OPERATIONS MANAGEMENT for MBAs Fourth Edition Chapter 6: Managing Process Improvement Projects 1 Meredith and Shafer John Wiley and Sons, Inc. Prepared

OPERATIONS MANAGEMENTOPERATIONS MANAGEMENTfor MBAs for MBAs Fourth EditionFourth Edition

Chapter 6: Managing Process Improvement Projects 1

Meredith and Shafer

John Wiley and Sons, Inc.

Prepared by: Al AnsariSeattle University

Chapter 6:Chapter 6:


Managing Process Improvement Projects

IntroductionIntroduction


BackgroundBackground

Project management concerned with managing organizational activities.

Often used to integrate and coordinate diverse activities.

Projects are special types of processes.


Defining a ProjectDefining a Project

Projects are processes that are performed infrequently and ad hoc, with a clear specification of the desired objective.


Examples of ProjectsExamples of Projects

Constructing highways, bridges, tunnels and dams

Erecting skyscrapers, steel mills, and homes

Organizing conferences and conventions

Managing R&D projectsRunning political

campaigns, war operations, and advertising campaigns


Reasons for Growth in Reasons for Growth in Project OperationsProject OperationsMore Sophisticated

TechnologyBetter-Educated

CitizensMore Leisure Time Increased

AccountabilityHigher ProductivityFaster Response to

CustomersGreater customization

for customers


Planning the ProjectPlanning the Project


The Project PortfolioThe Project Portfolio


The project portfolio also known as the aggregate project plan is to achieve the organization’s goals

Four Categories of Four Categories of ProjectProject


1. Derivative projects. Seek to make incremental improvements in the output and/or process.

2. Breakthrough projects. Are at the opposite end of the continuum from derivative projects and seek the development of a new generation of outputs.

3. Platform projects. Fall between derivative and breakthrough projects.

4. R&D projects. Entail working with basic technology to develop new knowledge.

Aggregate Project PlanAggregate Project Plan


An Example of Aggregate An Example of Aggregate Project PlanProject Plan


Life Cycle of a Project Life Cycle of a Project (Stretched-S) (Stretched-S) & (Exponential)& (Exponential)


Organizing the Project Organizing the Project TeamTeam

Ad Hoc Project FormWeak Functional MatrixStrong Project Matrix


Types of Project Team Types of Project Team MembersMembers

Those having a long-term relationship with the project.

Those that the PM will need to communicate with closely.

Those with rare skills necessary to project success.


Project PlansProject Plans


Elements of Project Elements of Project Charter Charter Overview A short summary of what the client expects from the project.

Goals, or Scope Contains a more detailed statement of the general goals

Business Case Describes the justification for the project

General Approach Describes both the managerial and the technical approaches


Elements of Project Elements of Project Charter Charter Cont.Cont.

Contractual Aspects This includes a complete list and description of allreporting requirements, customer-supplied resources, liaison arrangements, etc.,

Schedule and Milestones This outlines the schedule and lists milestone events.


Elements of Project Elements of Project Charter Charter Cont.Cont.

Resources -- The project budget and cost

PersonnelRisk Management Plan This covers

potential problems that could affect the project.

Evaluation Method Every project should be evaluated against standards


Three Project ObjectivesThree Project Objectives


Work Breakdown Work Breakdown StructureStructure


Project Master ScheduleProject Master Schedule


Complexity of Scheduling Complexity of Scheduling Project ActivitiesProject Activities

Large number of activities

Precedence relationships

Limited time of the project


Planning and Scheduling Planning and Scheduling ProjectsProjectsPlanning. Determining what must

be done and which tasks must precede others.

Scheduling. Determining when the tasks must be completed; when they can and when they must be started; which tasks are critical to the timely completion of the project; and which tasks have slack and how much.


Scheduling the ProjectScheduling the Project


TerminologyTerminologyActivityEventNetworkPathCritical PathCritical Activities


Project Scheduling with Certain Project Scheduling with Certain Activity Times: A Process Activity Times: A Process ImprovementImprovementInputs

◦list of the activities that must be completed

◦activity completion times◦activity precedence relationships


Project Scheduling with Certain Project Scheduling with Certain Activity Times: A Process Activity Times: A Process improvementimprovementOutputs

◦graphical representation of project◦time to complete project◦identification of critical path(s) and

activities◦activity and path slack◦earliest and latest time each

activity can be started ◦earliest and latest time each

activity can be completed


ExampleExample


Network DiagramNetwork Diagram


Activity Slack TimeActivity Slack TimeTES = earliest start time for activity

TLS = latest start time for activity

TEF = earliest finish time for activity

TLF = latest finish time for activity

Activity Slack = TLS - TES = TLF - TEF


Path SlackPath Slack

Path Slack = Duration of Critical Path - Path Duration


Project Scheduling with Project Scheduling with Uncertain Activity Times Uncertain Activity Times

Inputs◦Optimistic (to), most likely (tm), and

pessimistic (tp) time estimate for each activity

◦activity precedence relationshipsOutputs

◦graphical representation of project◦expected activity and path completion times◦variance of activity and path completion

times◦probability that project completed by

specified time


Expected Activity Time and Expected Activity Time and Variance of Activity TimeVariance of Activity Time


tt t t

t t

eo m p

p o

4

6

62

2

ExampleExample


Probabilities of Probabilities of CompletionCompletion


V

timecompletion expected - timecompletion desiredz

Probability of Project Being Probability of Project Being Completed on or Before Time 23Completed on or Before Time 23


Only path A-D-J has reasonable chance of taking 21 or more:

From standard normal table in Appendix A, there is a 79 % chance of completing project on or before time 23.

Z = 23 -21/2.449 = 0.818

Probability of Path A-D-J being Probability of Path A-D-J being Completed on or Before Time 23Completed on or Before Time 23


Simulating Project Completion Simulating Project Completion TimesTimes


Simulating Project Completion Simulating Project Completion TimesTimes


Chapter 6: Managing Process Improvement Projects

41

Project Management Project Management Software CapabilitiesSoftware Capabilities


Microsoft Project’s Gantt Microsoft Project’s Gantt ChartChart


PERT Chart Generated by PERT Chart Generated by Microsoft ProjectMicrosoft Project

Chapter 6: Managing Process Improvement Projects

44

Calendar of Activities Calendar of Activities Created by Microsoft Created by Microsoft ProjectProject


Project and Feeder Project and Feeder BuffersBuffers


Controlling the Project: Controlling the Project: Earned ValueEarned Value


Variance ReportVariance ReportCost standard determined using

engineering estimates or analysis of past performance

Actual cost monitored and compared with cost standard

Project manager can exert control if difference between standard and actual (called a variance) is considered significant.


Cost-Schedule Reconciliation Cost-Schedule Reconciliation ChartsCharts


Earned Value ChartEarned Value Chart


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OPERATIONS MANAGEMENT for MBAs Fourth Edition Chapter 6: Managing Process Improvement Projects 1 Meredith and Shafer John Wiley and Sons, Inc. Prepared