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Production and Operations Management Systems. Chapter 7: Project Management Sushil K. Gupta Martin K. Starr 2014. After reading this chapter, you should be able to (continued):. Draw project network diagrams. Find critical paths and project durations. - PowerPoint PPT Presentation
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Production and Operations Management Systems
Chapter 7: Project Management
Sushil K. Gupta
Martin K. Starr
2014
1
After reading this chapter, you should be able to (continued):
Draw project network diagrams.
Find critical paths and project durations.
Calculate early start, early finish, late start and late finish
times of activities.
Explain how to use forward-pass calculations to determine the
shortest feasible time for project completion.
Explain how to use backward-pass calculations to determine
which project activities are on the critical path.
2
After reading this chapter, you should be able to (continued):
Describe what slack means; explain how to derive it.
Crash activities (including multiple paths) to reduce project duration;
perform time-cost tradeoff analysis.
Analyze probabilistic projects; explain when deterministic and
probabilistic estimates for activity times apply.
Show how to use optimistic and pessimistic activity time estimates to
obtain a variance measure for activity times.
Identify implications of limited resources.
3
Introduction
Projects consist of a set of goal-oriented activities that end when the goal is achieved.
Such undertakings are time-based endeavors and have a finite planning horizon.
Projects are special work configurations designed to accomplish singular or nearly singular goals.
Examples include: putting on one play, writing new software, constructing a building, launching a new product, redesigning an established traditional hotel, and developing a new service etc.
In this presentation we discuss management of projects.
4
Classification of Projects
Projects can be classified according to the following criteria:
Degree of simplicity to change things.
Degree of complexity reflecting the number of people, teams,
components and activities.
Frequency of repetition.
Number of new activities involved.
. .
5
Managing Projects
Competent project management methods keep track of what is required at start up, what has been done as it progresses and what still needs to be done.
Good project methods point to activities that are critical for completion.
Project managers expedite important activities that seem to be slipping.
These points are part of the five project life cycle stages (below):
1.Begin by describing goals which requires developing and specifying the desired project outcomes.
6
Managing Projects (continued)
1. On prior page
2. Planning the project requires specifying (in detail) the activities that are essential to accomplish the goals. It involves planning the management of the project including the timing of the activities.
3. Carrying out the project requires doing the activities as scheduled.
4. Completing the project can mean disbanding work groups and closing down the project-management team.
5. The use of continuous project teams is an increasingly attractive option.
7
Project Management Origins
Starting about 1957, two similar approaches to large-scale project network planning and tracking were begun at separate locations and for different reasons. These were:
PERT—program evaluation review techniqueCPM—critical path method
PERT was developed by the U.S. Navy Special Projects Office in conjunction with Booz Allen Hamilton for the Polaris submarine launched missile project.
There were about 100,000 activities divided amongst thousands of suppliers.
8
Project Management Origins (continued)
CPM was a similar method developed by DuPont and Remington Rand, which later became Unisys. It was used to design and coordinate chemical plant operations.
The essential difference between PERT and CPM is in specifying the times for performing various activities.
PERT was used for projects where the activity times were not certain because project managers were unfamiliar with the activities.
On the other hand the projects and activities were familiar to the project managers in the case of CPM.
These days the distinction between PERT and CPM seems to be disappearing and together these are called PERT/CPM or simply network techniques. These two methods share the notion of a critical path as discussed later in the chapter.
9
Project Network
The following steps are required to utilize these network models.
Make a list of all activities that are required to complete the project.
Establish the precedence relationships among activities and document the rationale for these relationships.
Estimate the time to perform each task or activity using one of the following two options.Option 1: deterministic estimates for activity times. Option 2: probabilistic estimates for activity times.
Draw the precedence diagram (of project activities).Develop a project schedule.
10
Project Management Example
ActivityImmediate
PredecessorsImmediate Followers
Time (Weeks)
A None D 9B None E,F 5C None G 7D A H 12E B H 8F B I 6G C I 11H D,E I 5I F,G,H J 4J I None 10
Note: Either Immediate Predecessors or Immediate Followers need to be specified.
