Introduction to operations and supply chain management 3e bozarth chapter 14

Managing Projects
Chapter 14


Chapter Objectives
Be able to:

Explain the difference between routine business activities and
projects.
Describe the five major phases of a project.
Construct a Gantt chart and interpret the results.
Construct a project network diagram and calculate the earliest
and latest start and finish times for all activities.
Identify the critical activities and paths in a network.
Crash a project.

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Project
 Project – A temporary endeavor undertaken
to create a unique product, service, or result.
© 2008 Project Management Institute

 Projects have clear starting and ending points after which
the people and resources dedicated to the project are
reassigned.
 Projects are non-routine, can be large or small, and may be
difficult to manage.

 Projects typically require significant levels of crossfunctional and interorganizational coordination.
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Project Management
 Project Management – The application of
knowledge, skills, tools, and techniques to
project activities to meet project
requirements.
© 2008 Project Management Institute

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Project Management
Trends
 The faster pace of strategic change
 New product lines are introduced more often to fight off
competitors.
 Information technology solutions become quickly out-ofdate.
 Customer and supplier networks quickly change.

 The changing role of middle management
 The role has decreased due to more advanced information
systems handling many of the tasks.
 Responsibilities given to middle managers have been pushed

down to supervisors and employees.
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Project Phases






Concept phase
Project definition phase
Planning phase
Performance phase
Postcompletion phase

Figure 14.1

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Project Phases
 Concept Phase
 Broad definition and scope
 Budget estimates within  30%

 Project definition Phase
 Tentative schedules and budgets, organization, key
personnel and resource requirements
 Budget estimates refined within  5% to 10%

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Project Phases
 Planning phase

 Detailed plans, timing, budgets and resources
 Milestones
 Project management tools and techniques

 Performance phase

 Execution and control

 Postcompletion phase

 “Wrap-up”
 Reassignment of project resources
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Project Management Tools
 Gantt charts – Graphical tools used to show
expected start and end times for project activities
and to track actual progress against these time
targets.
 Network diagrams – Graphical tools that show the
logical linkages between activities in a project.

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Gantt Charts

Table 14.2

Activities can occur simultaneously and some have
predecessors that must be completed beforehand.
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Gantt Charts
Figure 14.2

Shows that the project should be completed by the end
of Week 18 and when specific activities should

start and finish.
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Network Diagrams
 Critical-path method – A network-based technique
in which there is a single time estimate for each
activity.
 Program evaluation and review technique (PERT) –
A network-based technique in which there are
multiple time estimates for each activity.

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Constructing a Network Diagram
 Identify each unique activity in a project by a capital letter that
corresponds only to that activity.
 Represent each activity in the project by a node that shows the estimate
length. (Activity on node (AON) diagram.)
 If an activity has an immediate predecessor(s), show the relationship by
connecting the two activities with an arrow.
 Determine the earliest start time (ES) and earliest finish time (EF) for each
activity by performing a forward pass.
 Determine the latest finish time (LF) and latest starting time (LS) for each
activity by doing a backward pass.

 Determine the critical activities and path(s) in the project.
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Network Diagrams
 Critical path – A network path that has the longest, or is tied
for the longest, linked sequence of activities.
 Project duration – The duration of a project is equal to the
duration of the critical path.
 Network path – A logically linked sequence of activities in a
network diagram.
 Critical activities – Project activities for which the earliest
start time and latest start time are equal.
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AON Example – Gina3000
 Use the following data to develop a network
diagram:

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AON Example – Gina3000

 Network Diagram

Figure 14.4

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AON Example – Gina3000
 Identify the Paths:









ACFGJ
ACDEGJ
ACDEHJ
ACDEIJ
BCFGJ
BCDEGJ
BCDEHJ
BCDEIJ
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AON Times and Slack
 Earliest Start Time (ES)
 = Latest EF for all immediate predecessors

 Earliest Finish Time (EF)
 = ES + activity’s duration

 Latest Start Time (LS)
 = LF – activity’s duration

 Latest Finish Time (LF)
 = Earliest LS for all immediate successors

 Slack = amount of allowable delay in an activity
 = Equal to LS – ES or LF – EF for an activity
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AON Example – Gina 3000

Table 14.3

Calculate Earliest Start and Earliest Finish Times
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AON Example – Gina 3000

Table 14.4

Calculate Latest Start and Latest Finish Times
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AON Example – Gina 3000
 Identify the Critical Path(s)









ACFGJ = 13 weeks
ACDEGJ = 17 weeks
ACDEHJ = 17 weeks
ACDEIJ = 17 weeks
BCFGJ = 14 weeks
BCDEGJ = 18 weeks

BCDEHJ = 18 weeks
BCDEIJ = 18 weeks

The activities in these critical
paths have no slack.
The project should be completed
in 18 weeks.

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Crashing a Project
 Crashing a Project – Shortening the overall duration
of a project by reducing the time it takes to perform
certain activities.
 List all network paths and their current lengths and mark all activities
that can be crashed.
 Focus on the critical path or paths. Working one period at a time,
choose the activity or activities that will shorten all critical paths at the
least cost. The one rule is this: Never shorten an activity that is not on
a critical path, regardless of the cost. Doing so will not shorten the
project; it will only add costs.
 Recalculate the lengths of all paths and repeat step 2 until the target
project completion is reached or until all options have been exhausted.
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Crashing Example 14.3
Courter Corporation
 Use the following data to develop a schedule to complete
the project within 23 weeks:

Table 14.5
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Crashing Example 14.3
Courter Corporation
 Network Diagram:

Figure 14.6
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Crashing Example 14.3
Courter Corporation
 Calculate ES, EF, LS, and LF for each activity

* Critical Activity

Note: Critical Activities have a Slack = 0

Table 14.6
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