© 2014 Pearson Education, Inc.3 - 1 Project Management 3 PowerPoint presentation to accompany...

© 2014 Pearson Education, Inc. 3 - 1

Project Management 33PowerPoint presentation to accompany Heizer and Render Operations Management, Eleventh EditionPrinciples of Operations Management, Ninth Edition

PowerPoint slides by Jeff Heyl

© 2014 Pearson Education, Inc.

3 - 2© 2014 Pearson Education, Inc.

Outline

► The Importance of Project Management► Project Planning► Project Scheduling► Project Controlling

► Project Management Techniques: PERT► A Critique of PERT

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MANAGEMENT OF PROJECTSMANAGEMENT OF PROJECTS

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Importance of Project Management

▶Project: unique, one-time operations designed to accomplish a set of objectives in a limited time frame.

► Building Construction ► Research Project

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1. Planning - goal setting, defining the project, team organization

2. Scheduling - relate people, money, and supplies to specific activities and activities to each other

3. Controlling - monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands

Planning Scheduling

Controlling

Importance of Project Management

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Project Planning

► Establishing objectives► Defining project► Creating work breakdown structure ► Determining resources► Forming organization

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Project Organization► Often temporary structure► Uses specialists from entire company► Headed by project manager

► Coordinates activities

► Monitors schedule and costs

► Permanent structure called ‘matrix organization’

Project Planning

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TechnicianProject No. 2

ProjectManager

ElectricalEngineer

Computer Engineer

TestEngineer

MechanicalEngineer

Project No. 1

ProjectManager Technician

Marketing FinanceHumanResources Design Quality

Mgt Production

President

Figure 3.2

Project Planning

A Sample Project Organization

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Marketing Operations Engineering Finance

Project 1

Project 2

Project 3

Project 4

Project Planning

Matrix Organization

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The Role of Project Manager:

1. All necessary activities are finished in order and on time

2. The project comes in within budget

3. The project meets quality goals

4. The people assigned to the project receive motivation, direction, and information

Project Planning

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The Role of Project Manager:

1. All necessary activities are finished in order and on time

2. The project comes in within budget

3. The project meets quality goals

4. The people assigned to the project receive motivation, direction, and information

Project Planning

Project managers should be:

► Good coaches

► Good communicators

► Able to organize activities from a variety of disciplines

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Level

1. Project

2. Major tasks in the project

3. Subtasks in the major tasks

4. Activities (or “work packages”)to be completed

Project Planning Work Breakdown Structure

► Dividing a project into more and more detailed tasks (or activities)

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Level 4 Compatible with Windows 7

Compatible with Windows Vista

Compatible with Windows XP 1.1.2.3

1.1.2.2

1.1.2.1

(Work packages)

Level 3 Develop GUIs

Design Cost Tracking Reports

Module Testing

Ensure Compatibility with Earlier Versions

Develop Cost/Schedule

Interface

Defect Testing

1.1.1

1.2.2 1.3.2

1.3.11.2.1

1.1.2

Work Breakdown Structure

Figure 3.3

Level 2 Software Design

Cost Management Plan

System Testing1.1 1.2 1.3

Level 1 Develop Windows 8 Operating System 1.0

Project Scheduling

1. Shows the relationship of each activity to others and to the whole project

2. Identifies the precedence relationships among activities

3. Encourages the setting of realistic time and cost estimates for each activity

4. Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project

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► Techniques► Gantt chart► Critical Path Method

(CPM)► Program Evaluation

and Review Technique (PERT)

Project Scheduling

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A Simple Gantt ChartProject : establish a new department

Activity Sequence

Activity Time

Project Duration

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Project Controlling

► Close monitoring of resources, costs, quality, budgets

► Feedback enables revising the project plan and shift resources

► Computerized tools produce extensive reports

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Project Management Software

► There are several popular packages for managing projects

► Primavera ► MacProject► MindView► HP Project► Fast Track► Microsoft Project

© 2014 Pearson Education, Inc.

