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© 2014 Pearson Education, Inc. 3 - 1
Project Management 33PowerPoint presentation to accompany Heizer and Render Operations Management, Eleventh EditionPrinciples of Operations Management, Ninth Edition
PowerPoint slides by Jeff Heyl
© 2014 Pearson Education, Inc.
3 - 2© 2014 Pearson Education, Inc.
Outline
► The Importance of Project Management► Project Planning► Project Scheduling► Project Controlling
► Project Management Techniques: PERT► A Critique of PERT
3 - 3© 2014 Pearson Education, Inc.
MANAGEMENT OF PROJECTSMANAGEMENT OF PROJECTS
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Importance of Project Management
▶Project: unique, one-time operations designed to accomplish a set of objectives in a limited time frame.
► Building Construction ► Research Project
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1. Planning - goal setting, defining the project, team organization
2. Scheduling - relate people, money, and supplies to specific activities and activities to each other
3. Controlling - monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands
Planning Scheduling
Controlling
Importance of Project Management
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Project Planning
► Establishing objectives► Defining project► Creating work breakdown structure ► Determining resources► Forming organization
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Project Organization► Often temporary structure► Uses specialists from entire company► Headed by project manager
► Coordinates activities
► Monitors schedule and costs
► Permanent structure called ‘matrix organization’
Project Planning
© 2014 Pearson Education, Inc. 3 - 8
TechnicianProject No. 2
ProjectManager
ElectricalEngineer
Computer Engineer
TestEngineer
MechanicalEngineer
Project No. 1
ProjectManager Technician
Marketing FinanceHumanResources Design Quality
Mgt Production
President
Figure 3.2
Project Planning
A Sample Project Organization
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Marketing Operations Engineering Finance
Project 1
Project 2
Project 3
Project 4
Project Planning
Matrix Organization
© 2014 Pearson Education, Inc. 3 - 10
The Role of Project Manager:
1. All necessary activities are finished in order and on time
2. The project comes in within budget
3. The project meets quality goals
4. The people assigned to the project receive motivation, direction, and information
Project Planning
© 2014 Pearson Education, Inc. 3 - 11
The Role of Project Manager:
1. All necessary activities are finished in order and on time
2. The project comes in within budget
3. The project meets quality goals
4. The people assigned to the project receive motivation, direction, and information
Project Planning
Project managers should be:
► Good coaches
► Good communicators
► Able to organize activities from a variety of disciplines
3 - 12© 2014 Pearson Education, Inc.
Level
1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or “work packages”)to be completed
Project Planning Work Breakdown Structure
► Dividing a project into more and more detailed tasks (or activities)
3 - 13© 2014 Pearson Education, Inc.
Level 4 Compatible with Windows 7
Compatible with Windows Vista
Compatible with Windows XP 1.1.2.3
1.1.2.2
1.1.2.1
(Work packages)
Level 3 Develop GUIs
Design Cost Tracking Reports
Module Testing
Ensure Compatibility with Earlier Versions
Develop Cost/Schedule
Interface
Defect Testing
1.1.1
1.2.2 1.3.2
1.3.11.2.1
1.1.2
Work Breakdown Structure
Figure 3.3
Level 2 Software Design
Cost Management Plan
System Testing1.1 1.2 1.3
Level 1 Develop Windows 8 Operating System 1.0
Project Scheduling
1. Shows the relationship of each activity to others and to the whole project
2. Identifies the precedence relationships among activities
3. Encourages the setting of realistic time and cost estimates for each activity
4. Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project
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► Techniques► Gantt chart► Critical Path Method
(CPM)► Program Evaluation
and Review Technique (PERT)
Project Scheduling
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A Simple Gantt ChartProject : establish a new department
Activity Sequence
Activity Time
Project Duration
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Project Controlling
► Close monitoring of resources, costs, quality, budgets
► Feedback enables revising the project plan and shift resources
► Computerized tools produce extensive reports
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Project Management Software
► There are several popular packages for managing projects
► Primavera ► MacProject► MindView► HP Project► Fast Track► Microsoft Project
© 2014 Pearson Education, Inc.
3 - 19© 2014 Pearson Education, Inc.
