OPSM 301 Operations Management Class 18: Project Management: Introduction and CPM Koç University Zeynep Aksin

Announcements  New Module: Project Management  Chapter 7  Next class on Tuesday December 14 will be in SOS 180-quiz 3  Third group assignment will be about project scheduling, to be assigned next week.

Why project management?  Competition through new product development  Information-intensive products: costly to produce, cheap to reproduce  Flatter organizations  Systems approach  Project approach

Project  A single “product” is obtained from the completion of a project  The differentiating characteristic of projects from processes is the intense uncertainty in projects  Two types of project –With absolute deadline: olympic stadium –With relative deadline : new product development project  Successful project management: To finish on time without going over budget and without sacrificing from the scope of the project

Project Management  Examples –Construction –R & D –Computer system implementation –Product development –Advertising campaign –Business Plan

Project Management Resources Budget Scope Schedule

Projects are Balancing Acts Precedence Structure Statistical Variation Human Behavior Quality and Scope Timing and Schedule Budgeted Costs

Some observations  Most projects –Either go over time –or over budget –or the promised content cannot be delivered  Little’s law: more projects in the system (WIP), longer completion times

Modern Project Management  The process of project management has two dimensions: the “science” and the “art” of project management –Technical: defining, planning and controlling –Socio-Cultural: stimulating teamwork and personal motivation identifying and resolving problems shaping customer expectations sustaining political support of top management monitoring subcontractors negotiating with functional managers

10 Planning l Objectives l Resources l Work break- down schedule l Organization Scheduling l Project activities l Start & end times l Network Controlling l Monitor, compare, revise, action Project Management Activities

Project Planning, Scheduling, and Controlling

Work Breakdown Structure  1.Project  2. Major tasks in the project  3.Subtasks in the major tasks  4. Activities (or work packages) to be completed

The Work Breakdown Structure 1. House 1.2 Heating System WP-F1 WP-F2 WP-P1 WP-P2 WP-P Fuel Tank1.2.2 Furnace Piping 1.3 Interior Design 1.1 Building/St ructure 1.4 Garden/P arking Solar Panels WP-FT1 WP-FT2 WP-FT3 WP-SP1 WP-SP4 WP-SP2 WP-SP5 WP-SP3

14  Gantt chart  Critical Path Method (CPM)  Program Evaluation & Review Technique (PERT) Project Scheduling and Controlling

15  Network techniques  Developed in 1950’s –CPM by DuPont for chemical plants (1957) –PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)  Consider precedence relationships and interdependencies  Each uses a different estimate of activity times PERT and CPM

16  Is the project on schedule, ahead of schedule, or behind schedule?  Is the project over or under cost budget?  Are there enough resources available to finish the project on time?  If the project must be finished in less than the scheduled amount of time, what is the way to accomplish this at least cost? Questions Which May Be Addressed by PERT & CPM

17 The Six Steps Common to PERT & CPM 1.Define the project and prepare the work breakdown structure, 2.Develop relationships among the activities. (Decide which activities must precede and which must follow others.) 3.Draw the network connecting all of the activities 4.Assign time and/or cost estimates to each activity 5.Compute the longest time path through the network. This is called the critical path 6.Use the network to help plan, schedule, monitor, and control the project

18 Precedence Relations ActivityImmediate PredecessorDuration (days) A(Start)4 BA3 CA5 DB,C2

19 Simple Project Network A B C D Activity “A” precedes Activity “B” precedence relations as “arcs”

20  Provides activity information –Earliest (ES) & latest (LS) start –Earliest (EF) & latest (LF) finish –Slack (S): Allowable delay  Identifies critical path –Longest path in network –Shortest time project can be completed –Any delay on critical path activities delays project –Critical path activities have 0 slack Critical Path Analysis

21  Begin at starting event and work forward  ES = 0 for starting activities –ES is earliest start  EF = ES + Activity time –EF is earliest finish  ES = Maximum EF of all predecessors for non-starting activities Earliest Start and Finish Steps

22  Begin at ending event and work backward  LF = Maximum EF for ending activities –LF is latest finish; EF is earliest finish  LS = LF - Activity time –LS is latest start  LF = Minimum LS of all successors for non-ending activities Latest Start and Finish Steps

Latest Finish ES LS EF LF Earliest Finish Latest Start Earliest Start Activity Name Activity Duration

Finding the Critical Path A D C B Activity Slack: S = LS-ES, or S = LF-EF Start at time t=0 ES LS EF LF

Finding the Critical Path A D C B S=0 S=2 Critical Path: Path with zero activity slacks Activity Slack: S = LS-ES, or S = LF-EF

26 Yozgat Paper Manufacturing Activities ActivityDescriptionImmediate Predecessors Time (weeks) ABuild internal components-2 BModify roof and floor-3 CConstruct collection stackA2 DPour concrete and install frame A, B4 EBuild high-temperature burner C4 FInstall pollution control system C3 GInstall air pollution deviceD, E5 HInspect and testF, G2

27 AON Network for Yozgat Paper Manufacturing Start A B C D F F G H

28 Critical Path for Yozgat Paper Manufacturing Start A B C D F F G H

29 AON Network for Yozgat Paper Manufacturing Slack=0 Start

30 Gantt Chart Earliest Start and Finish Yozgat Paper Manufacturing A Build internal components B Modify roof and floor C Construct collection stack D Pour concrete and install frame E Build high-temperature burner F Install pollution control system G Install air pollution device H Inspect and test