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Chap017 - Project Management

This document discusses key concepts in project management. It begins by defining projects as unique, time-limited operations designed to achieve specific objectives. It then explains that projects are different from regular operations in having limited timeframes and narrow, specific objectives. The document outlines some of the key metrics, success factors, administrative issues, tools, and decisions involved in project management. It also discusses topics like work breakdown structures, Gantt charts, PERT/CPM diagrams, time estimating, and dealing with probabilistic time estimates.

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0% found this document useful (0 votes)
162 views40 pages

Chap017 - Project Management

This document discusses key concepts in project management. It begins by defining projects as unique, time-limited operations designed to achieve specific objectives. It then explains that projects are different from regular operations in having limited timeframes and narrow, specific objectives. The document outlines some of the key metrics, success factors, administrative issues, tools, and decisions involved in project management. It also discusses topics like work breakdown structures, Gantt charts, PERT/CPM diagrams, time estimating, and dealing with probabilistic time estimates.

Uploaded by

spchheda4996
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPS, PDF, TXT or read online on Scribd
You are on page 1/ 40

17-1 Project Management

Operations Management

William J. Stevenson

8th edition
17-2 Project Management
17-3 Project Management

Projects
JAN FEB MAR APR MAY JUN
Build A

A Done

Build B

B Done

Build C

C Done
On time!
Build D

Ship

Unique, one-time operations designed to accomplish


a specific set of objectives in a limited time frame.
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
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


Gantt Chart 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 install


phones

Move in/startup
17-9 Project Management

Key Decisions
 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
17-10 Project Management

Project Manager
Responsible for:

Work Quality
Human Resources Time
Communications Costs
17-11 Project Management

Ethical Issues
 Temptation to understate costs
 Withhold information
 Misleading status reports
 Falsifying records
 Comprising workers’ safety
 Approving substandard work
17-12 Project Management

Project Life Cycle

Feasibility

Management
Planning
Concept
Execution

Termination
17-13 Project Management

Work Breakdown Structure


Figure 17.2

Project
Project X
X

Level 1

Level 2

Level 3

Level 4
17-14 Project Management

PERT and CPM


PERT: Program Evaluation and
Review 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
17-16 Project Management

The Network Diagram


(cont’d)
 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
Project Network – Activity on
17-17 Project Management

Arrow
Figure 17.4
Order
AOA furniture 4
Furniture
Locate 2 setup
facilities
Remodel
1 5 6
Move
in
Interview
Hire and
train
3
Project Network – Activity on
17-18 Project Management

Node
Figure 17.4
Order
furniture
Locate Furniture
2 setup
facilities
AON
1 6
Move
Remodel
in

S 5 7

Hire and
Interview
train

3 4
17-19 Project Management

Network Conventions
a
b
c a

c
b

a c
a c

b Dummy
activity
b d
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
Figure 17.5

6 weeks
Deterministic 4
time estimates rd er e
O i tu r

Fur p
n 3 weeks
fu r

set
8 weeks 2

n i tu
u
Rem
ate s od e

re
c
Lo ilitie 11 weeks
l Move
fac in
1 5 6
In 1 week
er t ain
r
vi dt
4 weeks ew an
re
Hi 9 weeks

3
17-22 Project Management

Example 1 Solution
Critical Path

P a t h L e n g t h S la c k
( w e e k s )
1 - 2 - 3 - 4 - 5 1 - 86 2
1 - 2 - 5 - 6 2 0 0
1 - 3 - 5 - 6 1 4 6
17-23 Project Management

Computing Algorithm
 Network activities
 ES: early start
 EF: early finish
 LS: late start
 LF: late finish
 Used to determine
 Expected project duration
 Slack time
 Critical path
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
17-25 Project Management

Probabilistic Estimates
Figure 17.8

to tm te tp

Activity Optimistic Most likely Pessimistic


start time time (mode) time
17-26 Project Management

Expected Time

te t
= o + 4t m +t p
6
te = expected time
to = optimistic time
tm = most likely time
tp = pessimistic time
17-27 Project Management

Variance

σ 2 (t
= p – t o)2

36

σ 2 = variance
to = optimistic time
tp = pessimistic time
17-28 Project Management

Example 5

Optimistic Most likely Pessimistic


time time time

2-4-6
b

2- c
- 4

3-
-3

5
1 a
3-4-5 3-5-7 5-7-9
d e f
6
2- g

4 -
3-

-
3 i
6

4-6-8
h
17-29 Project Management

Path Probabilities

Specified time – Path mean


Z =
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

Example 6
17
Weeks
1.00
a-b-c
Weeks
10.0

d-e-f
Weeks
16.0

1.00
g-h-i
13.5 Weeks
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
Time-Cost Trade-Offs:
17-32 Project Management

Crashing
Figure 17.11

Total
cost

Expected indirect costs

Shorten

Cumulative CRASH
cost of
crashing
Shorten

Optimum
17-33 Project Management

Example 7

10
6 b
a
2
f
5

9
c

e
4
d
17-34 Project Management

Advantages of PERT
 Forces managers to organize
 Provides graphic display of activities
 Identifies 4
 Critical activities 2

 Slack activities 1 5 6

3
17-35 Project Management

Limitations of PERT
 Important activities may be omitted
 Precedence relationships may not4 be
correct
2
 Estimates may include
a fudge factor
1 5 6
 May focus solely
on critical path
142 weeks

3
Technology for Managing
17-36 Project Management

Projects
 Computer aided design (CAD)
 Groupware (Lotus Notes)
 Project management software
 CA Super Project
 Harvard Total Manager
 MS Project
 Sure Track Project Manager
 Time Line
17-37 Project Management

Advantages of PM Software
 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
17-38 Project Management

Project Risk Management


 Risk: occurrence of events that have
undesirable consequences
 Delays
 Increased costs
 Inability to meet specifications
 Project termination
17-39 Project Management

Risk Management
 Identify potential risks
 Analyze and assess risks
 Work to minimize occurrence of risk
 Establish contingency plans
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

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