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3 - 1 2011 Pearson Education, Inc. publishing as Prentice Hall

3Project

Management

PowerPoint presentati

on to accompanyPowerPoint presentation to accompany

Heizer and RenderHeizer and Render

Operations Management, 10eOperations Management, 10e

Principles of Operations Management, 8ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

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Single unit

Many related activities

Difficult production planning andinventory control

General purpose equipment

High labor skills

Project CharacteristicsProject Characteristics

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Management of ProjectsManagement of Projects

1. Planning - goal setting, defining theproject, team organization

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

3. Controlling - monitors resources,

costs, quality, and budgets; revisesplans and shifts resources to meettime and cost demands

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Project Planning,Project Planning,

Scheduling, and ControllingScheduling, and Controlling

Figure 3.1

Before Start of project During

project Timeline project

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Figure 3.1



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Figure 3.1



8/6/2019 ISDS 3115 Ch.3

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Figure 3.1



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Figure 3.1



Budgets

Delayed activities reportSlack activities report

Time/cost estimates

Budgets

Engineering diagrams

Cash flow charts

Material availability details

CPM/PERT

Gantt charts

Milestone charts

Cash flow schedules

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Project Organization

Often temporary structure

Uses specialists from entire company

Headed by project manager

Matrix Organization

Types of ProjectTypes of ProjectOrganizationsOrganizations

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The Role ofThe Role of

the Project Managerthe Project ManagerHighly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:

1. All necessary activities are finished in orderand on time

2. The project comes in within budget

3. The project meets quality goals

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

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The Role ofThe Role of

the Project Managerthe Project ManagerHighly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:

1. All necessary activities are finished in orderand on time

2. The project comes in within budget

3. The project meets quality goals

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

Project managers should be:

Good coaches

Good communicators

Able to organize activities

from a variety of disciplines

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Ethical IssuesEthical Issues

1. Offers of gifts from contractors

2. Pressure to alter status reports to mask delays

3. False reports for charges of time and expenses

4. Pressure to compromise quality to meetschedules

Project managers face many ethicaldecisions on a daily basis

The Project Management Institute has

established an ethical code to deal withproblems such as:

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Work Breakdown StructureWork Breakdown Structure

Level

1. Project

2. Major tasks in the project

3. Subtasks in the major tasks

4. Activities (or work packages)to be completed

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Level 4Compatible with

Windows ME

Compatible withWindows Vista

Compatible withWindows XP 1.1.2.3

1.1.2.2

1.1.2.1

(Work packages)

Level 3Develop

GUIsPlanning

ModuleTesting

Ensure Compatibilitywith Earlier Versions

Cost/ScheduleManagement

DefectTesting

1.1.1

1.2.2 1.3.2

1.3.11.2.1

1.1.2

Work Breakdown StructureWork Breakdown Structure

Figure 3.3

Level 2SoftwareDesign

ProjectManagement

SystemTesting1.1 1.2 1.3

Level 1

Develop Windows 7

Operating System 1.0

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Project SchedulingProject Scheduling

Identifying precedencerelationships

Sequencing activities

Determining activitytimes & costs

Estimating material &

worker requirements Determining critical

activities

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Gantt chart

Critical Path Method(CPM)

Program Evaluationand Review

Technique (PERT)

Project ManagementProject ManagementTechniquesTechniques

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A Simple Gantt ChartA Simple Gantt Chart

TimeJ F M A M J J A S

Design

Prototype

Test

Revise

Production

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Service For a Delta JetService For a Delta Jet

Figure 3.4

Passengers

Baggage

Fueling

Cargo and mail

Galley servicingLavatory servicingDrinking water

Cabin cleaning

Cargo and mail

Flight servicesOperating crew

Baggage

Passengers

DeplaningBaggage claim

Container offload

Pumping

Engine injection water

Container offload

Main cabin door

Aft cabin doorAft, center, forward

Loading

First-class section

Economy section

Container/bulk loading

Galley/cabin check

Receive passengersAircraft check

Loading

Boarding

0 10 20 30 40Time, Minutes

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Network techniques

Developed in 1950s

CPM by DuPont for chemical plants (1957)

