
© 2008 Prentice Hall, Inc.

Start of project
Timeline

During
project
3 – 17


Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
© 2008 Prentice Hall, Inc.

Start of project
Timeline

During
project

3 – 18


estimates
Project Time/cost
Planning,
Budgets
Engineering
diagrams
Scheduling, and
Controlling
Cash flow charts
Material availability details

Budgets
Delayed activities report
Slack activities report
CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules
Figure 3.1
Before
project
© 2008 Prentice Hall, Inc.

Start of project
Timeline

During

project
3 – 19


Project Planning
Establishing objectives
Defining project
Creating work
breakdown structure
 Determining
resources
 Forming organization




© 2008 Prentice Hall, Inc.

3 – 20


Project Organization
 Often temporary structure
 Uses specialists from entire company
 Headed by project manager
 Coordinates activities
 Monitors schedule
and costs

 Permanent

structure called
‘matrix organization’
© 2008 Prentice Hall, Inc.

3 – 21


A Sample Project
Organization
President
Human
Resources

Marketing

Project 1

Project 2
Figure 3.2
© 2008 Prentice Hall, Inc.

Finance

Design

Quality
Mgt

Production

Mechanical
Engineer

Test
Engineer

Technician

Electrical
Engineer

Computer
Engineer

Technician

Project
Manager

Project
Manager

3 – 22


Project Organization
Works Best When
1. Work can be defined with a specific
goal and deadline
2. The job is unique or somewhat

unfamiliar to the existing organization
3. The work contains complex
interrelated tasks requiring specialized
skills
4. The project is temporary but critical to
the organization
5. The project cuts across organizational
lines
© 2008 Prentice Hall, Inc.

3 – 23


Matrix Organization
Marketing

Operations

Engineering

Finance

Project 1
Project 2
Project 3
Project 4

© 2008 Prentice Hall, Inc.

3 – 24

The Role of
the Project Manager
Highly visible
Responsible for making sure that:
 All necessary activities are finished in order
and on time
 The project comes in within budget
 The project meets quality goals
 The people assigned to the project receive
motivation, direction, and information
© 2008 Prentice Hall, Inc.

3 – 25