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Project Control Reports► Detailed cost breakdowns for each task► Total program labor curves► Cost distribution tables► Functional cost and hour summaries► Raw materials and expenditure forecasts► Variance reports► Time analysis reports► Work status reports

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PROJECT MGMT TECHNIQUES: PROJECT MGMT TECHNIQUES: PERTPERT

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► Network techniques► Developed in 1950s

► 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

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Six Steps PERT

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

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Six Steps PERT

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

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Activity on ActivityNode (AON) Meaning

A comes before B, which comes before C(a) A B C

3.0 2.5 2.0

A and B must both be completed before C can start(b)

A

C

B

3.0

2.5

2.0

PERT: AON Convention

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Activity on ActivityNode (AON) Meaning

B and C cannot begin until A is completed(c)

B

A

C

3.0

2.5

2.0

C and D cannot begin until A and B have both been completed(d)

A

B

C

D

3.0

2.5

2.0

3.5

PERT: AON Convention

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Activity on ActivityNode (AON) Meaning

C cannot begin until both A and B are completed; D cannot begin until B is completed. (e)

A

B

C

D

3.0

2.5

2.0

3.5

B and C cannot begin until A is completed. D cannot begin until both B and C are completed. (f)

A

C

DB3.0 2.5 3.5

2.0

PERT: AON Convention

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AON Example Example 3.1: Milwaukee has identified the eight activities that need to be performed in order to install air pollution control equipment in its facility.

Activity DescriptionImmediate

PredecessorsEstimated

Time (weeks)

A Build internal components — 2

B Modify roof and floor — 3

C Construct collection stack A 2

D Pour concrete and install frame A, B 4

E Build high-temperature burner C 4

F Install pollution control system C 3

G Install air pollution device D, E 5

H Inspect and test F, G 2

© 2014 Pearson Education, Inc. 3 - 28

ActivityImmediate

PredecessorsEstimated

Time (weeks)

A — 2

B — 3

C A 2

D A, B 4

E C 4

F C 3

G D, E 5

H F, G 2

FC

D

A

B

Start

E

G

H

43

2

42

3

5

2

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EstimatedEstimatedTimeTime ImmediateImmediate

TaskTask (weeks)(weeks) predecessorpredecessor

AA 88 ——BB 66 AACC 44 ——DD 99 CCEE 1111 AAFF 33 B, EB, EGG 11 B, C, EB, C, EHH 55 D, F, GD, F, G

Construct a PERT network for this project by using AON convention

EX1 in class

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▶Important concepts▶Path: A sequence of activities leading from the beginning

node to the ending node of a PERT network.

▶Path length: The sum of the time estimates of the activities on a path.

▶Critical path: The longest path in a PERT network.

▶Critical activities: The activities on the critical path.

▶Project duration (or completion time): The length of the critical path.

▶Path slack: The difference between the length of a path and the project duration.

PERT

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▶Deterministic PERT Analysis

▶Computational Algorithm

PERT Analysis

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▶Enumeration method

▶Calculate and compare the lengths of all paths

▶Determine the critical path, critical activities, and the path slacks

Deterministic PERT Analysis

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EstimatedTime Immediate

Task (weeks) predecessor

A 8 —B 6 AC 4 —D 9 CE 11 AF 3 BG 1 D, E, F

G

FB

E

D

A

C

Start94

6

11 1

8

3

Example 3.2: Do deterministic PERT analysis.

Total 42

Deterministic PERT Analysis

Critical PathCritical Path Path Length (weeks) Slack

Start – A – B – F – G 8+6+3+1=18

Start – A – E – G 8+11+1=20

Start – C – D – G 4+9+1=14

(1) What is the critical path? What are the critical activities?

(1) The critical path is Start – A – E - G. The critical activities are A, E, G.

(2) What is the duration of the project?

(2) The duration of the project is 20 weeks.

