Chapter 9 Project Management Russell and Taylor Operations and
Supply Chain Management, 8th Edition
Slide 2
Lecture Outline Project Planning Slide 5Project Planning
Project Scheduling Slide 18Project Scheduling Project Control Slide
21Project Control CPM/PERT Slide 22CPM/PERT Probabilistic Activity
Times Slide 34Probabilistic Activity Times Microsoft Project Slide
46Microsoft Project Project Crashing and Time-Cost Trade-off Slide
56Project Crashing and Time-Cost Trade-off 9-2 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e
Slide 3
Learning Objectives Discuss the project planning process,
including planning tools, evaluation methods, and key elements
Discuss the benefits of and strategies for dealing with diverse
project groups Explain the basics of project scheduling and the use
of Gantt charts Define enterprise project management and discuss
the key elements in project control 9-3 2014 John Wiley & Sons,
Inc. - Russell and Taylor 8e
Slide 4
Learning Objectives Define enterprise project management and
discuss the key elements in project control Develop and analyze
both deterministic probabilistic and project networks Use Microsoft
Project for network analysis Determine and explain project crashing
and time-cost tradeoffs 9-4 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e
Slide 5
Project Planning Project has unique purpose not repetitive
relatively short period of time one-time operational activity or
effort draws resources from multiple departments 9-5 2014 John
Wiley & Sons, Inc. - Russell and Taylor 8e
Slide 6
Project Management Process 9-6 2014 John Wiley & Sons, Inc.
- Russell and Taylor 8e
Slide 7
Project Management Process 9-7 2014 John Wiley & Sons, Inc.
- Russell and Taylor 8e
Slide 8
Project Management Process 9-8 2014 John Wiley & Sons, Inc.
- Russell and Taylor 8e
Slide 9
Elements of a Project Plan Objective Scope Contract
requirements Schedules Resources Personnel Control Risk and problem
analysis 9-9 2014 John Wiley & Sons, Inc. - Russell and Taylor
8e
Slide 10
Project Return Project requires positive gain or benefit ROI is
one measure, but not always applicable Soft returns Projects for
public good 9-10 2014 John Wiley & Sons, Inc. - Russell and
Taylor 8e ROI = (Gain from project cost of project) Cost of
project
Slide 11
Project Team and Project Manager Project team made up of
individuals from various areas and departments within a company
Matrix organization a team structure with members from functional
areas, depending on skills required Project manager most important
member of project team 9-11 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e
Slide 12
Scope Statement Scope statement a document that provides an
understanding, justification, and expected result of a project
Statement of work written description of objectives of a project
9-12 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e
Slide 13
Work Breakdown Structure Organizes the work in a project Breaks
project into components, subcomponents, activities, and tasks Start
at the top and work down Brainstorm project activities 9-13 2014
John Wiley & Sons, Inc. - Russell and Taylor 8e
Slide 14
9-14 Work Breakdown Structure for Computer Order Processing
System Project
Slide 15
Responsibility Assignment Matrix Organizational Breakdown
Structure (OBS) a chart that shows which organizational units are
responsible for work items Responsibility Assignment Matrix (RAM)
shows who is responsible for the work in a project 9-15 2014 John
Wiley & Sons, Inc. - Russell and Taylor 8e
Slide 16
Responsibility Assignment Matrix 9-16 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 17
Global Cultural and Diversity Issues in Project Management
Global project teams are formed from different genders, cultures,
ethnicities, etc. Diversity among team members can add an extra
dimension to project planning Cultural research and communication
are important elements in the planning process 9-17 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e
Slide 18
Project Scheduling Steps Define activities Sequence activities
Estimate time Develop schedule Techniques Gantt chart CPM/PERT
Software Microsoft Project 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e 9-18
Slide 19
Gantt Chart Graph or bar chart Bars represent the time for each
task Bars also indicate status of tasks Provides visual display of
project schedule Shows precedence sequence of tasks Slack amount of
time an activity can be delayed without delaying the project 2014
John Wiley & Sons, Inc. - Russell and Taylor 8e 9-19
Slide 20
A Gantt Chart 9-20 2014 John Wiley & Sons, Inc. - Russell
and Taylor 8e
Slide 21
Project Control Time management Cost management Quality
