Lecture Fundamentals of operations management (4/e): Chapter 4 - Davis, Aquilano, Chase

DAVIS
F   O   U   R   T   H       E   D   I   T   I   O   N

AQUILANO
CHASE

supplement 3

Project Management
PowerPoint
Presentation
by
Charlie
Cook

© The McGraw-Hill Companies, Inc., 2003


Supplement Objectives
Supplement Objectives
• Recognize that project management involves both people
skills to coordinate and motivate individuals from a range of
disciplines and technical skills to properly plan and
schedule a project.
• Explain the role of the project manager in organizing and
coordinating all activities performed in a project.
• Introduce critical path scheduling as a tool for identifying
activities that require immediate attention.
• Identify the time–cost trade-offs involved in expediting the
completion of a project.
• Discuss some of the criticisms often associated with project

© The McGraw­Hill 
management techniques.

Fundamentals of Operations 
Management 4e 

Companies, Inc., 2003
S3–2


Definition of Project Management
Definition of Project Management
• Project
–Series of related jobs or tasks focused on the
completion of an overall objective.

• Project Management
–Planning, directing, and controlling resources to
meet the technical, cost, and time constraints of
the project.

• Program
–Synonym for a project, although it also can
consist of several interrelated projects.
© The McGraw­Hill 
Fundamentals of Operations 
Companies, Inc., 2003
Management 4e 
S3–3

Project Management: Key Terms
Project Management: Key Terms
• Task (Activity)
–A subdivision of a project perform by one group
or organization.

• Subtask
–Used to break a project into more meaningful
pieces.

• Work Package
–A group of activities combined to be assignable
to a single organizational unit.

• Milestones

© The McGraw­Hill 
–Specific events to be reached
at points in time.
Fundamentals of Operations 
Companies, Inc., 2003
Management 4e 
S3–4


Work Breakdown Structure
Work Breakdown Structure
• Work Breakdown Structure
–Method by which a project is divided into tasks

and subtasks.
Level
1 Program
2
Project
3
Task
4
Subtask
5
Work
Package
© The McGraw­Hill 
Fundamentals of Operations 
Companies, Inc., 2003
Management 4e 
S3–5


Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.1
S3–6


Key Factors in a Breakdown Structure
Key Factors in a Breakdown Structure

• Allow the activities to be worked on
independently.
• Make them of manageable size.
• Give authority to carry out the program.
• Monitor and measure the program.
• Provide the required measures.

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
S3–7


Organizational Considerations in 
Organizational Considerations in 
Project Management
Project Management
• Role of the Project Manager
–Using social and technical skills to manage
across traditional functional lines to create a
collaborative culture.

• High-Performance Project Teams
–Creating a successful team requires
consideration of:
• Task-related variables
• People-related variables
• Leadership variables

• Organization variables
Fundamentals of Operations 

Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
S3–8


Organizational Considerations in 
Organizational Considerations in 
Project Management (cont’d)
Project Management (cont’d)
• Barriers to High Team Performance:
–Different points of view
–Role conflicts
–Power struggles

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
S3–9


Project Control
Project Control
• Gantt Chart

–Graphical technique that shows the amount of
time required for each activity and the sequence
in which the activities are to be performed.

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
S3–10


Gantt Chart
Gantt Chart

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.2A
S3–11


Total Program Cost Breakdown
Total Program Cost Breakdown

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.2B
S3–12


Divisional Breakdown of Costs and Labor Hours
Divisional Breakdown of Costs and Labor Hours

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.2C
S3–13


Cost and 
Cost and 
Performance 
Performance 
Tracking 
Tracking 
Schedule
Schedule

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.2D
S3–14


Bar/Milestone Chart
Bar/Milestone Chart

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.2E
S3–15


Critical Path Scheduling
Critical Path Scheduling
• PERT (Program Evaluation and Review
Technique)
–The technique developed by the U.S. Navy for
planning the Polaris missile project.

• CPM (Critical Path Method)
–Technique developed by J. E. Kelly and M.
R.Walker to schedule preventative maintenance
shutdowns of chemical processing plants.
• Identifies the longest time-consuming path

through a network of tasks required to complete a
project (i.e., the shortest time
in which the project
© The McGraw­Hill 
can be completed).
Fundamentals of Operations 
Companies, Inc., 2003

Management 4e 

S3–16


Critical Path Scheduling
Critical Path Scheduling
• Project Characteristics
–Well-defined jobs or tasks indicating completion
of the project.
–Tasks must be independent of each other.
–Job or tasks are ordered such that each must
follow a particular or given sequence.

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
S3–17

CPM Key Terms
CPM Key Terms
• Slack Time
– The amount of time the starting of an activity
can be delayed without affecting the earliest
completion date of the overall project.
• Early start (ES): the earliest possible time an
activity can begin.
• Early finish time (EF): the early start time plus the
time need to complete the activity.
• Late finish time (LF): the latest time an activity can
end without delaying the project.
• Late start time (LS): the late finish time minus the
© The McGraw­Hill 
time needed to complete the
activity.

Fundamentals of Operations 
Management 4e 

Companies, Inc., 2003
S3–18


CPM with a Single Time Estimate
CPM with a Single Time Estimate
Step 1: Identify all project activities.
Step 2: Sequence activities and construct
network.
Step 3: Determine the critical path.

Step 4: Determine slack times.
Step 4.1: Find the EF and ES for each
activity.
Step 4.2: Find the LS and LF for each
activity.
Step 4.3: Determined© The McGraw­Hill 
the total slack time
for each activity.
Fundamentals of Operations 
Companies, Inc., 2003
Management 4e 
S3–19


CPM Network for Computer Design Project
CPM Network for Computer Design Project

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.3
S3–20


CPM Key Terms (cont’d)
CPM Key Terms (cont’d)
• Early Start Schedule
–The earliest time that each activity in the project

can be started.

• Late Start Schedule
–The latest start time that each activity can be
started without affecting the overall completion
time.

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
S3–21


CPM Network for Computer Design Project
CPM Network for Computer Design Project

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.4
S3–22


CPM with Three Activity Time Estimates
CPM with Three Activity Time Estimates
Step 1: Identify activities.

Step 2: Sequence activities and construct network.
Step 3: Determine the three time estimates for
each activity.
a = optimistic time
m = most likely time
b = pessimistic time
Step 4: Calculate the expected time (ET) for each
activity.

ET a 4m b
6 © The McGraw­Hill 

Fundamentals of Operations 
Management 4e 

Companies, Inc., 2003
S3–23


Typical Beta Curves
Typical Beta Curves

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.5
S3–24

CPM with Three Activity Time Estimates
CPM with Three Activity Time Estimates
Step 5: Calculate the variance (σ2) for each activity.
2

b a
6

2

Fundamentals of Operations 
Management 4e 

© The McGraw­Hill 
Companies, Inc., 2003
Exhibit S3.6
S3–25