Project Control Reports► Detailed cost breakdowns for each task► Total program labor curves► Cost distribution tables► Functional cost and hour summaries► Raw materials and expenditure forecasts► Variance reports► Time analysis reports► Work status reports
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PROJECT MGMT TECHNIQUES: PROJECT MGMT TECHNIQUES: PERTPERT
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► Network techniques► Developed in 1950s
► CPM by DuPont for chemical plants (1957)
► PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)
► Consider precedence relationships and interdependencies
► Each uses a different estimate of activity times
PERT and CPM
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Six Steps PERT
1. Define the project and prepare the work breakdown structure
2. Develop relationships among the activities - decide which activities must precede and which must follow others
3. Draw the network connecting all of the activities
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Six Steps PERT
4. Assign time and/or cost estimates to each activity
5. Compute the longest time path through the network – this is called the critical path
6. Use the network to help plan, schedule, monitor, and control the project
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Activity on ActivityNode (AON) Meaning
A comes before B, which comes before C(a) A B C
3.0 2.5 2.0
A and B must both be completed before C can start(b)
A
C
B
3.0
2.5
2.0
PERT: AON Convention
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Activity on ActivityNode (AON) Meaning
B and C cannot begin until A is completed(c)
B
A
C
3.0
2.5
2.0
C and D cannot begin until A and B have both been completed(d)
A
B
C
D
3.0
2.5
2.0
3.5
PERT: AON Convention
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Activity on ActivityNode (AON) Meaning
C cannot begin until both A and B are completed; D cannot begin until B is completed. (e)
A
B
C
D
3.0
2.5
2.0
3.5
B and C cannot begin until A is completed. D cannot begin until both B and C are completed. (f)
A
C
DB3.0 2.5 3.5
2.0
PERT: AON Convention
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AON Example Example 3.1: Milwaukee has identified the eight activities that need to be performed in order to install air pollution control equipment in its facility.
Activity DescriptionImmediate
PredecessorsEstimated
Time (weeks)
A Build internal components — 2
B Modify roof and floor — 3
C Construct collection stack A 2
D Pour concrete and install frame A, B 4
E Build high-temperature burner C 4
F Install pollution control system C 3
G Install air pollution device D, E 5
H Inspect and test F, G 2
© 2014 Pearson Education, Inc. 3 - 28
ActivityImmediate
PredecessorsEstimated
Time (weeks)
A — 2
B — 3
C A 2
D A, B 4
E C 4
F C 3
G D, E 5
H F, G 2
FC
D
A
B
Start
E
G
H
43
2
42
3
5
2
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EstimatedEstimatedTimeTime ImmediateImmediate
TaskTask (weeks)(weeks) predecessorpredecessor
AA 88 ——BB 66 AACC 44 ——DD 99 CCEE 1111 AAFF 33 B, EB, EGG 11 B, C, EB, C, EHH 55 D, F, GD, F, G
Construct a PERT network for this project by using AON convention
EX1 in class
3 - 30© 2014 Pearson Education, Inc.
▶Important concepts▶Path: A sequence of activities leading from the beginning
node to the ending node of a PERT network.
▶Path length: The sum of the time estimates of the activities on a path.
▶Critical path: The longest path in a PERT network.
▶Critical activities: The activities on the critical path.
▶Project duration (or completion time): The length of the critical path.
▶Path slack: The difference between the length of a path and the project duration.
PERT
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▶Deterministic PERT Analysis
▶Computational Algorithm
PERT Analysis
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▶Enumeration method
▶Calculate and compare the lengths of all paths
▶Determine the critical path, critical activities, and the path slacks
Deterministic PERT Analysis
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EstimatedTime Immediate
Task (weeks) predecessor
A 8 —B 6 AC 4 —D 9 CE 11 AF 3 BG 1 D, E, F
G
FB
E
D
A
C
Start94
6
11 1
8
3
Example 3.2: Do deterministic PERT analysis.
Total 42
Deterministic PERT Analysis
Critical PathCritical Path Path Length (weeks) Slack
Start – A – B – F – G 8+6+3+1=18
Start – A – E – G 8+11+1=20
Start – C – D – G 4+9+1=14
(1) What is the critical path? What are the critical activities?
(1) The critical path is Start – A – E - G. The critical activities are A, E, G.
(2) What is the duration of the project?
(2) The duration of the project is 20 weeks.
(3) Path Start – A – B – F – G has a slack of 2 weeks, and path Start – C – D – G has a slack of 6 weeks.