(3) Path Start – A – B – F – G has a slack of 2 weeks, and path Start – C – D – G has a slack of 6 weeks.

(3) Are there any path slacks? If so, how long is each of the

slacks?

2

0

6

G

FB

E

D

A

C

Start94

6

11 1

8

3

Deterministic PERT Analysis

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▶The critical path is the longest path through the network

▶The critical path is the shortest time in which the project can be completed

▶Any delay in critical path activities delays the project

▶Critical path activities have no slack time

Deterministic PERT Analysis

Critical PathCritical PathPath Length (weeks) Slack

Start – A – C – F – H 9 6

Start – A – C – E – G – H 15 0

Start – A – D – G – H 13 2

(1) What is the critical path? What are the critical activities?

(1) The critical path is Start – A – C – E – G – H. The critical activities are A, C, E, G, H.

(2) What is the duration of the project?

(2) The duration of the project is 15 weeks.(3) Path Start – A – C – F – H has a slack of 6 weeks, path Start – A – D – G – H has a

slack of 2 weeks, and path Start – B – D – G – H has a slack of 1 week.

(3) Are there any path slacks? If so, how long is each of the

slacks?

Start – B – D – G – H 14 1

FC

D

A

B

Start

E

G

H

43

2

42

3

5

2

Deterministic PERT AnalysisExample 3.3

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Activity Immediate Predecessor(s)

Estimated Time (weeks)

J -- 10

K -- 8

L J 6

M J 3

N K, M 5

O K, M 7

P L, N 8

Draw the diagram by using the information above, and determine the project duration, critical activity and path slacks

EX2 in class

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Earliest start (ES) =earliest time at which an activity can start, assuming all predecessors have been completed

Earliest finish (EF) =earliest time at which an activity can be finished

Latest start (LS) =latest time at which an activity can start so as to not delay the completion time of the entire project

Latest finish (LF) =latest time by which an activity has to be finished so as to not delay the completion time of the entire projectES EF

LS LF

PERT Computational Algorithm

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Begin at starting event and work forward

Earliest Start Time Rule:

If an activity has only one immediate predecessor, its ES equals the EF of the predecessor

If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors

ES = Max (EF of all immediate predecessors)

PERT: Forward Pass

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Begin at starting event and work forward

Earliest Finish Time Rule:

The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time

EF = ES + Activity time

PERT: Forward Pass

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Step 1: Use forward pass to calculate ES and EF

FC

D

A

B

StartE

G

H

43

2

4

2

3

5

2

ES EF

LS LF

0 0

0 2

0 3 3 7

2 4 4 7

4 8

8 13

13 15

PERT: Forward Pass (Example 3.4)

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Begin with the last event and work backwards

Latest Finish Time Rule:

If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it

If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it

LF = Min (LS of all immediate following activities)

PERT: Backward Pass

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Begin with the last event and work backwards

Latest Start Time Rule:

The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time

LS = LF – Activity time

PERT: Backward Pass

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Step 2: Use backward pass to calculate LS and LF

FC

D

A

B

StartE

G

H

43

2

4

2

3

5

2

ES EF

LS LF

0 0

0 0

0 2

0 2

0 3

1 4

3 7

4 8

2 4

2 4

4 7

10 13

4 8

4 8

8 13

8 13

13 15

13 15

PERT: Backward Pass (Example 3.4)

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After computing the ES, EF, LS, and LF times for all activities, compute the slack time for each activity, and identify the critical activity.

Slack is the length of time an activity can be delayed without delaying the entire project

Slack = LS – ES = LF – EF

Critical activity is an activity with zero slack

PERT: Slack time & Critical activity

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Noncritical activity is an activity with a positive slack

Project duration is the time to finish the whole project.

