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Introduction to Operations Management
Ch. 17. Project Management
Hansoo Kim (金翰秀)
Dept. of Management Information Systems, YUST
What you should have done!
Review Ch. 1 and 2
HW#1 (3/22 수업시간 전까지!!!)
Read Ch. 17
Important things in Ch.1 and 2
Organizational Functions
What is OM? Why OM?
Productivity
Calculating Productivity
Productivity Variables
History of OM
What, When, by Who
Changing Challenges!
Mission/Strategy
Better/Cheaper/Faster
Strategy and Issues During a Product’s Life Cycle
OM Overview
Class Overview(Ch. 0)
ProjectManagement
(Ch. 17)
StrategicCapacity Planning
(Ch. 5, 5S)
Operations, Productivity,and Strategy
(Ch. 1, 2)
Mgmt of Quality/Six Sigma Quality
(Ch. 9, 10)
Supply ChainManagement(Ch 11)
Location Planningand Analysis(Ch. 8)
Demand MgmtForecasting
(Ch 3)
InventoryManagement
(Ch. 12)
AggregatedPlanning
(Ch. 13)
Queueing/Simulation(Ch. 18)
MRP & ERP(Ch 14)
JIT & Lean Mfg System
(Ch. 15)
Term Project
Process Selection/Facility
Layout; LP(Ch. 6, 6S)
X X
To be OM Expert !!!
Understanding
Problem
Developing
Proper Model
Finding Solution
Technique
Communicable
with other OM People
Domain Expert
(Studying general
Problems and Working
Experience)
Operations Research
(경영과학)
Mathematical Programming,
and Computational
Methodology
Existing Models:
LP Model,
Queueing Model,
Simulation Model,
PERT/CPM Model
Develop New Models
OM EXPERT!!
Learning Objectives
Discuss the behavioral aspects of projects in terms of project personnel and the project manager.
Discuss the nature and importance of a work breakdown structure in project management.
Give a general description of PERT/CPM techniques.
Construct simple network diagrams.
Learning Objectives
List the kinds of information that a PERT or CPM analysis can provide.
Analyze networks with deterministic times.
Analyze networks with probabilistic times.
Describe activity “crashing” and solve typical problems.
Terms(용어) Project organization (项目管理) Work breakdown structure (WBS)
(工作结构分解) Gantt charts (甘特图) Program evaluation and review
technique (PERT) (计划评审技术) Critical path method (CPM) (关键
路线法) Critical path (关键路线) Activity-on-node (AON) (点线法) Activity-on-arrow (AOA) (箭线法) Dummy activities (虚活动)
Critical path analysis(关键路线分析)
Forward pass (正推法) Backward pass (逆推法) Slack time (松弛时间) Total slack (总浮时) Free slack (自由浮时) Optimistic time (乐观时间) Pessimistic time (悲观时间) Most likely time (最可能时间) Beta probability distribution (β分
布) Crashing (赶工)
What is Project, and Project Management?
Project: (项目)
Unique, one-time operations designed to accomplish a set of objectives in a limited time frame
Project Management: (项目管理)
Planning(计划), scheduling(排程,일정관리), and controlling(控制) resources(资源) (people, equipment, material) to meet the technical, cost, and time constraints of a project
Examples of Project
Building Construction
Microsoft® Vista Development Project
Space Shuttle Development Project
Research Project
Class Term Project
Etc.
Management of Large Projects
Planning (计划)- goal setting(设计目标), project definition(定义项目), team organization (项目小组)
Scheduling (排程, 일정관리)- relating people, money, and supplies to specific activities, and relating activities to each other
Controlling (控制)- monitoring resources, costs, quality, and budgets; revising plans and shifting resources to meet time and cost demands
Project Management Activities
Planning
Objectives
Resources
Work break-
down schedule
Organization
Scheduling
Project
activities
Start & end
times
Network
Controlling
Monitor, compare,
revise, action
Project Planning, Scheduling, and Controlling
Project Life-Cycle
Project Planning (计划)
Establishing objectives (设立目标)
Defining project (定义项目)
Creating work breakdown structure (WBS*)
Determining resources (资源)
Forming organization (形成组织)
© 1995 Corel Corp.
Project Planning:Project Organization (项目小组)
Often temporary structure
Uses specialists from entire company
Headed by project manager (PM)
Coordinates activities
Monitors schedule& costs
Permanent structure called ‘matrix(矩阵) organization’
© 1995 Corel Corp.