management Performance management Communication Enterprise project
management 9-21 2014 John Wiley & Sons, Inc. - Russell and
Taylor 8e
Slide 22
CPM/PERT Critical Path Method (CPM) DuPont & Remington-Rand
Deterministic task times Activity-on-node network construction
Project Evaluation and Review Technique (PERT) US Navy and Booz,
Allen & Hamilton Probabilistic task time estimates
Activity-on-arrow network construction 9-22 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 23
Project Network Activity-on-node (AON) nodes represent
activities arrows show precedence relationships Activity-on-arrow
(AOA) arrows represent activities nodes are events for points in
time Event completion or beginning of an activity in a project 2014
John Wiley & Sons, Inc. - Russell and Taylor 8e 9-23
Slide 24
AOA Project Network for a House 9-24 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 25
Concurrent Activities Dummy activity two or more activities
cannot share same start and end nodes add dummy activity to show
correct precedence 9-25 2014 John Wiley & Sons, Inc. - Russell
and Taylor 8e
Slide 26
AON Network for House Building Project 9-26 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e
Slide 27
Activity Start Times 9-27 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e A:1-2-4-7 3 + 2 + 3 + 1 = 9 months
B:1-2-5-6-7 3 + 2 + 1 + 1 + 1 = 8 months C:1-3-4-7 3 + 1 + 3 + 1 =
8 months D:1-3-5-6-7 3 + 1 + 1 + 1 + 1 = 7 months Critical path
Longest path through a network Minimum project completion time
Slide 28
Activity Scheduling Earliest start time (ES) earliest time an
activity can start ES = maximum EF of immediate predecessors
Forward pass starts at beginning of CPM/PERT network to determine
earliest activity times Earliest finish time (EF) earliest time an
activity can finish earliest start time plus activity time EF= ES +
t 9-28 2014 John Wiley & Sons, Inc. - Russell and Taylor
8e
Slide 29
Node Configuration 9-29 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e
Slide 30
Earliest Activity Start and Finish Times 9-30 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e
Slide 31
Activity Scheduling Latest start time (LS) Latest time an
activity can start without delaying critical path time LS= LF - t
Latest finish time (LF) latest time an activity can be completed
without delaying critical path time LF = minimum LS of immediate
predecessors Backward pass Determines latest activity times by
starting at the end of CPM/PERT network and working forward 9-31
2014 John Wiley & Sons, Inc. - Russell and Taylor 8e
Slide 32
Latest Activity Start and Finish Times 9-32 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e
Slide 33
Activity Slack 9-33 2014 John Wiley & Sons, Inc. - Russell
and Taylor 8e * Critical Path 09988*7 178676 167565 08855*4 145343
05533*2 03300*1 Slack SEFLFESLSActivity
Slide 34
Probabilistic Activity Times Beta distribution probability
distribution traditionally used in CPM/PERT 9-34 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e a = optimistic estimate m
= most likely time estimate b = pessimistic time estimate where
Mean (expected time): t = a + 4 m + b 6 Variance: 2 = 2 b - a
6
Slide 35
Examples of the Beta Distribution 9-35 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 36
Project with Probabilistic Time Estimates 9-36 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e
Slide 37
Activity Time Estimates 9-37 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e 1 681080.44 236961.00 313530.44 4 241252.78 5
23430.11 634540.11 722220.00 8371171.78 924640.44 1014741.00
111101394.00 TIME ESTIMATES (WKS)MEAN TIMEVARIANCE ACTIVITY ambt
2
Slide 38
Activity Early, Late Times & Slack 9-38 2014 John Wiley
& Sons, Inc. - Russell and Taylor 8e ACTIVITY t ESEFLSLFS
180.4408191 261.0006060 330.4403252 4 52.7881316218 5 30.1169690
640.1137592 720.0035141611 871.789169160 940.4491312163
1041.00131721258 1194.00162516250
Slide 39
Earliest, Latest Times, and Slack 9-39 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 40
Total Project Variance 9-40 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e 2 = 2 2 + 5 2 + 8 2 + 11 2 = 1.00 + 0.11 +
1.78 + 4.00 = 6.89 weeks
Slide 41
CPM/PERT With OM Tools 9-41 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e
Slide 42
Probabilistic Network Analysis 9-42 2014 John Wiley & Sons,
Inc. - Russell and Taylor 8e Determine probability that project is
completed within specified time where = t p = project mean time
=project standard deviation x =proposed project time Z =number of
standard deviations that x is from the mean Z = x -
Slide 43
Normal Distribution of Project Time 9-43 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 44
Southern Textile 30 weeks 9-44 2014 John Wiley & Sons, Inc.