Project duration = LF of ending activity = EF of ending activity

PERT: Critical activity & Project duration

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Step 3: Calculate activity slack and decide critical activities & project duration

FC

D

A

B

StartE

G

H

43

2

4

2

3

5

20 0

0 0

0 2

0 2

0 3

1 4

3 7

4 8

2 4

2 4

4 7

10 13

4 8

4 8

8 13

8 13

13 15

13 15

Slack = 0

Slack = 0

Slack = 0 Slack = 6

Slack = 0

Slack = 0

Slack = 0Slack = 1Slack = 1

PERT: Critical Activity (Example 3.4)

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FC

D

A

B

StartE

G

H

43

2

4

2

3

5

20 0

0 0

0 2

0 2

0 3

1 4

3 7

4 8

2 4

2 4

4 7

10 13

4 8

4 8

8 13

8 13

13 15

13 15

Slack = 0

Slack = 0

Slack = 0 Slack = 6

Slack = 0

Slack = 0

Slack = 0Slack = 1Slack = 1

Critical activities: A, C, E, G, H

Project duration is 15 weeks.

PERT: Critical Activity (Example 3.4)

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▶Activity slack time: ▶PERT Algorithm

▶Example 3.4

▶Path slack time: ▶Deterministic PERT Analysis

▶Example 3.3, 3.2

Note

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ActivityImmediate

PredecessorsEstimated Time

(weeks)

A — 7

B — 3

C B 9

D A, C 5

E D 2

F C 5

E

C

A

B

Start

D

F

End93

257

5

(1) Construct a PERT network for this project by using AON convention

Dummy Starting Activity

Dummy Ending Activity

PERT: Computational Algorithm (Example 3.5)

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E

C

A

B

Start

D

F

End93

257

5

Step 1: Use forward pass to calculate ES and EF

ES EF

LS LF

0 0

0 7

0 3 3 12

12 17

12 17

17 19

19 19

PERT: Example 3.5

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E

C

A

B

Start

D

F

End93

257

5

ES EF

LS LF

0 0

0 0

0 7

5 12

0 3

0 3

3 12

3 12

12 17

12 17

12 17

14 19

17 19

17 19

19 19

19 19

Step 2: Use backward pass to calculate LS and LF

PERT: Example 3.5

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E

C

A

B

Start

D

F

End93

257

5

0 0

0 0

0 7

5 12

0 3

0 3

3 12

3 12

12 17

12 17

12 17

14 19

17 19

17 19

19 19

19 19

Step 3: Calculate activity slack and decide critical activities & project duration

Slack = 0

Slack = 5 Slack = 0 Slack = 0

Slack = 0 Slack = 0 Slack = 2

Slack = 0

PERT: Example 3.5

E

C

A

B

Start

D

F

End93

257

5

0 0

0 0

0 7

5 12

0 3

0 3

3 12

3 12

12 17

12 17

12 17

14 19

17 19

17 19

19 19

19 19

Slack = 0

Slack = 5 Slack = 0 Slack = 0

Slack = 0 Slack = 0 Slack = 2

Slack = 0

Critical activities are B, C, D, E.

Project duration is 19 weeks.

PERT: Example 3.5

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Start

J

K

L

M

O

N

P

End

10

8

6

3 5

7

8

Use the computational algorithm to determine the critical activities & project duration

EX3 in class

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Advantages of PERT/CPM

1. Especially useful when scheduling and controlling large projects

2. Straightforward concept and not mathematically complex

3. Graphical networks help highlight relationships among project activities

4. Critical path and slack time analyses help pinpoint activities that need to be closely watched

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Advantages of PERT/CPM

5. Project documentation and graphics point out who is responsible for various activities

6. Applicable to a wide variety of projects

7. Useful in monitoring not only schedules but costs as well

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1. Project activities have to be clearly defined, independent, and stable in their relationships

2. Precedence relationships must be specified and networked together

3. Time estimates tend to be subjective and are subject to fudging by managers

4. There is an inherent danger of too much emphasis being placed on the longest, or critical, path

Limitations of PERT/CPM