Operations Management Contemporary Concepts and Cases Chapter Fourteen Project Planning and Scheduling Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

14-2 Chapter 14 Outline What is a “Project”? Objectives and Tradeoffs Planning and Control in Projects Scheduling Methods Constant-Time Networks PERT Method CPM Method Use of Project Management Concepts

14-3 What is a “Project”? Unique item or event - often a single unit. Often located on one place. The unit does not move during production. Resources are brought to the project. May be of any size, although we focus on large projects.

14-4 Examples of Projects A wedding A wedding A divorce  Building construction Bridge construction Aircraft carrier R&D project Audit New product introduction Open or close a facility Make a movie Fund-raising campaign Ad campaign Software installation

14-5 Objectives and Tradeoffs Meet the specifications Stay within the budget

14-6 Project Management Activities & Decisions Planning Scheduling Closing Control

14-7 Planning Activities & Decisions Identify the project customer Establish the end product or service Set project objectives Estimate total resources and time required Decide on the form of project organization Make key personnel appointments Define major tasks required Establish a budget

14-8 Scheduling Activities & Decisions Develop a detailed work-breakdown structure Estimated time required for each task Sequence tasks in proper order Develop a start/stop time for each task Develop detailed budget for each task Assign people to tasks

14-9 Control Monitor actual time, cost, and performance Compare planned to actual figures Determine whether corrective action is needed Evaluate alternative corrective actions Take appropriate corrective actions

14-10 Closing Finish all work Close contracts Pay all accounts payable Turn the project over to the owners Reassign personnel and equipment

14-11 PMI Body of Knowledge IntegrationScope Time management Costs Quality management Human resources CommunicationsRiskProcurement

14-12 Scheduling Methods Gantt Charts –Shown as a bar charts –Do not show precedence relations –Visual & easy to understand Network Methods –Shown as a graphs or networks –Show precedence relations –More complex, difficult to understand, and costly than Gantt charts

14-13 Gantt Chart Project Example (Figure 14.2) Week No Lease the site 2Hire the workers 3 Arrange for the Furnishings 4Install the furnishings 5Arrange for the phones 6Install the phones 7Move into the office

14-14 Constant-Time Networks Activity times are assumed to be constant Activities are represented by nodes in the network Arrows show the precedence relationships Notations used in calculating start and finish times: –ES(a) =Early Start of activity a –EF(a) =Early Finish of activity a –LS(a) =Late Start of activity a –LF(a) =Late Finish of activity a

‘Write a Business Report’ (Table 14.4) ImmediateDuration ActivityDescriptionPredecessorsDays ADecide on TopicNone1 BCollect DataA2 CSearch the InternetA3 DWrite the ReportB and C

14-16 Network Diagram for ‘Write a Business Plan’ (Figure 14.3) A B D C

14-17 Forward Pass for ‘Write a Business Plan’ (Figure 14.4) A B D C ES EF

14-18 Calculating ES, EF, LS, LF, and Completion Time ES (a) = 0 for the starting activity EF (a) = ES (a) + t (a)* ES (a) = max [EF (all predecessors of a)] Project completion time = max [EF(all ending activities)] * t (a) denotes the duration of activity a LF (a) = min [LS (all successors of a)] LS (a) = LF - t(a)* Forward Pass: Backward pass:

14-19 Backward Pass for ‘Write a Business Plan’ (Figure 14.5) A B D C ES EF LS LF

14-20 Critical Path Critical Path = longest path in the network –All activities for which ES=LS and EF=LF –Length of critical path is equal to the project completion time –If there is any delay on the critical path, the project will be delayed (unless one takes ‘corrective actions’) –Critical path in example is A-C-D

14-21 Slack Times Slack time equals amount of time a path may be delayed without delaying the project –Paths not on the critical path have slack –Slack = LS-ES or LF-EF

Precedence and Times for Opening a New Office (Table 14.5) ImmediateActivityComputed ActivityDescriptionPredecessorsTimeSlack 1Lease the siteNone10 2Hire the workers150 3Arrange for the furnishings111 4Install the furnishings321 5Arrange for the phones113 6Install the phones4,511 7Move into the office2,6,

14-23 Network for ‘Open a New Office’ (Figure 14.6) ES EF LS LF

14-24PERT Program Evaluation Review Technique Developed in 1950’s for missile firing nuclear submarine project Used under conditions of uncertainty in activity times Requires three time estimates for each activity –Optimistic –Most likely –Pessimistic Time estimates have beta distribution

PERT Activity Times Estimate three times for each activity Compute mean completion time for each activity: 14-25

PERT Activity Times Compute the variance for each activity: Assumes pessimistic and optimistic times cover six standard deviations 14-26

PERT Activity Times If T = total completion time of the project, then and 14-27

14-28CPM Critical Path Method Developed in 1950’s in private sector Used under conditions of certainty in activity times Requires one time estimate for each activity Looks at time/cost trade-offs –Normal activity time –Normal cost –Crash time –Crash cost

14-29 Time-Cost Relationship in CPM (Fig. 14.9) Crash Cost Cost Normal Cost Crash Time Normal Time

14-30 Use of Project Management Concepts Scheduling is only part of a complete approach to project management Trade-off between sophistication and cost of methods Choice between constant time, PERT, CPM or more advanced techniques Choice of project management software packages, e.g., Microsoft Project

14-31 Summary What is a “Project”? Objectives and Tradeoffs Planning and Control in Projects Scheduling Methods Constant-Time Networks PERT Method CPM Method Use of Project Management Concepts

14-32 End of Chapter Fourteen