Operation management 9e stevenson mcgrwhill chap017

17

Project
Management

McGraw-Hill/Irwin

Copyright © 2007 by The McGraw-Hill Companies, Inc. All


Learning Objectives







Discuss the behavioral aspects of projects
in terms of project personnel and the
project manager.
Discuss the nature and importance of a
work breakdown structure in project
management.
Give a general description of PERT/CPM
techniques.
Construct simple network diagrams.
17-2


Learning Objectives






List the kinds of information that a PERT or
CPM analysis can provide.
Analyze networks with deterministic times.
Analyze networks with probabilistic times.
Describe activity “crashing” and solve
typical problems.

17-3


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.
17-4


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
 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
 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

17-7


Project Management
 What are the tools?





Work breakdown structure
Network diagram
Gantt charts
Risk management

17-8


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


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

17-10


Project Manager
Responsible for:
Work
Human Resources
Communications

Quality
Time
Costs

17-11


Ethical Issues
 Temptation to understate costs
 Withhold information
 Misleading status reports
 Falsifying records
 Comprising workers’ safety
 Approving substandard work

17-12


Project Life Cycle

Concept

Planning
Execution

Management

Feasibility

Termination

17-13


Work Breakdown Structure

Figure 17.2

Project
Project X
X

Level 1
Level 2
Level 3

Level 4

17-14


PERT and CPM
PERT:
Program Evaluation and
Review Technique
CPM:
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

17-15


The Network Diagram
 Network (precedence) diagram – diagram of
project activities that shows sequential
relationships by the use of arrows and nodes.
 Activity-on-arrow (AOA) – a network diagram
convention in which arrows designate activities.

 Activity-on-node (AON) – a network diagram
convention in which nodes designate activities.
 Activities – steps in the project that consume
resources and/or time.
 Events – the starting and finishing of activities,
designated by nodes in the AOA convention. 17-16


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
17-17


Project Network – Activity on
Arrow
Figure 17.4
AOA

Locate
facilities

Order
furniture

4
Furniture
setup

2
Remodel

1

5

Interview

3

Move
in

6

Hire and
train

17-18

Project Network – Activity on
Node
Figure 17.4
Order
furniture

AON

Locate
facilities

Furniture
setup

2

6

1

Move
in

Remodel

5

S

Interview

3

7

Hire and
train

4

17-19


Network Conventions
a
c

a

c

b

a

a

c
b

b

b

d

c
Dummy
activity

17-20


Time Estimates
 Deterministic
 Time estimates that are fairly certain

 Probabilistic
 Estimates of times that allow for variation

17-21


Example 1

Figure 17.5

8 weeks
ate s

c
Lo ilitie
fac

2

4

er e
d
r
O
tu r
i
n
fur
Rem
ode
l
11 weeks

re
nitu
Fur p
u
set

Deterministic
time estimates

6 weeks

1

3 weeks

5

In
te
rv
i
4 weeks ew

in
a
r
t

Move
in
1 week

6

nd
a
re
Hi
9 weeks

3

17-22


Example 1 Solution
Critical Path

P a th

L e n g th

S la c k

(w e e k s )

1 -2 -3 -4 -5 -6
1 -2 -5 -6
1 -3 -5 -6

18
20
14

2
0
6

17-23

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

17-24


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

17-25