- Russell and Taylor 8e 2 = 6.89 weeks = 6.89 = 2.62 weeks x - Z =
= = 1.91 30 - 25 2.62 From Table A.1, (appendix A) a Z score of
1.91 corresponds to a probability of 0.4719. Thus P(30) = 0.4719 +
0.5000 = 0.9719
Slide 45
Southern Textile 22 weeks 9-45 2014 John Wiley & Sons, Inc.
- Russell and Taylor 8e 2 = 6.89 weeks = 6.89 = 2.62 weeks Z = = =
-1.14 x - 22 - 25 2.62 From Table A.1, (appendix A) a Z score of
1.14 corresponds to a probability of 0.3729. Thus P(22) = 0.5000 -
0.3729 = 0.1271
Slide 46
Microsoft Project Popular software package for project
management and CPM/PERT analysis Relatively easy to use
House-building example 9-46 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e
Slide 47
Microsoft Project 9-47 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e Click on Tasks First step; Start Date
Slide 48
Microsoft Project 9-48 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e
Slide 49
Microsoft Project 9-49 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e
Slide 50
Microsoft Project Zoom View 9-50 2014 John Wiley & Sons,
Inc. - Russell and Taylor 8e
Slide 51
PERT Analysis with Microsoft Project 9-51 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 52
PERT Analysis with Microsoft Project 9-52 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 53
PERT Analysis with Microsoft Project 9-53 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 54
Project Crashing Crashing reducing project time by expending
additional resources Crash time an amount of time an activity is
reduced Crash cost cost of reducing activity time Goal reduce
project duration at minimum cost 9-54 2014 John Wiley & Sons,
Inc. - Russell and Taylor 8e
Slide 55
Normal Time and Cost vs. Crash Time and Cost 9-55 2014 John
Wiley & Sons, Inc. - Russell and Taylor 8e $7,000 $6,000 $5,000
$4,000 $3,000 $2,000 $1,000 ||||||| 02468101214Weeks Normal
activity Normal time Normal cost Crash time Crashed activity Crash
cost Slope = crash cost per week
Slide 56
Project Network Building a House 9-56 2014 John Wiley &
Sons, Inc. - Russell and Taylor 8e
Slide 57
Project Crashing 9-57 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e TOTAL NORMALCRASHALLOWABLECRASH
TIMETIMENORMALCRASHCRASH TIMECOST PER
ACTIVITY(WEEKS)(WEEKS)COSTCOST(WEEKS)WEEK 1127$3,000$5,0005$400
2852,0003,5003500 3434,0007,00013,000 412950,00071,00037,000
5415001,1003200 6415001,1003200 74315,00022,00017,000
$75,000$110,700
Slide 58
Weekly Crash Costs Fig 9-16a 9-58 2014 John Wiley & Sons,
Inc. - Russell and Taylor 8e
Slide 59
Project Crashed to 31 Weeks 9-59 2014 John Wiley & Sons,
Inc. - Russell and Taylor 8e Fig 9-16b
Slide 60
Time-Cost Relationship 9-60 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e Crashing costs increase as project duration
decreases Indirect costs increase as project duration increases
Reduce project length as long as crashing costs are less than
indirect costs
Slide 61
Time-Cost Tradeoff 9-61 2014 John Wiley & Sons, Inc. -
Russell and Taylor 8e Cost ($) Project duration CrashingTime
Minimum cost = optimal project time Total project cost Indirect
cost Direct cost
Slide 62
6-62 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e
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