OPERATIONS MANAGEMENT INTEGRATING MANUFACTURING AND SERVICES FIFTH EDITION Mark M. Davis Janelle Heineke Copyright ©2005, The McGraw-Hill Companies, Inc. PowerPoint Presentation by Charlie Cook, The University of West Alabama

CHAPTER PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2005 The McGraw-Hill Companies. All rights reserved. Project Management 7

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–3 CHAPTER OBJECTIVES Demonstrate that project management involves both people skills to coordinate and motivate individuals from a range of disciplines and technical skills to properly plan and schedule a project. Explain the role of the project manager in organizing and coordinating all activities performed in a project. Introduce critical path scheduling as a tool for identifying activities that require immediate attention. Identify the time–cost trade-offs involved in expediting the completion of a project. Discuss some of the criticisms often associated with project management techniques.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–4 Definition of Project Management Project –Series of related jobs or tasks focused on the completion of an overall objective. Statement of Work (SOW) –Objectives, tasks, schedule, performance measures Project Management –Planning, directing, and controlling resources to meet the technical, cost, and time constraints of the project. Program –Synonym for a large project, although it also can consist of several interrelated projects.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–5 Project Management: Key Terms Task (Activity) –A subdivision of a project perform by one group or organization. Subtask –Used to break a project into more meaningful pieces. Work Package –A group of activities combined to be assignable to a single organizational unit. Milestones –Specific events to be reached at points in time.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–6 Work Breakdown Structure –Method by which a project is divided into tasks and subtasks. Level 1Program 2Project 3Task 4Subtask 5Work Package

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–7 Different Formats for Presenting a Work Breakdown Structure Exhibit 7.1

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–8 Part of a Work Breakdown Structure for Opening a New Restaurant Exhibit 7.2

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–9 A Good Work Breakdown Structure: Allows the activities to be worked on independently. Makes activities manageable in size. Gives authority to carry out the program. Monitors and measure the program. Provides the required resources.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–10 Organizational Considerations in Project Management Role of the Project Manager –Using social and technical skills to manage across traditional functional lines to create a collaborative work environment. Launching and Implementing the Project Plan –Developmental stages of teamwork: Forming Storming Norming Performing Adjourning

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–11 Organizational Considerations in Project Management (cont’d) High-Performance Project Teams –Creating a successful team requires consideration of: Task-related variables People-related variables Leadership variables Organization variables Barriers to High Team Performance: –Different points of view –Role conflicts –Power struggles

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–12 Project Control Gantt Chart –Graphical technique that shows the amount of time required for each activity and the sequence in which the activities are to be performed.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–13 A Sample of Graphic Project Reports: Gantt Chart Exhibit 7.3A

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–14 A Sample of Graphic Project Reports (cont’d): Total Program Cost Breakdown Exhibit 7.3B

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–15 A Sample of Graphic Project Reports (cont’d): Divisional Breakdown of Costs and Labor Hours Exhibit 7.3C

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–16 A Sample of Graphic Project Reports (cont’d): Cost and Performance Tracking Schedule Exhibit 7.3D

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–17 A Sample of Graphic Project Reports (cont’d): Bar/Milestone Chart Exhibit 7.3e

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–18 Critical Path Scheduling PERT (Program Evaluation and Review Technique) –The technique developed by the U.S. Navy for planning the Polaris missile project. CPM (Critical Path Method) –Technique developed by J. E. Kelly and M. R.Walker to schedule preventative maintenance shutdowns of chemical processing plants. Identifies the longest time-consuming path through a network of tasks required to complete a project (i.e., the shortest time in which the project can be completed).

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–19 Critical Path Scheduling Requirements Project Characteristics –It must have well-defined jobs or tasks whose completion marks the end of the project. –The jobs or tasks are independent; they may be started, stopped, and conducted separately within a given sequence. –The jobs or tasks are ordered; certain ones must follow others in a given sequence.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–20 CPM with a Single Time Estimate Step 1:Identify all project activities. Step 2:Sequence activities and construct network. Step 3:Determine the critical path. Step 4:Determine slack times. Step 4.1: Find the EF and ES for each activity. Step 4.2: Find the LS and LF for each activity. Step 4.3: Determined the total slack time for each activity.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–21 CPM Network for Computer Design Project Exhibit 7.4