(3) Are there any path slacks? If so, how long is each of the
slacks?
2
0
6
G
FB
E
D
A
C
Start94
6
11 1
8
3
Deterministic PERT Analysis
3 - 35© 2014 Pearson Education, Inc.
▶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 activities delays the project
▶Critical path activities have no slack time
Deterministic PERT Analysis
Critical PathCritical PathPath Length (weeks) Slack
Start – A – C – F – H 9 6
Start – A – C – E – G – H 15 0
Start – A – D – G – H 13 2
(1) What is the critical path? What are the critical activities?
(1) The critical path is Start – A – C – E – G – H. The critical activities are A, C, E, G, H.
(2) What is the duration of the project?
(2) The duration of the project is 15 weeks.(3) Path Start – A – C – F – H has a slack of 6 weeks, path Start – A – D – G – H has a
slack of 2 weeks, and path Start – B – D – G – H has a slack of 1 week.
(3) Are there any path slacks? If so, how long is each of the
slacks?
Start – B – D – G – H 14 1
FC
D
A
B
Start
E
G
H
43
2
42
3
5
2
Deterministic PERT AnalysisExample 3.3
3 - 37© 2014 Pearson Education, Inc.
Activity Immediate Predecessor(s)
Estimated Time (weeks)
J -- 10
K -- 8
L J 6
M J 3
N K, M 5
O K, M 7
P L, N 8
Draw the diagram by using the information above, and determine the project duration, critical activity and path slacks
EX2 in class
3 - 38© 2014 Pearson Education, Inc.
Earliest start (ES) =earliest time at which an activity can start, assuming all predecessors have been completed
Earliest finish (EF) =earliest time at which an activity can be finished
Latest start (LS) =latest time at which an activity can start so as to not delay the completion time of the entire project
Latest finish (LF) =latest time by which an activity has to be finished so as to not delay the completion time of the entire projectES EF
LS LF
PERT Computational Algorithm
3 - 39© 2014 Pearson Education, Inc.
Begin at starting event and work forward
Earliest Start Time Rule:
If an activity has only one immediate predecessor, its ES equals the EF of the predecessor
If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors
ES = Max (EF of all immediate predecessors)
PERT: Forward Pass
3 - 40© 2014 Pearson Education, Inc.
Begin at starting event and work forward
Earliest Finish Time Rule:
The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time
EF = ES + Activity time
PERT: Forward Pass
3 - 41© 2014 Pearson Education, Inc.
Step 1: Use forward pass to calculate ES and EF
FC
D
A
B
StartE
G
H
43
2
4
2
3
5
2
ES EF
LS LF
0 0
0 2
0 3 3 7
2 4 4 7
4 8
8 13
13 15
PERT: Forward Pass (Example 3.4)
3 - 42© 2014 Pearson Education, Inc.
Begin with the last event and work backwards
Latest Finish Time Rule:
If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it
If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it
LF = Min (LS of all immediate following activities)
PERT: Backward Pass
3 - 43© 2014 Pearson Education, Inc.
Begin with the last event and work backwards
Latest Start Time Rule:
The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time
LS = LF – Activity time
PERT: Backward Pass
3 - 44© 2014 Pearson Education, Inc.
Step 2: Use backward pass to calculate LS and LF
FC
D
A
B
StartE
G
H
43
2
4
2
3
5
2
ES EF
LS LF
0 0
0 0
0 2
0 2
0 3
1 4
3 7
4 8
2 4
2 4
4 7
10 13
4 8
4 8
8 13
8 13
13 15
13 15
PERT: Backward Pass (Example 3.4)
3 - 45© 2014 Pearson Education, Inc.
After computing the ES, EF, LS, and LF times for all activities, compute the slack time for each activity, and identify the critical activity.
Slack is the length of time an activity can be delayed without delaying the entire project
Slack = LS – ES = LF – EF
Critical activity is an activity with zero slack
PERT: Slack time & Critical activity
3 - 46© 2014 Pearson Education, Inc.
Noncritical activity is an activity with a positive slack
Project duration is the time to finish the whole project.
Project duration = LF of ending activity = EF of ending activity
PERT: Critical activity & Project duration
3 - 47© 2014 Pearson Education, Inc.
