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7/31/2019 PM Chap014
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17-1 Project Management
William J. Stevenson
Operations Management
8th edition
17-2 Project Management
CHAPTER
17
Project
Management
McGraw-Hill/IrwinOperationsManagement, Eighth Edition, by WilliamJ. Stevenson
Copyright 2005 by The McGraw-Hill Companies, Inc. Allrights reserved.
17-3 Project Management
Unique, one-time operations designed to accomplish
a specific set of objectives in a limited time frame.
Build A
A Done
Build B
B Done
Build C
C Done
Build D
Ship
J AN FEB MAR AP R MAY JUN
On time!
Projects
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17-4 Project Management
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
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
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
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17-7 Project Management
Project Management
What are the tools?
Work breakdown structure
Network diagram
Gantt charts
Risk management
17-8 Project Management
Planning and Scheduling
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 installphones
Move in/startup
Gantt Chart
17-9 Project Management
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
Key Decisions
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17-10 Project Management
Project Manager
Responsible for:
Work QualityHuman Resources TimeCommunications Costs
17-11 Project Management
Temptation to understate costs
Withhold information
Misleading status reports
Falsifying records
Comprising workers safety
Approving substandard work
Ethical Issues
17-12 Project Management
Project Life Cycle
Concept
Feasibility
Planning
Execution
Termination
Manag
ement
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17-13 Project Management
Work Breakdown Structure
Project X
Level 1
Level 2
Level 3
Level 4
Figure 17.2
17-14 Project Management
PERT and CPM
PERT: Program Evaluation andReview 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 Project Management
The Network Diagram
Network (precedence) diagram
Activity-on-arrow (AOA)
Activity-on-node (AON)
Activities
Events
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17-16 Project Management
The Network Diagram (contd)
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 Management
Project Network Activity on Arrow
1
2
3
4
5 6
Locate
facilities
Orderfurniture
Furniture
setup
InterviewHire and
train
Remodel
Movein
Figure 17.4
AOA
17-18 Project Management
Project Network Activity on Node
1
2
3
5
6
Locatefacilities
Orderfurniture
Furniture
setup
Interview
Remodel Movein
4
Hire andtrain
7S
Figure 17.4
AON
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17-19 Project Management
Network Conventions
a
b
c ab
c
a
b
c
d
a
b
c
Dummyactivity
17-20 Project Management
Time Estimates
Deterministic
Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation
17-21 Project Management
Example 1
1
2
3
4
5 6
8 weeks
6 weeks
3 weeks
4 weeks9 weeks
11 weeks
1 week
Locate
facilit
ies
Orde
r
furnit
ureFurnitu
re
setup
Interview
Hire
andtra
in
Remodel Move
in
Deterministic
time estimates
Figure 17.5
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17-22 Project Management
Example 1 Solution
Path Length(weeks)
Slack
1-2-3-4-5-61-2-5-61-3-5-6
182014
206
Critical Path
17-23 Project Management
Network activities
ES: early start
EF: early finish
LS: late start
LF: late finish
Used to determine
Expected project duration
Slack time
Critical path
Computing Algorithm
17-24 Project Management
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
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17-25 Project Management
Probabilistic Estimates
Activity
start
Optimistic
time
Most likely
time (mode)
Pessimistic
time
to tptm te
Figure 17.8
17-26 Project Management
Expected Time
te =to + 4tm +tp
6
te = expected time
to = optimistic time
tm = most likely time
tp = pessimistic time
17-27 Project Management
Variance
2 =(tp to)
2
36
2 = varianceto = optimistic time
tp = pessimistic time
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17-28 Project Management
Example 5
1-3-
4
a
3-4-5
d
3-5-7
e
5-7-9
f
2-4-6
b
4-6-8
h
2-3-6g 3-4-
6
i
2-3-5c
Optimistic
time
Most likely
time
Pessimistic
time
17-29 Project Management
Path Probabilities
Z =Specified time Path mean
Path standard deviation
Z indicates how many standard deviations
of the path distribution the specified tine
is beyond the expected path duration.
17-30 Project Management
17
Weeks
Weeks
Weeks
Weeks
10.0
16.0
13.5
1.00
1.00
a-b-c
d-e-f
g-h-i
Example 6
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17-31 Project Management
Time-cost Trade-offs: Crashing
Crash shortening activity duration
Procedure for crashing Crash the project one period at a time
Only an activity on the critical path
Crash the least expensive activity
Multiple critical paths: find the sum of
crashing the least expensive activity on each
critical path
17-32 Project Management
Time-Cost Trade-Offs: Crashing
Totalcost
Shorten
Shorten
Cumulativecost of
crashing
Expected indirect costs
Optimum
CRASH
Figure 17.11
17-33 Project Management
6a
4
d
5c
10b
9e
2f
Example 7
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17-34 Project Management
Advantages of PERT
Forces managers to organize
Provides graphic display of activities Identifies
Critical activities
Slack activities1
2
3
4
5 6
17-35 Project Management
Limitations of PERT
Important activities may be omitted
Precedence relationships may not be correct
Estimates may include
a fudge factor
May focus solely
on critical path 1
2
3
4
5 6
142 weeks
17-36 Project Management
Computer aided design (CAD)
Groupware (Lotus Notes)
Project management software
CA Super Project
Harvard Total Manager
MS Project
Sure Track Project Manager
Time Line
Technology for Managing Projects
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17-37 Project Management
Imposes a methodology
Provides logical planning structure
Enhances team communication
Flag constraint violations
Automatic report formats
Multiple levels of reports
Enables what-if scenarios
Generates various chart types
Advantages of PM Software
17-38 Project Management
Risk: occurrence of events that have
undesirable consequences
Delays
Increased costs
Inability to meet specifications
Project termination
Project Risk Management
17-39 Project Management
Identify potential risks
Analyze and assess risks
Work to minimize occurrence of risk
Establish contingency plans
Risk Management
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17-40 Project Management
Summary
Projects are a unique set of activities
Projects go through life cycles PERT and CPM are two common techniques
Network diagrams
Project management software available
17-41 Project Management
Additional PowerPoint slidescontributed byGeoff Willis,University of Central Oklahoma.
CHAPTER
17
17-42 Project Management
Project Crashing
Crashing a project involves paying moremoney to complete a project more quickly.
Since the critical path determines the length of
a project, it makes sense to reduce the lengthof activities on the critical path.
CP activities should be reduced until theproject is reduced to the desired length or youare paying more per day than you save.
If you have multiple CPs, they should beshortened simultaneously.