PERT by Booz, Allen & Hamilton with theU.S. Navy, for Polaris missile (1958)

Consider precedence relationships andinterdependencies

Each uses a different estimate ofactivity times

PERT and CPMPERT and CPM

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Six Steps PERT & CPMSix Steps PERT & CPM

1. Define the project and prepare thework breakdown structure

2. Develop relationships among theactivities - decide which activitiesmust precede and which mustfollow others

3. Draw the network connecting all ofthe activities

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Six Steps PERT & CPMSix Steps PERT & CPM

4. Assign time and/or cost estimatesto each activity

5. Compute the longest time paththrough the network this is calledthe critical path

6. Use the network to help plan,schedule, monitor, and control theproject

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1. When will the entire project becompleted?

2. What are the critical activities or tasks inthe project?

3. Which are the noncritical activities?

4. What is the probability the project will becompleted by a specific date?

Questions PERT & CPMQuestions PERT & CPM

Can AnswerCan Answer

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5. Is the project on schedule, behindschedule, or ahead of schedule?

6. Is the money spent equal to, less than, orgreater than the budget?

7. Are there enough resources available tofinish the project on time?

8. If the project must be finished in a shortertime, what is the way to accomplish thisat least cost?

Questions PERT & CPMQuestions PERT & CPM

Can AnswerCan Answer

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A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network Conventions

Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)

A comes before

B, which comesbefore C.(a) A B C BA C

A and B must bothbe completedbefore C can start.

(b)

A

C

CB

A

B

B and C cannotbegin until A iscompleted.

(c)

B

A

C

AB

CFigure 3.5

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C and D cannot

begin until bothA and B arecompleted.

(d)A

B

C

D B

A C

D

C cannot beginuntil both A and Bare completed; Dcannot begin untilB is completed. Adummy activity isintroduced in AOA.

(e)CA

B D

Dummy activity

A

B

C

D

Figure 3.5

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B and C cannotbegin until A iscompleted. Dcannot beginuntil both B andC are completed.A dummyactivity is againintroduced inAOA.

(f)

A

C

DB A B

C

D

Dummy

activity

Figure 3.5

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AON ExampleAON Example

Activity Description ImmediatePredecessors

A Build internal components

B Modify roof and floor C Construct collection stack A

D Pour concrete and install frame A, B

E Build high-temperature burner C

F Install pollution control system C

G Install air pollution device D, E

H Inspect and test F, G

Milwaukee Paper Manufacturing'sMilwaukee Paper Manufacturing'sActivities and PredecessorsActivities and Predecessors

Table 3.1

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AON Network forAON Network for

Milwaukee PaperMilwaukee Paper

A

Start

BStartActivity

Activity A

(Build Internal Components)

Activity B(Modify Roof and Floor)

Figure 3.6

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AON Network forAON Network for


Arrows Show PrecedenceRelationships Figure 3.8

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Determining the ProjectDetermining the ProjectScheduleSchedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

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 activitiesdelays the project

Critical path activities have no slacktime

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Table 3.2

Activity Description Time (weeks)

A Build internal components 2

B Modify roof and floor 3

C Construct collection stack 2

D Pour concrete and install frame 4

E Build high-temperature burner 4

F Install pollution control system 3G Install air pollution device 5

H Inspect and test 2

Total Time (weeks) 25

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Table 3.2

Activity Description Time (weeks)

A Build internal components 2

B Modify roof and floor 3

C Construct collection stack 2

D Pour concrete and install frame 4

E Build high-temperature burner 4F Install pollution control system 3

G Install air pollution device 5

H Inspect and test 2

Total Time (weeks) 25

Earliest start (ES) = earliest time atwhich an activity can start, assumingall predecessors have been completed

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

Latest start (LS) = latest time atwhich an activity can start so as to notdelay the completion time of the entireproject

Latest finish (LF) = latest time bywhich an activity has to be finished soas to not delay the completion time of

the entire project

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Figure 3.10

A

Activity Nameor Symbol

EarliestStart

ESEarliestFinishEF

LatestStart

LS LatestFinish

LF

Activity Duration

2

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Forward PassForward Pass

Begin at starting event and work forwardBegin at starting event and work forward

Earliest Start Time Rule:

If an activity has only a single immediatepredecessor, its ES equals the EF of thepredecessor

If an activity has multiple immediatepredecessors, its ES is the maximum ofall the EF values of its predecessors

ES = Max {EF of all immediate predecessors}

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ES/EF Network forES/EF Network for

Milwaukee PaperMilwaukee PaperA

2

2

EF of A =ES of A + 2

0

ESof A

EF = ES + Activity time

ES = Max {EF of all immediate predecessors}

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Backward PassBackward Pass

Begin with the last event and work backwardsBegin with the last event and work backwards

Latest Finish Time Rule:

If an activity is an immediate predecessorfor just a single activity, its LF equals theLS of the activity that immediately followsit

If an activity is an immediate predecessorto more than one activity, its LF is theminimum of all LS values of all activitiesthat immediately follow it

LF = Min {LS of all immediate following activities}

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Backward PassBackward Pass

Begin with the last event and work backwardsBegin with the last event and work backwards

Latest Start Time Rule:

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

LS = LF Activity time

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Computing Slack TimeComputing Slack Time

After computing the ES, EF, LS, and LF timesfor all activities, compute the slack or freetime for each activity

Slack is the length of time an activity canbe delayed without delaying the entireproject

Slack = LS ES or Slack = LF EF

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Critical Path forCritical Path for


E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start

0

0

0

A

2

20

42

84

20

41

00

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ES EF Gantt ChartES EF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

A Build internalcomponents

B Modify roof and floor

C Construct collectionstack

D Pour concrete andinstall frame

E Build high-temperature burner

F Install pollutioncontrol system

G Install air pollutiondevice

H Inspect and test

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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LS LF Gantt ChartLS LF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

A Build internalcomponents

B Modify roof and floor

C Construct collectionstack

D Pour concrete andinstall frame

E Build high-temperature burner

F Install pollutioncontrol system

G Install air pollutiondevice

H Inspect and test

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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CPM assumes we know a fixed timeestimate for each activity and there

is no variability in activity times PERT uses a probability distribution

for activity times to allow forvariability

Variability in Activity TimesVariability in Activity Times

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Three time estimates are required

Optimistic time (a) if everything

goes according to plan Pessimistic time (b) assuming very

unfavorable conditions

Most likely time (m) most realisticestimate


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Estimate follows beta distributionEstimate follows beta distribution


Expected time:

Variance of times:t = (a + 4m + b)/6

v= [(b a)/6]2

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Estimate follows beta distributionEstimate follows beta distribution


Expected time:Expected time:

Variance of times:Variance of times:t =t = ((a +a + 44mm ++ bb)/6)/6

v =v = [([(bb aa)/6]2)/6]2Probabilityof 1 in 100 of> b occurring

Probability of1 in 100 of< a occurring

Pro

ba

bilit

y

OptimisticTime (a)

Most LikelyTime (m)

PessimisticTime (b)

ActivityTime

Figure 3.12

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Computing VarianceComputing Variance

Table 3.4

Most ExpectedOptimistic Likely Pessimistic Time Variance

Activity a m b t = (a + 4m + b)/6 [(b a)/6]2

A 1 2 3 2 .11

B 2 3 4 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00

F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11

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Probability of ProjectProbability of ProjectCompletionCompletion

Project variance is computed byProject variance is computed bysumming the variances of criticalsumming the variances of criticalactivitiesactivities

2 = Project variance= (variances of activities

on critical path)

p

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Project variance is computed byProject variance is computed bysumming the variances of criticalsumming the variances of criticalactivitiesactivitiesProject variance

2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

p = Project variance= 3.11 = 1.76 weeks

p

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PERT makes two more assumptions:PERT makes two more assumptions:

Total project completion times follow anormal probability distribution

Activity times are statisticallyindependent

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Standard deviation = 1.76 weeks

15 Weeks

(Expected Completion Time)Figure 3.13

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What is the probability this project canWhat is the probability this project canbe completed on or before the 16 weekbe completed on or before the 16 weekdeadline?deadline?

Z= / p= (16 wks 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Zis the number ofstandard deviations the duedate or target date lies fromthe mean or expected date

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What is the probability this project canWhat is the probability this project canbe completed on or before the 16 weekbe completed on or before the 16 weekdeadline?deadline?