Step 3: Calculate activity slack and decide critical activities & project duration
FC
D
A
B
StartE
G
H
43
2
4
2
3
5
20 0
0 0
0 2
0 2
0 3
1 4
3 7
4 8
2 4
2 4
4 7
10 13
4 8
4 8
8 13
8 13
13 15
13 15
Slack = 0
Slack = 0
Slack = 0 Slack = 6
Slack = 0
Slack = 0
Slack = 0Slack = 1Slack = 1
PERT: Critical Activity (Example 3.4)
3 - 48© 2014 Pearson Education, Inc.
FC
D
A
B
StartE
G
H
43
2
4
2
3
5
20 0
0 0
0 2
0 2
0 3
1 4
3 7
4 8
2 4
2 4
4 7
10 13
4 8
4 8
8 13
8 13
13 15
13 15
Slack = 0
Slack = 0
Slack = 0 Slack = 6
Slack = 0
Slack = 0
Slack = 0Slack = 1Slack = 1
Critical activities: A, C, E, G, H
Project duration is 15 weeks.
PERT: Critical Activity (Example 3.4)
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▶Activity slack time: ▶PERT Algorithm
▶Example 3.4
▶Path slack time: ▶Deterministic PERT Analysis
▶Example 3.3, 3.2
Note
3 - 50© 2014 Pearson Education, Inc.
ActivityImmediate
PredecessorsEstimated Time
(weeks)
A — 7
B — 3
C B 9
D A, C 5
E D 2
F C 5
E
C
A
B
Start
D
F
End93
257
5
(1) Construct a PERT network for this project by using AON convention
Dummy Starting Activity
Dummy Ending Activity
PERT: Computational Algorithm (Example 3.5)
3 - 51© 2014 Pearson Education, Inc.
E
C
A
B
Start
D
F
End93
257
5
Step 1: Use forward pass to calculate ES and EF
ES EF
LS LF
0 0
0 7
0 3 3 12
12 17
12 17
17 19
19 19
PERT: Example 3.5
3 - 52© 2014 Pearson Education, Inc.
E
C
A
B
Start
D
F
End93
257
5
ES EF
LS LF
0 0
0 0
0 7
5 12
0 3
0 3
3 12
3 12
12 17
12 17
12 17
14 19
17 19
17 19
19 19
19 19
Step 2: Use backward pass to calculate LS and LF
PERT: Example 3.5
3 - 53© 2014 Pearson Education, Inc.
E
C
A
B
Start
D
F
End93
257
5
0 0
0 0
0 7
5 12
0 3
0 3
3 12
3 12
12 17
12 17
12 17
14 19
17 19
17 19
19 19
19 19
Step 3: Calculate activity slack and decide critical activities & project duration
Slack = 0
Slack = 5 Slack = 0 Slack = 0
Slack = 0 Slack = 0 Slack = 2
Slack = 0
PERT: Example 3.5
E
C
A
B
Start
D
F
End93
257
5
0 0
0 0
0 7
5 12
0 3
0 3
3 12
3 12
12 17
12 17
12 17
14 19
17 19
17 19
19 19
19 19
Slack = 0
Slack = 5 Slack = 0 Slack = 0
Slack = 0 Slack = 0 Slack = 2
Slack = 0
Critical activities are B, C, D, E.
Project duration is 19 weeks.
PERT: Example 3.5
3 - 55© 2014 Pearson Education, Inc.
Start
J
K
L
M
O
N
P
End
10
8
6
3 5
7
8
Use the computational algorithm to determine the critical activities & project duration
EX3 in class
3 - 56© 2014 Pearson Education, Inc.
Advantages of PERT/CPM
1. Especially useful when scheduling and controlling large projects
2. Straightforward concept and not mathematically complex
3. Graphical networks help highlight relationships among project activities
4. Critical path and slack time analyses help pinpoint activities that need to be closely watched
3 - 57© 2014 Pearson Education, Inc.
Advantages of PERT/CPM
5. Project documentation and graphics point out who is responsible for various activities
6. Applicable to a wide variety of projects
7. Useful in monitoring not only schedules but costs as well
3 - 58© 2014 Pearson Education, Inc.
1. Project activities have to be clearly defined, independent, and stable in their relationships
2. Precedence relationships must be specified and networked together
3. Time estimates tend to be subjective and are subject to fudging by managers
4. There is an inherent danger of too much emphasis being placed on the longest, or critical, path
Limitations of PERT/CPM