Acct.
Eng. Eng.
Mkt.
Mgr.
Project Planning:An Example of Project Organization
Sales
President
FinanceHuman
ResourcesEngineering
Quality
ControlProduction
TechnicianTest
Engineer
Propulsion
EngineerPhysiologist
Project
Manager
PsychologistStructural
Engineer
Inspection
TechnicianTechnician
Project 1
Project 2
Project
Manager
Matrix Organization
Project Planning:The Role of Project Manager (PM)
Project Plan
and Schedule
Revisions and
Updates
Project
Manager
Project
Team
Top
ManagementResources
Performance
Reports
Information
regarding times,
costs, problems,
delays Feedback Loop
Project Planning: Work Breakdown Structure (WBS)
1. 1.0 Project
2. 1.1 Major tasks in the project
3. 1.1.1 Subtasks in the major tasks
4. 1.1.1.1 Activities (or work packages) to be completed
WBS: The hierarchy of project tasks, subtasks, and activities (or work packages)
Level Level ID Activity
Project Scheduling (排程,일정관리)
Identifying precedence relationships (先后关系)
Sequencing activities
Determining activity times & costs
Estimating material & worker requirements
Determining critical activities (关键活动)
© 1995 Corel Corp.
Project Scheduling:Gantt Chart
Project Control (控制)
Monitoring resources, costs, quality, and budgets;
Revising plans and shifting resources to meet time and cost demands
Project Management Techniques
Gantt chart(甘特图)
Critical Path Method (CPM 关键路径发)
Program Evaluation & Review Technique (PERT 计划评审技术)
© 1984-1994 T/Maker Co.
PERT and CPM
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: Program Evaluation and Review Technique
CPM: Critical Path Method
Understanding Problem!!
Understanding
Problem
Developing
Proper Model
Finding Solution
Technique
Communicable
with other OM People
Domain Expert
(Studying general
Problems and Working
Experience)
Operations Research
(경영과학)
Mathematical Programming,
and Computational
Methodology
Existing Models:
LP Model,
Queueing Model,
Simulation Model,
PERT/CPM Model
Develop New Models
OM EXPERT!!
Project Management Problem
Given, Activities from WBS Activity Times and Costs Precedence Relationships
Answer Is the project on schedule, ahead of schedule, or behind schedule?
(프로젝트가 계획대로 진행될 것인가?) Is the project over or under cost budget?
(프로젝트 예산에 맞는가 아니면 초과 혹 미달 하는가?) Are there enough resources available to finish the project on time?
(프로젝트를 정시에 마치기 위한 충분한 가용한 자원이 있는가?) If the project must be finished in less than the scheduled amount
of time, what is the way to accomplish this at least cost?(만약 프로젝트를 좀 더 빨리 끝내기 위해서는 최소의 비용으로 어떻게 해야 하는가?)
Milwaukee General Hospital’s Activities and Predecessors
Activity Description ProcessingTime
Immediate Predecessors
A Build internal components 2 -
B Modify roof and floor 3 -
C Construct collection stack 2 A
D Pour concrete and install frame 4 A, B
E Build high-temperature burner 4 C
F Install pollution control system 3 C
G Install air pollution device 5 D, E
H Inspect and test 2 F, G
AON(点线法) Network for Milwaukee General Hospital
Start
A
B
C
D
E
F
G
H
AOA(箭线法) Network (With Dummy Activities) for Milwaukee General
1
3
2 4
5
6 7H
Inspect/Test
D
Pour concrete/ Install frame
C
Construct stack
Dummy
Activity
A Comparison of AON and AOA Network Conventions
Critical Path (关键路径) and Slack Time(松弛时间)
A
B
C4
2
2
Slack = 0
A
B
C3
2
2
Slack = 1
Critical Path Analysis
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
Earliest Start and Finish Steps
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
Latest Start and Finish Steps
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
Nam
e
Activity
Duration
Critical Path(关键路径) forMilwaukee General Hospital
Start
A
B
C
D
E
F
G
H
AON Network for Milwaukee General Hospital Forward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
AON Network for Milwaukee General Hospital Forward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
0
AON Network for Milwaukee General Hospital Forward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
0
B0
03
3
0