Activity on Node (AON) Diagram
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Finding Critical Path and Project Duration
A
C
B
D
E
F
I
G
H
J
LengthA D H I J 40 Critical Path
B E H I J 32B F I J 25
C G I J 32
Paths
ActivityTime
(Weeks)
A 9
B 5C 7D 12E 8F 6G 11H 5I 4J 10
12
Early Start and Early Finish Times
A
C
B
D
E
F
I
G
H
J
ActivityTime
(Weeks)
Early Start Time
(Weeks)
Early Finish Time
(Weeks)
A 9 0 9
B 5 0 5C 7 0 7D 12 9 21E 8 5 13F 6 5 11G 11 7 18H 5 21 26I 4 26 30J 10 30 40
Early Finish Time = Early Start Time + Activity Time
13
Late Start and Late Finish Times
A
C
B
D
E
F
I
G
H
J
Late Start Time = Late Finish Time - Activity Time
ActivityTime
(Weeks)
Late Start Time
(Weeks)
Late Finish Time
(Weeks)
A 9 0 9
B 5 8 13C 7 8 15D 12 9 21E 8 13 21F 6 20 26G 11 15 26H 5 21 26I 4 26 30J 10 30 40
14
Slack Time
ActivityTime
(Weeks)
Early Start Time
(Weeks)
Early Finish Time
(Weeks)
Late Start Time
(Weeks)
Late Finish Time
(Weeks)
Slack Time
(Weeks)
A 9 0 9 0 9 0B 5 0 5 8 13 8C 7 0 7 8 15 8D 12 9 21 9 21 0E 8 5 13 13 21 8F 6 5 11 20 26 15G 11 7 18 15 26 8H 5 21 26 21 26 0I 4 26 30 26 30 0J 10 30 40 30 40 0
Slack Time = Late Finish - Early Finish = Late Start - Early Start
Paths LengthA D H I J 40 Critical Path
B E H I J 32
B F I J 25
C G I J 3215
Reducing Project Duration: Crashing of Activities
16
Data for Crashing
ActivityImmediate
Predecessor (s)
Normal Time
(weeks)
Crash Time (weeks)
Normal Cost ($)
Crash Cost ($)
Cost of Crashing/
Week
Maximum Crashing Possible
A None 9 6 $13,000 $15,550 $850 3
B None 5 4 $7,000 $7,900 $900 1
C None 7 5 $15,000 $15,800 $400 2
D A 12 8 $12,000 $14,800 $700 4
E B 8 5 $9,000 $10,500 $500 3
F B 6 4 $5,000 $6,200 $600 2
G C 11 9 $13,000 $14,000 $500 2
H D,E 5 4 $8,000 $9,000 $1,000 1
I F,G,H 4 3 $3,000 $3,500 $500 1
J I 10 8 $12,000 $15,000 $1,500 2
$97,000 $112,250
Cost of Crashing per week = (Crash Cost - Normal Cost)/(Normal Time - Crash Time)Critical Path
A-D-H-I-JMaximum Crashing Possible = Normal Time - Crash Time
17
Crashing Process
Schedule 1 Schedule 2 Schedule 3 Schedule 4 Schedule 5 Schedule 6
PATHNormal
ScheduleCrash (I) by
1 weekkCrash (D) by 4 weeks
Crash (A) by 3 weeks
Crash (H) by 1 week
Crash (J) by 2 weeks
A-D-H-I-J 40 39 35 32 31 29
B-E-H-I-J 32 31 31 31 30 28
B-F-I-J 25 24 24 24 24 22
C-G-I-J 32 31 31 31 31 29
Activity Cost 97,000
97,500
100,300
102,850
103,850
106,850
Crashing Cost
500
2,800
2,550
1,000
3,000
Cost of Crashing 500=700*4 (2800)
=850*3 (2550) 1000
=1500*2 (3000)
18
Time Cost Trade-offProject Time Activity Cost Fixed Cost Total Cost
29 106,850 23,200 130,050
30 105,350 24,000 129,350
31 103,850 24,800 128,650
32 102,850 25,600 128,450
33 102,000 26,400 128,400
34 101,150 27,200 128,350
35 100,300 28,000 128,300
36 99,600 28,800 128,400
37 98,900 29,600 128,500
38 98,200 30,400 128,600
39 97,500 31,200 128,700
40 97,000 32,000 129,000
Fixed Cost/Week 800
A project time of 35 weeks minimizes the total cost.
19
Project Management - Probabilistic
20
Probabilistic PERT
Expected Activity Time = (Optimistic Time + 4* Most Likely Time + Pessimistic Time)/6
Variance of Activity Times = Square of {(Pessimistic Time - Optimistic Time)/6}
ActivityImmediate
Predecessor (s)Optimistic
Time
Most Likely Time
Pessimistic Time
Expected Activity
Time
Variance of Activity Times
A None 5.00 8.00 11.00 8.00 1.000B None 2.00 6.00 10.00 6.00 1.778C None 3.00 3.00 3.00 3.00 0.000D A 8.00 9.00 10.00 9.00 0.111E B 3.00 5.00 10.00 5.50 1.361F B 2.00 4.00 7.00 4.17 0.694G C 3.00 5.00 10.00 5.50 1.361H D,E 3.00 4.00 5.00 4.00 0.111I F,G,H 6.00 9.00 11.00 8.83 0.694J I 2.00 5.00 8.00 5.00 1.000
21
AON Diagram
22
Probability of Project Completion
z-Value = (Project Due Date - Expected Time of the Path)/Standard Deviation
For a given value of z, the Excel function "=NORMSDIST(z)" can be used to find probability or z tables (included in the appendix) can be used.
The probability of completing the project by the due date is assumed to be the probability of completing the critical path by the due date.
Project Due Date 36
PathsExpected
Time of the Path
Variance of the Path
Standard Deviation
of the Path z-Value
Probability of completing the path
by due date
A-D-H-I-J 34.83 2.92 1.71 0.683 0.7527B-E-H-I-J 29.33 4.94 2.22 2.998 0.9986
B-F-I-J 24.00 4.17 2.04 5.879 1.0000C-G-I-J 22.33 3.06 1.75 7.818 1.0000
23
Resource Management
Resource management switches extra resources from places where they are not essential to places where they could be used immediately, that is, balance resource assignments across activities over time.
Resource management has two functions – resource leveling and resource scheduling.
In resource leveling the goal is to minimize the fluctuations in resources required from one period to another over the life of the project.
In resource scheduling it is assumed that there is an upper limit on the resources available and all activities are to be scheduled within the resource constraints.
24
Thank you
25