1. Copyright 2006 John Wiley & Sons, Inc. Beni Asllani University of Tennessee at Chattanooga Project Management Operations Management - 5 th Edition Chapter 9 Roberta Russell & Bernard W. Taylor, III

2. Copyright 2006 John Wiley & Sons, Inc.9-2 Characteristics of Projects  A unique, one-time activity or effort  Defined end product or result, with specific performance requirements, budget, and completion date  Usually require cross-functional teams, composed of people with different skills  Often involve uncertainty and risk

3. Copyright 2006 John Wiley & Sons, Inc.9-3 Examples of Projects  Construction or major renovations  Creating new computer software  Starting a new business  Designing and launching a new product or model  Evaluating a merger or acquisition  Designing new equipment  Selecting and installing new equipment or software  Writing a new human resources manual

4. Copyright 2006 John Wiley & Sons, Inc.9-4 Project Elements  Objective  Scope  Contract requirements  Schedules  Resources: equipment, materials, people  Managing people  Control  Risk and problem analysis

5. Copyright 2006 John Wiley & Sons, Inc.9-5 Project Manager  Leader of project team  Responsible for satisfactory completion of project Goals accomplished Goals accomplished Completed on time Completed on time Completed within budget Completed within budget Conformance quality Conformance quality

6. Copyright 2006 John Wiley & Sons, Inc.9-6 Project Team Organizations  Matrix organization: each team member reports to functional manager and to project manager. Team members work part-time on the project and spend the remaining time on their regular job.  Project management organization: Each team member works full-time on the project and reports to the project manager.

7. Copyright 2006 John Wiley & Sons, Inc.9-7 Project Planning  Scope statement: specifies project objectives and expected results  Statement of work: describes the project in enough detail so that suppliers and contractors can submit bids May be divided into work packages for different project tasks May be divided into work packages for different project tasks Statements of work can also be prepared for team members or company departments Statements of work can also be prepared for team members or company departments

8. Copyright 2006 John Wiley & Sons, Inc.9-8 Project Planning (2)  Work breakdown structure (WBS) breaks down a project into components, subcomponents, activities, and tasks breaks down a project into components, subcomponents, activities, and tasks  Responsibility assignment matrix: shows who is responsible for various tasks in a project

9. Copyright 2006 John Wiley & Sons, Inc.9-9 Work Breakdown Structure for Computer Order Processing System Project

10. Copyright 2006 John Wiley & Sons, Inc.9-10 Work Breakdown Structure Details  Lowest level component for any branch is called a work package.  A work package should be defined so that it can be accomplished by an individual, department, team, contractor, supplier  Clear criteria for completion of each work package.

11. Copyright 2006 John Wiley & Sons, Inc.9-11  Organizational Breakdown Structure a chart that shows which organizational units are responsible for work items a chart that shows which organizational units are responsible for work items  Responsibility Assignment Matrix shows who is responsible for work in a project shows who is responsible for work in a project

12. Copyright 2006 John Wiley & Sons, Inc.9-12 Project Scheduling Details  Determine what tasks (activities) must be done.  Determine the time for each activity  Determine the order in which the tasks must be done For a given activity X, it is enough to know what activities come immediately before activity X (called immediate predecessors or immediately preceding activities) For a given activity X, it is enough to know what activities come immediately before activity X (called immediate predecessors or immediately preceding activities)  Set up a precedence table with activity times and immediate predecessors.  Draw a network diagram for the project. We will use activity on node (AON) diagrams. We will use activity on node (AON) diagrams.

13. Copyright 2006 John Wiley & Sons, Inc.9-13 Activity on Node Diagrams  Use a node (circle or box) to represent each activity  Draw an arrow from each immediate predecessor to the activities that it precedes  The diagram must have a unique first activity and a unique last activity.

14. Copyright 2006 John Wiley & Sons, Inc.9-14 Project Network   Activity-on-node (AON) nodes represent activities, and arrows show precedence relationships 1 3 2 Branch Node

15. Copyright 2006 John Wiley & Sons, Inc.9-15 AON Network for House Building Project 1 3 2 2 4 3 3 1 5 1 6 1 7 1Start Design house and obtain financing Order and receive materials Select paint Select carpet Lay foundations Build house Finish work

16. Copyright 2006 John Wiley & Sons, Inc.9-16 Determining Project Duration & Critical Path – Method 1  The duration of a project is the minimum time required to complete the project, based on the activity times determined earlier.  A network diagram must have a unique first activity and a unique last activity.  A path is a connected sequence of activities that begins with the first activity and ends with the last activity.  The length of a path is the sum of the activity times for the activities on the path.  The path with the greatest length is called the critical path. No other path requires more time than the critical path.  The project duration is the length of the critical path.