AON Network for Milwaukee General Hospital Forward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
0
B0
03
3
0
D3
04
7
0
C2
02
4
0E
4
04
8
0
F4
03
7
0
G8
05
13
0
H13
02
15
0
AON Network for Milwaukee General Hospital Backward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
0
B0
03
3
0
D3
04
7
0
C2
02
4
0E
4
04
8
0
F4
03
7
0
G8
05
13
0
H13
132
15
15
AON Network for Milwaukee General Hospital Backward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
0
B0
03
3
0
D3
04
7
0
C2
02
4
0E
4
04
8
0
F4
103
7
13
G8
85
13
13
H13
132
15
15
AON Network for Milwaukee General Hospital Backward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
0
B0
03
3
0
D3
44
7
8
C2
02
4
0E
4
44
8
8
F4
103
7
13
G8
85
13
13
H13
132
15
15
AON Network for Milwaukee General Hospital Backward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
0
B0
03
3
0
D3
44
7
8
C2
22
4
4E
4
44
8
8
F4
103
7
13
G8
85
13
13
H13
132
15
15
AON Network for Milwaukee General Hospital Backward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
2
B0
13
3
4
D3
44
7
8
C2
22
4
4E
4
44
8
8
F4
103
7
13
G8
85
13
13
H13
132
15
15
Slack=0 Slack=0
Slack=0
Slack=0
Slack=6
Slack=1Slack=1
Start
AON Network for Milwaukee General Hospital Backward Calculation
Start
A
B
C
D
E
F
G
H0
00
0
0
A0
02
2
2
B0
13
3
4
D3
44
7
8
C2
22
4
4E
4
44
8
8
F4
103
7
13
G8
85
13
13
H13
132
15
15
Slack=0 Slack=0
Slack=0
Slack=0
Slack=6
Slack=1Slack=1
StartCriticalPath
Gantt Chart(甘特图)Earliest Start and Finish
Milwaukee General Hospital
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
1 2 3 4 5 6 7 8 9 10 1112 13 1415 16
Gantt ChartLatest Start and Finish
Milwaukee General Hospital
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
1 2 3 4 5 6 7 8 9 10 1112 13 1415 16
Using MS-Project 2003
Example and Practice
Milwaukee General Hospital’s Activities and Predecessors
Activity Description ProcessingTime
Immediate Predecessors
A Build internal components 2 -
B Modify roof and floor 3 -
C Construct collection stack 2 A
D Pour concrete and install frame 4 A, B
E Build high-temperature burner 4 C
F Install pollution control system 3 C
G Install air pollution device 5 D, E
H Inspect and test 2 F, G
PERT Activity Times
3 time estimates (p781)
Optimistic times (a)
Most-likely time (m)
Pessimistic time (b)
Assume to follow beta distribution, then
Expected time: t = (a + 4m + b)/6
Variance of times: s2 =v= (b - a)2/62
What if activity times are not certainty????
Project Times
Expected project time (T)
Sum of critical path activity times, t i
T = ti
Project variance (S2)
Sum of critical path activity variances, vi
S2 = vi
Desired project completion time Random Variable (D)
Used to obtain
probability of project
completion!
)1,0(~
),,(~
NormS
TDZ
STNormD
Activity Expected Times and Variances
Activity Description a m b t s2
A Build internal components 1 2 3 2 1/9
B Modify roof and floor 2 3 4 3 1/9
C Construct collection stack 1 2 3 2 1/9
D Pour concrete and install frame 1 4 4 3.5 1/4
E Build high-temperature burner 1 4 5 11/3 4/9
F Install pollution control system 2 3 4 3 1/9
G Install air pollution device 1 5 3 4 1/9
H Inspect and test 2 2 2 2 0
t = (a + 4m + b)/6
s2 = (b - a)2/62
Critical Path: A-C-E-G-H, T=2+2+11/3+4+2 = 123/9=13.667, S2=1/9+1/9+4/9+1/9=7/9=0.778
Suppose thatd = 15.43, then
0.29994.1
9/7
9/12343.15
Z
Converting to Standardized Variable
T = 13.67
s2= 7/9
15.43 X
Normal
Distribution
mz = 0
s2Z
= 1
Z2.0
Standardized Normal
Distribution
0.2778.0
667.1343.15
Z
)0.2()778.0
667.1343.15()43.15(
ZP
S
TDPDP
Obtaining the Probability
mz = 0
sZ
= 1
Z2.0
Z .00 .01
0.0 .50000 .50399
: : : :
2.0 .97725 .97784 .97831
2.1 .98214 .98257 .98300
Standardized Normal Probability
Table (Portion) [see Appendix I]
Probabilities in body
.02
.50798
.97725
Project Success Probability = 97.7%
Variability of Completion Time for Non-critical Paths
Variability of times for activities on non-critical paths must be considered when finding the probability of finishing in a specified time.