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–22 CPM Key Terms Slack Time – The amount of time the starting of an activity can be delayed without affecting the earliest completion date of the overall project. Early start (ES): the earliest possible time an activity can begin. Early finish time (EF): the early start time plus the time need to complete the activity. Late finish time (LF): the latest time an activity can end without delaying the project. Late start time (LS): the late finish time minus the time needed to complete the activity.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–23 CPM Key Terms (cont’d) Early Start Schedule –The earliest time that each activity in the project can be started. Late Start Schedule –The latest start time that each activity can be started without affecting the overall completion time.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–24 CPM Network for Computer Design Project Exhibit 7.5

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–25 CPM with Three Activity Time Estimates Step 1:Identify activities. Step 2:Sequence activities and construct network. Step 3:Determine the three time estimates for each activity. a = optimistic time m = most likely time b = pessimistic time Step 4:Calculate the expected time (ET) for each activity. 6 b 4m4m a ET  

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–26 Typical Beta Curves Exhibit 7.6

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–27 Activity Expected Times and Variances Exhibit 7.7 Step 5:Calculate the variance (σ 2 ) for each activity.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–28 Path Estimated Completion Times and Variances Exhibit 7.8 Step 6:Identify all of the paths in the network and their estimated completion times and variances.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–29 CPM with Three Activity Time Estimates Step 7:Determine the probability of completing the project by a certain date. D= Desired completion date for the project ET p = Expected completion time for the path σ p = Standard deviation for the path

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–30 Probability of Each Path Being Completed in 39 Weeks or Less Exhibit 7.9

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–31 Probability of Each Path Being Completed in 39 Weeks or Less (cont’d) Exhibit 7.9 (cont’d)

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–32 Path Z-Values and Probabilities of Completing Each Path in 39 Weeks or Less Exhibit 7.10

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–33 Time-Cost Trade-off Models Time-Cost Trade-off Model –A model that develops the relationship between direct project costs, indirect costs, and time to complete the project by minimizing the sum of direct and indirect costs. Direct costs: costs (e.g., labor and materials incurred solely for project activities Indirect costs: overhead, facilities, and resource opportunity costs associated with sustaining the project. Crash Costs –The additional costs of an activity when time to complete it is shortened.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–34 Minimum-Cost Scheduling Step 1:Prepare CPM-type network diagram. a. Normal cost (NC) b. Normal time (NT) c. Crash time (CT) d. Crash Cost (CC) Step 2:Determine the cost per unit of time to expedite (or crash) each activity. Step 3:Compute the critical path. Step 4:Shorten the critical path at the least cost. Step 5: Plot project direct, indirect, and total-cost curves and find the minimum-cost schedule.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–35 Example of Time–Cost Trade-Off Procedure Exhibit 7.11

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–36 Calculation of Cost per Day to Expedite Each Activity Exhibit 7.12

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–37 Reducing the Project Completion Time One Day at a Time Exhibit 7.13 *To reduce both critical paths by one day, reduce either A alone, or B and C together at the same time (since either B or C by itself modifies the critical path without shortening it). †B & C must be crashed together to reduce both critical paths by one day.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–38 Plot of Costs and Minimum Cost Schedule Exhibit 7.14

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–39 Criticisms of PERT and CPM Assumption: Activities are entities having a clear beginning and ending point for each activity. –Criticism: Projects change over time such that a beginning network may be highly inaccurate later on. Assumption: Activity sequence relationships can be specified and networked. –Criticism: The sequence of relationships cannot always be specified beforehand.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–40 Criticisms of PERT and CPM Assumption: Project control should focus on the critical path. –Criticism: It is not necessarily true that the longest time-consuming path (or the path in which each of the activities has zero slack) ultimately determines project completion time.

Copyright © 2005 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 7–41 Project Management Related Issues Closing Out and Evaluating the Project –Reasons given for not evaluating projects “It’s time to move on.” “We know we made mistakes; no point in dwelling on them.” “The team has changed.” “It’s costly to meet about something that’s already done.” Project Life-Cycle Compression –Fast-tracking: overlapping phases or activities Relating Projects to Repetitive Processes –Prior projects are useful sources of information and guidance for repeated projects.