17. Copyright 2006 John Wiley & Sons, Inc.9-17 1 3 2 2 4 3 3 1 5 1 6 1 7 1Start Critical Path  Critical path Longest path through a network Longest path through a network Minimum project completion time Minimum project completion time A:1-2-4-7 3 + 2 + 3 + 1 = 9 months B:1-2-5-6-7 3 + 2 + 1 + 1 + 1 = 8 months C:1-3-4-7 3 + 1 + 3 + 1 = 8 months D:1-3-5-6-7 3 + 1 + 1 + 1 + 1 = 7 months

18. Copyright 2006 John Wiley & Sons, Inc.9-18 Gantt Chart   Graph or bar chart with a bar for each project activity that shows passage of time  Provides visual display of project schedule  Early start (ES) schedule: Each activity is started as soon as possible, considering preceding activities

19. Copyright 2006 John Wiley & Sons, Inc.9-19 |||||||||| Activity Design house and obtain financing Lay foundation Order and receive materials Build house Select paint Select carpet Finish work 0246810 MonthMonth 13579135791357913579 Gantt Chart – ES Schedule

20. Copyright 2006 John Wiley & Sons, Inc.9-20 Critical Path Method (CPM)  Critical path method (CPM) - inputs Activities from work breakdown structure Activities from work breakdown structure Precedence relationships among activities Precedence relationships among activities (what activities must be completed before other activities can be started) One time estimate for each activity (how long does it take to do the activity?) One time estimate for each activity (how long does it take to do the activity?)  Use CPM when activity times can be estimated accurately

21. Copyright 2006 John Wiley & Sons, Inc.9-21 Critical Path Method (2)  Critical path method (CPM) – outputs Project completion time Project completion time Start and end times for each activity Start and end times for each activity Critical path: activities that must be finished Critical path: activities that must be finished on time so that the project will be completed on time so that the project will be completed on time on time The greatest amount of management attention The greatest amount of management attention is focused on the critical path.

22. Copyright 2006 John Wiley & Sons, Inc.9-22 Objectives of Scheduling Computations  To determine the acceptable start and end dates for each activity. These computations can also be used to determine project duration and the critical path. These computations can also be used to determine project duration and the critical path.  To provide a basis for developing a project schedule

23. Copyright 2006 John Wiley & Sons, Inc.9-23 Scheduling Terms  For each activity in a project: The early start (ES) is the earliest time that an activity can be started. The early start (ES) is the earliest time that an activity can be started. The early finish (EF) is the earliest time that an activity can be finished. The early finish (EF) is the earliest time that an activity can be finished. The late finish (LF) is the latest time that an activity can be finished. The late finish (LF) is the latest time that an activity can be finished. The late start is the latest time that an activity can be started. The late start is the latest time that an activity can be started.

24. Copyright 2006 John Wiley & Sons, Inc.9-24 Node Configuration 103 303 Activity number Activity duration Earliest start Latest start Earliest finish Latest finish

25. Copyright 2006 John Wiley & Sons, Inc.9-25 Steps in Scheduling Computations  Set up a network diagram  Working from left to right (L  R), compute ES and EF for each activity.  Project duration = EF for last activity.  Working from right to left (R  L), compute LF and LS in that order for each activity.  For each activity, compute slack = LF – EF = LS – ES  The critical path is the set of activities with zero slack.

26. Copyright 2006 John Wiley & Sons, Inc.9-26 Computing ES and EF  Work from left to right (L  R)  For first activity, ES = 0  For all other activities, ES = Largest {EF for immediately preceding activities}  For all activities, EF = ES + activity time (inside the circle or box)

27. Copyright 2006 John Wiley & Sons, Inc.9-27 Earliest Activity Start and Finish Times 103 1 235 2 334 1 556 1 458 3 667 1 789 1 Start Design house and obtain financing Select paint Lay foundations Select carpet Build house Finish work Order and receive materials

28. Copyright 2006 John Wiley & Sons, Inc.9-28 Computing LF and LS  Work from right to left (R  L)  For last activity, LF = EF  For all other activities, LF = smallest {LS for immediately following activities}  For all activities, LS = LF – activity time

29. Copyright 2006 John Wiley & Sons, Inc.9-29 Latest Activity Start and Finish Times 103 103 235 235 334 145 556 167 458 358 667 178 789 189 Start Design house and obtain financing Select paint Lay foundations Select carpet Build house Finish work Order and receive materials

30. Copyright 2006 John Wiley & Sons, Inc.9-30 Slack and the Critical Path  Slack tells us how much flexibility we have in scheduling each activity  slack = LF – EF = LS – ES  The critical path is the set of activities with zero slack.  Scheduling for non-critical activities may depend on when resources are needed for other projects

31. Copyright 2006 John Wiley & Sons, Inc.9-31 * Critical Path 00 99998888 *7*7 11 77886677 66 11 66775566 55 00 88885555 *4*4 114455334433 00 55553333 *2*2 00 33330000 *1*1 Slack S EF LF ES LS Activity Activity Slack

32. Copyright 2006 John Wiley & Sons, Inc.9-32 ES and LS Schedules  In an early start (ES) schedule, each activity begins at time ES and ends at time EF  In a late start (LS) schedule, each activity begins at time LS and ends at time LF  Other schedules may be possible. For all activities, we must have ES < start time < LS The activity must start between ES and LS (inclusive) The activity must start between ES and LS (inclusive)

33. Copyright 2006 John Wiley & Sons, Inc.9-33 Project Crashing   Crashing: reducing project time by expending additional resources   Crash time: the maximum amount of time an activity can be reduced   Crash cost: cost of reducing activity time by one time unit  Goal:  Goal: reduce project duration at minimum cost

34. Copyright 2006 John Wiley & Sons, Inc.9-34 Project Crashing (2)  Activities to be crashed must be on the critical path.  If there is more than one critical path, all critical paths must be reduced at the same time.