Variation in non-critical activity may cause change in critical path.
Factors to Consider when Crashing
The amount by which an activity is crashed is, in fact, permissible.
Taken together, the shortened activity durations will enable one to finish the project by the due date.
The total cost of crashing is as small as possible.
Steps in Project Crashing(赶工)
Compute the crash cost per time period. For crash costs assumed linear over time:
Using normal activity times, find the critical path If there is only one critical path, then select the activity on
this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period. Note that a single activity may be common to more than one critical path
Update all activity times.
)Crash time time(Normal
cost) Normalcost(Crash periodper cost Crash
Example: Project Crashing Step 1
A
NT=2
CT=1
NC=$6
CC=$10
B
NT=5
CT=2
NC=$9
CC=$18
D
NT=3
CT=1
NC=$5
CC=$9
C
NT=4
CT=3
NC=$6
CC=$8
NT= Normal TimeCT= Crash TimeNC= Normal CostCC= Crash Cost
Step1: Prepare Network Diagram with Activity Cost
Example: Project CrashingStep 2
Step2: Calculation of Cost per time to expedite each activity
ActivityCC-NC
NT-CT
(CC-NC) / (NT-CT)
Cost per time to expedite
Times may be shortened
A 4 1 4/1 4 1
B 9 3 9/3 3 3
C 2 1 2/1 2 1
D 4 2 4/2 2 2
Which activity should be expedited?
CT NT
NC
CC
Example: Project CrashingStep 3
Step3: Reducing the project completion time one at a time
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
Total cost of all activities in network
Project completion
Time
ABD $26 10
ABD A-1, B-3, D-2 D ($2) $28 9
ABD A-1, B-3, D-1 D ($2) $30 8
ABD A-1, B-3 B ($3) $33 7
ABCD A-1, B-3, C-1 A ($4)* $37 6
ABCD B-2, C-1 B and C ($5) $42 5
ABCD B-1 B ($3) $45 5
Example
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
ABD
ABD A-1, B-3, D-2 D ($2)
ABD A-1, B-3, D-1 D ($2)
ABD A-1, B-3 B ($3)
ABCD A-1, B-3, C-1 A ($4)*
ABCD B-2, C-1 B and C ($5)
ABCD B-1 B ($3)
A
NT=2
CT=1
NC=$6
CC=$10
B
NT=5
CT=2
NC=$9
CC=$18
D
NT=3
CT=1
NC=$5
CC=$9
C
NT=4
CT=3
NC=$6
CC=$8
PT=10
TC=$26
A: 4 $/hB: 3 $/hC: 2 $/hD: 2 $/h
Example
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
ABD
ABD A-1, B-3, D-2 D ($2)
ABD A-1, B-3, D-1 D ($2)
ABD A-1, B-3 B ($3)
ABCD A-1, B-3, C-1 A ($4)*
ABCD B-2, C-1 B and C ($5)
ABCD B-1 B ($3)
A
NT=2
CT=1
NC=$6
CC=$10
B
NT=5
CT=2
NC=$9
CC=$18
D
T=2
CT=1
NC=$5
CC=$9
C
NT=4
CT=3
NC=$6
CC=$8
PT=9
TC=$28
A: 4 $/hB: 3 $/hC: 2 $/hD: 2 $/h
Example
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
ABD
ABD A-1, B-3, D-2 D ($2)
ABD A-1, B-3, D-1 D ($2)
ABD A-1, B-3 B ($3)
ABCD A-1, B-3, C-1 A ($4)*
ABCD B-2, C-1 B and C ($5)
ABCD B-1 B ($3)
A
NT=2
CT=1
NC=$6
CC=$10
B
NT=5
CT=2
NC=$9
CC=$18
D
T=1
CT=1
NC=$5
CC=$9
C
NT=4
CT=3
NC=$6
CC=$8
PT=8
TC=$30
A: 4 $/hB: 3 $/hC: 2 $/hD: 2 $/h
Example
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
ABD
ABD A-1, B-3, D-2 D ($2)
ABD A-1, B-3, D-1 D ($2)
ABD A-1, B-3 B ($3)
