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© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 3-1 Operations Management Project Management Chapter 3 - Heizer.

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Presentation on theme: "© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 3-1 Operations Management Project Management Chapter 3 - Heizer."— Presentation transcript:

1 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Operations Management Project Management Chapter 3 - Heizer

2 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Why a separate topic ?  If you look back to the product-process matrix, there is a focus on volume - as volume increases, we become more standardized and efficient - as volume decreases, we have more customization  Project-based work is becoming increasingly prevalent for market-driven reasons - Growing project complexity - Collapsing product/service life cycles

3 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Examples of Projects  Building construction  Software development  Staging a play

4 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Single unit  Relatively low frequency  Defined starting points and ending points  Defined outcomes / goals  Complex interrelated tasks, often transcending functional boundaries  Require special management tools Characteristics of Projects

5 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Planning l Objectives l Resources l Work break- down structure l Organization Scheduling l Project activities l Start & end times l Network Controlling l Monitor, compare, revise, action Project Management Activities

6 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Project Planning, Scheduling & Controlling

7 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J WBS – Work Breakdown Structure Project Major tasks in the project Subtasks in the major tasks Activities (or work packages) to be completed A statement of all work that has to be completed. A list of all activities or tasks that constitute the project.

8 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Identifying precedence relationships  Sequencing activities  Determining activity times & costs  Estimating material & worker requirements  Determining critical activities © 1995 Corel Corp. J F M A M J J Month Activity Design Build Test Project Scheduling

9 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Gantt chart  Critical Path Method (CPM)  Program Evaluation & Review Technique (PERT) © T/Maker Co. Project Management Techniques

10 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J JFMAMJJ Time Period Activity Design Build Test Gantt Chart

11 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Relationship between activities  Project duration  Critical path  Slack for non – critical activities  Crashing (cost / time trade-offs)  Resource usage PERT / CPM Network planning methods that generate:

12 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J St. Paul’s Hospital Immediate Activity Description Predecessor(s) ASelect administrative and medical staff. BSelect site and do site survey. CSelect equipment. DPrepare final construction plans and layout. EBring utilities to the site. FInterview applicants and fill positions in nursing, support staff, maintenance, and security. GPurchase and take delivery of equipment. HConstruct the hospital. IDevelop an information system. JInstall the equipment. KTrain nurses and support staff. — A B A C D A E,G,H F,I,J

13 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J St. Paul’s Hospital Immediate Activity Description Predecessor(s) ASelect administrative and medical staff. BSelect site and do site survey. CSelect equipment. DPrepare final construction plans and layout. EBring utilities to the site. FInterview applicants and fill positions in nursing, support staff, maintenance, and security. GPurchase and take delivery of equipment. HConstruct the hospital. IDevelop an information system. JInstall the equipment. KTrain nurses and support staff. — A B A C D A E,G,H F,I,J AON Network FinishStart A B C D E F G H I J K

14 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J St. Paul’s Hospital Immediate Activity Description Predecessor(s) ASelect administrative and medical staff. BSelect site and do site survey. CSelect equipment. DPrepare final construction plans and layout. EBring utilities to the site. FInterview applicants and fill positions in nursing, support staff, maintenance, and security. GPurchase and take delivery of equipment. HConstruct the hospital. IDevelop an information system. JInstall the equipment. KTrain nurses and support staff. — A B A C D A E,G,H F,I,J Completion Time FinishStart K9K9 I 15 F 10 C 10 D 10 E 24 G 35 H 40 J4J4 A 12 B9B9

15 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J St. Paul’s Hospital Immediate Activity Description Predecessor(s) ASelect administrative and medical staff. BSelect site and do site survey. CSelect equipment. DPrepare final construction plans and layout. EBring utilities to the site. FInterview applicants and fill positions in nursing, support staff, maintenance, and security. GPurchase and take delivery of equipment. HConstruct the hospital. IDevelop an information system. JInstall the equipment. KTrain nurses and support staff. — A B A C D A E,G,H F,I,J Completion Time FinishStart K9K9 I 15 F 10 C 10 D 10 E 24 G 35 H 40 J4J4 A 12 B9B9 Path Expected Time (wks) A-I-K36 A-F-K31 A-C-G-J-K70 B-D-H-J-K72 B-E-J-K46 Critical Path