Z = / p= (16 wks 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Zis the number ofstandard deviations the duedate or target date lies fromthe mean or expected date

.00 .01 .07 .08

.1 .50000 .50399 .52790 .53188

.2 .53983 .54380 .56749 .57142

.5 .69146 .69497 .71566 .71904

.6 .72575 .72907 .74857 .75175

From Appendix I

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Time

Probability(T 16 weeks)

is 71.57%

Figure 3.14

0.57 Standard deviations

15 16Weeks Weeks

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Determining ProjectDetermining ProjectCompletion TimeCompletion Time

Probabilityof 0.01

Z

Figure 3.15

From Appendix I

Probabilityof 0.99

2.33 Standarddeviations

0 2.33

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Variability of CompletionVariability of Completion

Time for Noncritical PathsTime for Noncritical Paths Variability of times for activities

on noncritical paths must be

considered when finding theprobability of finishing in aspecified time

Variation in noncritical activitymay cause change in critical path

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Trade-Offs and ProjectTrade-Offs and Project

CrashingCrashing

The project is behind schedule The completion time has been

moved forward

It is not uncommon to face theIt is not uncommon to face thefollowing situations:following situations:

Shortening the duration of theproject is called project crashing

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Factors to Consider WhenFactors to Consider When

Crashing a ProjectCrashing a Project The amount by which an activity is

crashed is, in fact, permissible

Taken together, the shortenedactivity durations will enable us tofinish the project by the due date

The total cost of crashing is assmall as possible

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Steps in Project CrashingSteps in Project Crashing

3. If there is only one critical path, thenselect the activity on this critical paththat (a) can still be crashed, and (b) hasthe smallest crash cost per period. If

there is more than one critical path, thenselect one activity from each critical pathsuch that (a) each selected activity canstill be crashed, and (b) the total crash

cost of all selected activities is thesmallest. Note that the same activity maybe common to more than one criticalpath.

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Steps in Project CrashingSteps in Project Crashing

4. Update all activity times. If the desireddue date has been reached, stop. If not,return to Step 2.

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Crashing The ProjectCrashing The Project

Table 3.5

Time (Wks) Cost ($)Crash Cost Critical

Activity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 Yes

B 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes

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Crash and Normal TimesCrash and Normal Timesand Costs for Activity Band Costs for Activity B

| | |1 2 3 Time (Weeks)

$34,000

$33,000

$32,000

$31,000

$30,000

ActivityCost

Crash

Normal

Crash Time Normal Time

CrashCost

NormalCost

Crash Cost/Wk =Crash Cost Normal CostNormal Time Crash Time

= $34,000 $30,0003 1

= = $2,000/Wk$4,0002 Wks

Figure 3.16

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Critical Path and Slack TimesCritical Path and Slack Timesfor Milwaukee Paperfor Milwaukee Paper

Figure 3.17

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start

0

0

0

A

2

20

42

84

20

41

00

Slack = 1 Slack = 1

Slack = 0 Slack = 6

Slack = 0

Slack = 0

Slack = 0

Slack = 0

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Advantages of PERT/CPMAdvantages of PERT/CPM

1. Especially useful when scheduling andcontrolling large projects

2. Straightforward concept and not

mathematically complex3. Graphical networks help highlight

relationships among project activities

4. Critical path and slack time analyses help

pinpoint activities that need to be closelywatched

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Advantages of PERT/CPMAdvantages of PERT/CPM

5. Project documentation and graphicspoint out who is responsible for variousactivities

6. Applicable to a wide variety of projects7. Useful in monitoring not only schedules

but costs as well

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1. Project activities have to be clearlydefined, independent, and stable in theirrelationships

2. Precedence relationships must bespecified and networked together

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

4. There is an inherent danger of too muchemphasis being placed on the longest, orcritical, path

Limitations of PERT/CPMLimitations of PERT/CPM

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Project Management SoftwareProject Management Software

There are several popular packagesfor managing projects

Primavera

MacProject

Pertmaster

VisiSchedule

Time Line Microsoft Project

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Documents

ISDS 3115 Ch.3