ABCD A-1, B-3, C-1 A ($4)*
ABCD B-2, C-1 B and C ($5)
ABCD B-1 B ($3)
A
NT=2
CT=1
NC=$6
CC=$10
B
T=4
CT=2
NC=$9
CC=$18
D
T=1
CT=1
NC=$5
CC=$9
C
NT=4
CT=3
NC=$6
CC=$8
PT=7
TC=$33
A: 4 $/hB: 3 $/hC: 2 $/hD: 2 $/h
Example
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
ABD
ABD A-1, B-3, D-2 D ($2)
ABD A-1, B-3, D-1 D ($2)
ABD A-1, B-3 B ($3)
ABCD A-1, B-3, C-1 A ($4)*
ABCD B-2, C-1 B and C ($5)
ABCD B-1 B ($3)
A
T=1
CT=1
NC=$6
CC=$10
B
T=4
CT=2
NC=$9
CC=$18
D
T=1
CT=1
NC=$5
CC=$9
C
NT=4
CT=3
NC=$6
CC=$8
PT=6
TC=$37
A: 4 $/hB: 3 $/hC: 2 $/hD: 2 $/h
Example
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
ABD
ABD A-1, B-3, D-2 D ($2)
ABD A-1, B-3, D-1 D ($2)
ABD A-1, B-3 B ($3)
ABCD A-1, B-3, C-1 A ($4)*
ABCD B-2, C-1 B and C ($5)
ABCD B-1 B ($3)
A
T=1
CT=1
NC=$6
CC=$10
B
T=3
CT=2
NC=$9
CC=$18
D
T=1
CT=1
NC=$5
CC=$9
C
T=3
CT=3
NC=$6
CC=$8
PT=5
TC=$42
A: 4 $/hB: 3 $/hC: 2 $/hD: 2 $/h
Example
Current Critical Path
Remaining Number of time activity may be shortened
Least-cost activity to expedite (cost)
ABD
ABD A-1, B-3, D-2 D ($2)
ABD A-1, B-3, D-1 D ($2)
ABD A-1, B-3 B ($3)
ABCD A-1, B-3, C-1 A ($4)*
ABCD B-2, C-1 B and C ($5)
ABCD B-1 B ($3)
A
T=1
CT=1
NC=$6
CC=$10
B
T=3
CT=2
NC=$9
CC=$18
D
T=1
CT=1
NC=$5
CC=$9
C
T=3
CT=3
NC=$6
CC=$8
PT=5
TC=$42
A: 4 $/hB: 3 $/hC: 2 $/hD: 2 $/h
Advantages of PERT/CPM
Especially useful when scheduling and controlling large projects.
Straightforward concept and not mathematically complex. Graphical networks aid perception of relationships among
project activities. Critical path & slack time analyses help pinpoint activities that
need to be closely watched. Project documentation and graphics point out who is
responsible for various activities. Applicable to a wide variety of projects. Useful in monitoring schedules and costs.
Limitations of PERT/CPM
Assumes clearly defined, independent, & stable activities
Specified precedence relationships
Activity times (PERT) follow beta distribution
Subjective time estimates
Over-emphasis on critical path
Summary
Project Management is important to meet the schedule.
Use MS-Projector!
Techniques Critical Path Analysis
PERT
Crashing
Gantt Chart
Terms: Project, PERT, CPM, Matrix Organization, Gantt Chart
What to do next…
Read Chapter 17 again and Chapter 5, 5s
Do HW#2
Play with MS-Project®
HW#2
Find the definitions of the terms
WBS, PERT, CPM, Critical Path, Slack Time, Crashing
Review Solved Problem
Problem 1, 2, 3 (on 795)
Solve these Problems
11, 15
USE MS-Project
To be OM Expert !!!
Understanding
Problem
Developing
Proper Model
Finding Solution
Technique
Communicable
with other OM People
Domain Expert
(Studying general
Problems and Working
Experience)
Operations Research
(경영과학)
Mathematical Programming,
and Computational
Methodology
Existing Models:
LP Model,
Queueing Model,
Simulation Model,
PERT/CPM Model
Develop New Models
OM EXPERT!!
Project Management!!!
Good Bye