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7/28/2019 Chap017 Project Management
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17-1 Project Management
William J. Stevenson
Operations Management
8th edition
7/28/2019 Chap017 Project Management
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17-2 Project Management
CHAPTER
17
ProjectManagement
McGraw-Hill/Irwin
Operations Management, Eighth Edition, by William J. StevensonCopyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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17-3 Project Management
Unique, one-time operations designed to accomplish
a specific set of objectives in a limited time frame.
Bui ld A
A Done
Bui ld B
B Done
Bui ld C
C Done
Bui ld D
Ship
JAN FEB MAR APR MAY JUN
On time!
Projects
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17-4 Project Management
Project Management
How is it different? Limited time frame
Narrow focus, specific objectives
Less bureaucratic Why is it used?
Special needs
Pressures for new or improves products orservices
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17-5 Project Management
Project Management
What are the Key Metrics Time
Cost
Performance objectives What are the Key Success Factors?
Top-down commitment
Having a capable project manager
Having time to plan
Careful tracking and control
Good communications
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17-6 Project Management
Project Management
What are the Major Administrative Issues? Executive responsibilities
Project selection
Project manager selection Organizational structure
Organizational alternatives
Manage within functional unit Assign a coordinator
Use a matrix organization with a project leader
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17-7 Project Management
Project Management
What are the tools? Work breakdown structure
Network diagram
Gantt charts Risk management
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17-8 Project Management
Planning and SchedulingMAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Locate new
facil i t ies
Intervi ew staff
Hire and train staff
Select and o rder
furn i ture
Remodel and in stal lphones
Move in /star tup
Gantt Chart
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17-9 Project Management
Deciding which projects to implement
Selecting a project manager
Selecting a project team
Planning and designing the project
Managing and controlling project resources
Deciding if and when a project should be
terminated
Key Decisions
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17-10 Project Management
Project ManagerResponsible for:
Work Quality
Human Resources TimeCommunications Costs
17 11 P M
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17-11 Project Management
Temptation to understate costs
Withhold information
Misleading status reports
Falsifying records
Comprising workers safety
Approving substandard work
Ethical Issues
17 12 P j M
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17-12 Project Management
Project Life Cycle
Concept
Feasibility
Planning
Execution
Termination
Manag
ement
17 13 P j M
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17-13 Project Management
Work Breakdown StructureProject X
Level 1
Level 2
Level 3
Level 4
Figure 17.2
17 14 P j t M t
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17-14 Project Management
PERT and CPMPERT: Program Evaluation andReview Technique
CPM: Critical Path Method
Graphically displays project activities
Estimates how long the project will take
Indicates most critical activities
Show where delays will not affect project
17 15 P j t M t
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17-15 Project Management
The Network Diagram
Network (precedence) diagram
Activity-on-arrow (AOA)
Activity-on-node (AON)
Activities
Events
17 16 P j t M t
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17-16 Project Management
The Network Diagram (contd)
Path Sequence of activities that leads from the starting
node to the finishing node
Critical path
The longest path; determines expected project
duration
Critical activities
Activities on the critical path Slack
Allowable slippage for path; the difference the
length of path and the length of critical path
17 17 Project Management
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17-17 Project Management
Project NetworkActivity on Arrow
1
2
3
4
5 6
Locate
facilities
Orderfurniture
Furniture
setup
InterviewHire and
train
Remodel
Move
in
Figure 17.4
AOA
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17-18 Project Management
Project NetworkActivity on Node
1
2
3
5
6
Locate
facilities
Order
furniture
Furniture
setup
Interview
Remodel Movein
4
Hire andtrain
7S
Figure 17.4
AON
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17-19 Project Management
Network Conventionsa
b
c ab
c
a
b
c
d
a
b
c
Dummy
activity
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17-20 Project Management
Time Estimates
Deterministic Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation
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17-21 Project Management
Example 1
1
2
3
4
5 6
8 weeks
6 weeks
3 weeks
4 weeks 9 weeks
11 weeks
1 week
Move
in
Deterministic
time estimates
Figure 17.5
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17-22 Project Management
Example 1 Solution
Path Length(weeks)
Slack
1-2-3-4-5-61-2-5-61-3-5-6
182014
206
Critical Path
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17 23 Project Management
Network activities ES: early start
EF: early finish
LS: late start LF: late finish
Used to determine
Expected project duration
Slack time
Critical path
Computing Algorithm
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17 24 Project Management
Probabilistic Time Estimates
Optimistic time Time required under optimal conditions
Pessimistic time
Time required under worst conditions
Most likely time
Most probable length of time that will berequired
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17 25 Project Management
Probabilistic Estimates
Activity
start
Optimistic
time
Most likely
time (mode)
Pessimistic
time
to tptm te
Figure 17.8
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17 26 Project Management
Expected Time
te =to + 4tm +tp
6
te = expected time
to = optimistic time
tm
= most likely time
tp = pessimistic time
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j g
Variance
2 =(tp to)
2
36
2= variance
to = optimistic time
tp = pessimistic time
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j g
Example 5
3-4-5
d
3-5-7
e
5-7-9
f
2-4-6
b
4-6-8
h
Optimistictime Most likelytime Pessimistictime
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j g
Path Probabilities
Z =Specified time Path mean
Path standard deviation
Z indicates how many standard deviations
of the path distribution the specified tine
is beyond the expected path duration.
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j g
17
Weeks
Weeks
Weeks
Weeks
10.0
16.0
13.5
1.00
1.00
a-b-c
d-e-f
g-h-i
Example 6
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j g
Time-cost Trade-offs: Crashing
Crashshortening activity duration Procedure for crashing
Crash the project one period at a time
Only an activity on the critical path
Crash the least expensive activity
Multiple critical paths: find the sum ofcrashing the least expensive activity on each
critical path
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Time-Cost Trade-Offs: CrashingTotal
cost
Shorten
Shorten
Cumulative
cost ofcrashing
Expected indirect costs
Optimum
CRASH
Figure 17.11
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4d
2f
Example 7
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Advantages of PERT Forces managers to organize Provides graphic display of activities
Identifies
Critical activities
Slack activities1
2
3
4
5 6
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Limitations of PERT Important activities may be omitted Precedence relationships may not be correct
Estimates may include
a fudge factor
May focus solely
on critical path 1
2
3
4
5 6
142 weeks
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Computer aided design (CAD) Groupware (Lotus Notes)
Project management software
CA Super Project Harvard Total Manager
MS Project
Sure Track Project Manager
Time Line
Technology for Managing Projects
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Imposes a methodology Provides logical planning structure
Enhances team communication
Flag constraint violations
Automatic report formats
Multiple levels of reports Enables what-if scenarios
Generates various chart types
Advantages of PM Software
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Risk: occurrence of events that haveundesirable consequences
Delays
Increased costs
Inability to meet specifications
Project termination
Project Risk Management
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Identify potential risks Analyze and assess risks
Work to minimize occurrence of risk
Establish contingency plans
Risk Management
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Summary
Projects are a unique set of activities Projects go through life cycles
PERT and CPM are two common techniques
Network diagrams
Project management software available
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Additional PowerPoint slides
contributed byGeoff Willis,
University of Central Oklahoma.
CHAPTER
17
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Project Crashing
Crashing a project involves paying moremoney to complete a project more quickly.
Since the critical path determines the length of
a project, it makes sense to reduce the lengthof activities on the critical path.
CP activities should be reduced until theproject is reduced to the desired length or youare paying more per day than you save.
If you have multiple CPs, they should beshortened simultaneously.
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j
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ProjectsConcepts
PM1