Operations management heizer 6e ch03

Operations
Management
Chapter 3 –
Project Management
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
© 2006
Prentice
Hall, Inc. Hall, Inc.
©
2006
Prentice

3–1


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

 Project Scheduling
© 2006 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
© 2006 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
© 2006 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
© 2006 Prentice Hall, Inc.

3–5


Learning Objectives
When you complete this chapter, you
should be able to :
Identify or Define:
 Work breakdown structure
 Critical path
 AOA and AON Networks
 Forward and backward passes
 Variability in activity times
© 2006 Prentice Hall, Inc.

3–6


Learning Objectives

When you complete this chapter, you
should be able to :
Describe or Explain:
 The role of the project manager
 Program evaluation and review
technique (PERT)
 Critical path method (CPM)
 Crashing a project
 The use of MS Project
© 2006 Prentice Hall, Inc.

3–7


Bechtel Projects
 Restoring over 650 oil wells in Kuwait left ablaze
or uncapped after Desert Storm
 Building 26 massive distribution centers in just
two years for the internet company Webvan
Group
 Constructing 30 high-security data centers
worldwide for Equinix, Inc.
 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)

© 2006 Prentice Hall, Inc.

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Bechtel Projects
 Expanding the Dubai Airport in the UAE ($600
million), and the Miami Airport in Florida ($2
billion)
 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 a highway to link the north and south of
Croatia ($303 million)

© 2006 Prentice Hall, Inc.

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Strategic Importance of
Project Management
 Bechtel Kuwait Project:
 8,000 workers
 1,000 construction professionals
 100 medical personnel
 2 helicopter evacuation teams
 6 full-service dining halls
 27,000 meals per day
 40 bed field hospital

© 2006 Prentice Hall, Inc.

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

 Ford Redesign of Mustang Project:
 450 member project team
 Cost $700-million
 25% faster and 30% cheaper than
comparable project at Ford
© 2006 Prentice Hall, Inc.

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

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Examples of Projects
 Building Construction

 Research Project
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Project Organization
Works Best When
 Work can be defined with a specific
goal and deadline
 The job is unique or somewhat
unfamiliar to the existing organization
 The work contains complex interrelated
tasks requiring specialized skills
 The project is temporary but critical to
the organization
© 2006 Prentice Hall, Inc.

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Management of Projects

 Planning - goal setting, defining the
project, team organization
 Scheduling - relates people, money,
and supplies to specific activities
and activities to each other
 Controlling - monitors resources,
costs, quality, and budgets; revises
plans and shifts resources to meet
time and cost demands
© 2006 Prentice Hall, Inc.

3 – 15


Project Management
Activities
 Planning
 Objectives

 Scheduling

 Resources
 Work break-down
schedule
 Organization

 Project activities
 Start & end times
 Network

 Controlling
 Monitor, compare, revise, action
© 2006 Prentice Hall, Inc.

3 – 16


Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
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Start of project
Timeline

During
project
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Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
© 2006 Prentice Hall, Inc.

Start of project
Timeline

During
project
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Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
© 2006 Prentice Hall, Inc.

Start of project
Timeline

During
project
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Project Planning,
Scheduling, and Controlling

Figure 3.1
Before

project
© 2006 Prentice Hall, Inc.

Start of project
Timeline

During
project
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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
© 2006 Prentice Hall, Inc.

Start of project
Timeline

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

© 2006 Prentice Hall, Inc.

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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’
© 2006 Prentice Hall, Inc.

3 – 23


A Sample Project
Organization
President
Human
Resources

Marketing

Project 1

Project 2
Figure 3.2
© 2006 Prentice Hall, Inc.

Finance

Design

Quality
Mgt

Production

Mechanical
Engineer

Test
Engineer

Technician

Electrical
Engineer

Computer
Engineer

Technician

Project
Manager

Project
Manager

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Matrix Organization
Marketing

Operations

Engineering

Finance

Project 1
Project 2
Project 3
Project 4

© 2006 Prentice Hall, Inc.

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