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Managing Projects
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 2
Project Management:Why Do It?
Kuwait, After the Gulf War (1990):
• 650 burning oil wells
• No water, food, electricity or facilities
• Oil-covered roads, blazing
• Thousands of unexploded bombs, mines, artillery shells and grenades
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 3
Bechtel Construction:
• Mobilized workforce of 9,000• Deployed 125,000 tons of equipment and
supplies• Built 150 km of pipeline delivering 20
million gallons of water per day to the fires
• Served 27,000 meals per day• Established storage, docking, and
warehouse facilities in Dubai
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 4
What Is a Project?
A series of related tasks directed toward some major output or goal
Often driven by a completion deadline
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 5
Project Phases
• Concept– Broad definition and feasibility analysis– Budget estimates within 30%
• Project definition– Tentative schedules, budgets,
organization– Budget estimates refined within 5%
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 6
Project Phases (cont’d)
• Planning phase– Detailed tasks, timing, budgets &
resources– Project management tools
• Performance phase– Execution and control
• Post completion
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 7
Work Breakdown Structure (WBS)
Level 1 Program 2 Project 3 Task (group or organization)
4 Subtask 5 Work Assignment
(organizational unit)
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 8
Work Breakdown Structure Example
Level 1 Custom Home Builder 2 Custom Home 3 Foundation (group or organization)
4 Concrete work 5 Set-up forms
(organizational unit)
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 9
Breaking Down the Work
• Allows independent operation
• Improves manageability
• Decentralizes authority
• Enables monitoring and measurement
• Provides assessment of required resources
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 10
Tools for Project Control: Gantt Charts
...But there is no detailed information about interrelationships
ID Task Name Start Finish DurationApr 2005
4 5 6 7 8 9 10 11 12 13 14 15 16 17
1 3d4/6/20054/4/2005Activity 12 3d4/8/20054/5/2005Activity 23 2d4/11/20054/7/2005Activity 34 5d4/15/20054/8/2005Activity 45 1d 4h4/14/20054/13/2005Activity 56 1d4/18/20054/15/2005Activity 6
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 11
Tools for Project Control
• Network techniques• Consider precedence relationships• Capture interdependency of
activities• Determine critical path(s)
– Sequence(s) of activities that determines overall duration of the project
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 12
Critical Path Method (CPM)Consider the following consulting project:
Develop a critical path diagram and determine the duration of the critical path and slack times for all activities
Activity Designation Immediate Predecessor(s)
Duration (weeks)
Assess customer’s needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 4
Quality improvement pilot groups F D, E 5
Write assessment report G F 1
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 13
This activity-on-node (AON) diagram shows the precedence
relationships ...
. . .as well as the length of each activity. Do you see the two paths through the network?
A, 2 B, 1 C, 1
D, 2
E, 4
F, 5 G, 1START FINISH
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 14
Some Definitions
• Earliest Start Time (ES)= Latest EF for all immediate predecessors
• Earliest Finish Time (EF)= ES + activity’s duration
• Latest Start Time (LS)= LF – activity’s duration
• Latest Finish Time (LF)= Earliest LS for all immediate successors
• Slack = amount of allowable delay in an activity= Equal to LS – ES or LF – EF for an activity
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 15
Insights
• A ‘hit’ to a critical activity will make project late
• Rational time estimates needed
• Slack activities can start later
• Difference between effort-driven and time-driven activities
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 16
Some Assumptions
• Project activities can be identified as entities. (There is a clear beginning and ending point for each activity.)
• Project activity sequence relationships can be specified and networked
• Project control should focus on the critical path (activities with no slack)
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 17
In First Example ...
• Network-based scheduling techniques to:
Show precedence Determine project duration Identify critical paths and activities
• Setting EF = LF for last activity implies that current length of project is OK
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 18
However, there are often ...
• Deadlines for finishing projects– (Olympic stadium, dormitories, etc.)
• Penalty or overhead costs– (Bechtel Construction)
• Competitive pressures– Product launch
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 19
Ways to Shorten (Crash) a Project
• STEAL resources from non-critical activities
• MORE resources
• MORE hours
• MORE $$$$
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 20
Idea behind “CRASHING”
Duration of individual effort-driven activities can be shortened, but at a cost
Example: Following project must be completed by Week 26
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 21
Activity Duration Predecessors Crashable Weeks Cost per Week
A 6 None None
B 11 A 4 $700
C 14 A 3 $2,000
D 2 A None
E 4 B 1 $2,000
F 5 B 1 $1,000
G 6 C 1 $1,000
H 7 C 2 $2,000
I 3 D None
J 4 E None
K 4 F, G 2 $1,500
L 3 H, I 1 $2,500
Project Data
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 22
Network Diagram for Project
A, 6
E, 4
C, 14
F,5
H, 7
L, 3
J, 4
START FINISH
D, 2
B, 11
G, 6
I, 3
K, 4
17 21
22 26
E
L
S F
17 22
21 26
E
L
S F
21 25
26 30
E
L
S F
26 30
26 30
E
L
S F
6 17
10 21
E
L
S F
6 20
6 20
E
L
S F
27 30
27 30
E
L
S F
20 26
20 26
E
L
S F
8 11
24 27
E
L
S F
30 30
30 30
E
L
S F
6 8
22 24
E
L
S F
20 27
20 27
E
L
S F
0 0
0 0
E
L
S F
0 6
0 6
E
L
S F
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 23
1. Write Down All Possible Paths and Lengths of Time
Path Length
ABEJ 25
ABFK 26
ACGK 30
ACHL 30
ADIL 14
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 24
2. Identify All Paths to be Shortened
Path Length
ABEJ 25
ABFK 26
ACGK 30 Critical Path
ACHL 30 Critical Path
ADIL 14
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 25
3. Find Lowest-Cost Way to Shorten Critical Path(s)
Path Length
ABEJ 25
ABFK 26
ACGK 30
ACHL 30
ADIL 14
To CRASH, either:
1. Shorten C or
2. Shorten {G or K} and {H or L}
• Shorten C by 3 weeksCost = 3×$2,000 = $6,000
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 26
Update Lengths in Table
Path Length
ABEJ 25
ABFK 26
ACGK 3027
ACHL 3027
ADIL 14
Are we done?
What are ournext cheapestalternatives?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 27
To Crash Further
1. Shorten C, or
2. Shorten {G or K} and {H or L}
• Shorten Both G and H by 1 Week:
• Cost = $1,000 + $2,000 = $3,000
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 28
Update Lengths in Table
Path Length
ABEJ 25
ABFK 26
ACGK 302726
ACHL 302726
ADIL 14
Total Cost to Crash= $6,000 + $3,000= $9,000
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 29
If overhead per week is $4000
How many more weeks should the company try to crash the
project?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 30
Observations
• Cost of crashing becomes more and more expensive as cheapest options are used up
• There is a limit to how far a project can be crashed.
• Crashing non-critical activities is pointless
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 31
Controlling Projects
CPM used primarily to Plan and Schedule, BUT ...
• Things rarely go as planned
• Additional activities arise
• Better time and resource estimates are made as project progresses
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 5, Slide 32
Computer-Based PackageAdvantages
• Regular updates
• Change analysis, tracking, and exception reports
• High level of detail
• Scheduling around resource constraints