16 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Critical Path  The longest path in the network  Defines the shortest time project can be completed  Critical path activity delay project delay

17 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Begin at starting event and work forward  ES is earliest start  ES = 0 for starting activities  ES = Maximum EF of all predecessors for non-starting activities  EF is earliest finish  EF = ES + Activity time Earliest Start and Earliest Finish ES LS EF LF Activity Name Activity Duration

18 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J A 12 K9K9 C 10 G 35 J4J4 H 40 B9B9 D 10 E 24 I 15 F 10 Finish Start Earliest Start / Earliest Finish

19 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Earliest Start / Earliest Finish Finish Earliest start time Earliest finish time A 12 K9K9 C 10 G 35 J4J4 H 40 B9B9 D 10 E I 15 F Critical path Start

20 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Begin at ending event and work backward  LF is latest finish  LF = Maximum EF for ending activities  LF = Minimum LS of all successors for non-ending activities  LS is latest start  LS = LF – Activity time Latest Start and Latest Finish ES LS EF LF Activity Name Activity Duration

21 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Latest Start / Latest Finish A 12 K9K9 C 10 G 35 J4J4 H 40 B9B9 D 10 E I 15 F Latest start timeLatest finish time Critical path Finish Start What do you notice about ES/LS & EF/LF?

22 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Activity Slack Analysis A 12 K9K9 C 10 G 35 J4J4 H 40 B9B9 D 10 E I 15 F Latest start timeLatest finish time Critical path Finish Start Slack K = 63 – 63 = 0 or Slack K = 72 – 72 = 0 Slack = LS – ES or Slack = LF – EF

23 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Activity Slack Analysis A 12 K9K9 C 10 G 35 J4J4 H 40 B9B9 D 10 E I 15 F Latest start timeLatest finish time Critical path Finish Start Node DurationESLS Slack A12022 B9000 C D10990 E F G H I J K Activity slack = maximum delay time Critical path activities have zero slack

24 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Activity Slack How much would we like to reduce the time for activity B? C A5A5 0 5 Finish Start B D

25 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  3 activity time estimates  Optimistic times ( a )  Most-likely time ( m )  Pessimistic time ( b )  Follow beta distribution  Expected time: t = (a + 4m + b) / 6  Variance of times: v = (b - a) 2 / 6  Expected project time: T = sum of critical path activity times, t  Project variance: V = sum of critical path activity variances   Activity Times & Project Times

26 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Completion Time for Noncritical Activities  Variability of times for activities on non-critical paths must be considered when determining the probability of finishing in a specified time.  Variation in non-critical activity may cause change in critical path.

27 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Cost / Time Trade-offs Most activities can be done faster if you pay more money  Work overtime / hire more people / rent extra equipment / incentive contracts  PERT / CPM have the ability to crash a schedule – to shorten activity time in a network to reduce project completion time.

28 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Cost / Time Relationship 8000 — 7000 — 6000 — 5000 — 4000 — 3000 — 0 — Direct cost (dollars) Crash cost Normal cost |||||| Crash time Normal time Activity B

29 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Project Control Reports  Performance vs. schedule  Expected time to project completion  Cost vs. budget  Detailed cost breakdowns for each task and organization  Expected total project cost  Resource reports  Corrective action / contingency reports

30 © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Summary  Project management requires special tools PERT / CPM – Network planning methods that generate relationship between activities, project duration, critical path, slack for non-critical activities, crashing (cost / time trade-offs), and resource usage  Project-based work is becoming increasingly prevalent for market-driven reasons - Growing project complexity - Collapsing product/service life cycles  People with these skills are in demand  We have only scratched the surface – if you are interested, take the PM elective BA 462


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