1EO - 702

EMBA-2, BUP

M. ASAD

Operations Management for Competitive Advantages

Major Asad

EO - 702

EMBA-2, BUP

M. ASAD

Chapter 3 (A+B)

Project Management

3EO - 702

EMBA-2, BUP

M. ASAD

Project Management

What is a Project? a coherent set of actions aiming to well

defined results in a restricted period of time

A project is characterized as: unique and one-time operation designed to accomplish a series of related

jobs activities are accomplished in a order requiring a significant period of time to

perform usually directed toward some major output finally, has a beginning and ending time point

4EO - 702

EMBA-2, BUP

M. ASAD

Project Management What is Project Management ? are the management activities of planning,

directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project.

Project manager is responsible for : The work activities - accomplishing in

desired sequence to meet performance goal.

Directing and motivating human resources Communications Quality Time Cost

5EO - 702

EMBA-2, BUP

M. ASAD

Project Life Cycle and Structure

Project Life Cycle:

Organizational Structure of the Project Pure project Functional project Matrix project

Conception Planning Execution Terminatio

n

6EO - 702

EMBA-2, BUP

M. ASAD

Pure ProjectA pure project is where a self-contained team works full-time on the projectAdvantages Project manager has full authority over the

project Team members report to one boss Shortened communication lines Team pride, motivation, commitment are high

Disadvantages Organizational goals and policies are ignored Lack of technology transfer Team members have no functional area "home" Duplication of resources

7EO - 702

EMBA-2, BUP

M. ASAD

Functional Project

Advantages A team member can work on several projects Technical expertise is maintained within the

functional area Functional area is a ‘home’ after project

completes Critical mass of specialized knowledge

Disadvantages Motivation of team members is often weak Needs of other part are responded to slowly Decision for aspects of the project that are

not directly related to the functional area suffers

This project is housed within a functional division

8EO - 702

EMBA-2, BUP

M. ASAD

Matrix Project

Advantages Better communications between functional

areas Pinpointed responsibility for project manager Duplication of resources is minimized Functional “home” for team members Policies of the parent organization are

followed Disadvantages Too many bosses Depends on project manager’s negotiating

skills Potential for sub-optimization

This project attempts to blend properties of both functional and pure projects

9EO - 702

EMBA-2, BUP

M. ASAD

Build-Own-Operate-Transfer (BOOT)

Project A BOOT funding model involves a

single organization, (BOOT provider) designing, building, funding, owning and operating the scheme for a defined period of time and then transferring this ownership across to an agreed party.

Customers enter into long term supply contracts with the BOOT operator and are charged accordingly for the service delivered. The service charge includes capital and operating cost recovery and project profit.

10EO - 702

EMBA-2, BUP

M. ASAD

Turn-key Project A turn-key project is a type of project that is

constructed by a developer and sold or turned over to a buyer in a ready-to-use condition.

Turn-key refers to something that is ready for immediate use, generally used in the sale or supply of goods or services. The term is common in the construction industry, for instance, in which it refers to the bundling of materials and labor by sub-contractors.

Everything is done by General Contractor and client have to pay only payment. Client is not affected by market rise. Owner put minimum efforts for his project so he has less stress.

11EO - 702

EMBA-2, BUP

M. ASAD

SOW, WBS, Milestones SOW (Statement of Work)- form of a formal

written description of objectives, brief statement of the work, works to be done, project time frame and etc

Work Breakdown Structure - is a method for project planning. In a WBS, a project is broken down into major components- Task / Modules subcomponents (Sub Task) Finally – Individual task / Activities

Project Milestone – Completion of any event in activities. i.e. completion of design, completion of production of a prototype, completion of testing of prototype, Approval of pilot run

12EO - 702

EMBA-2, BUP

M. ASAD

Project Control Charts

13EO - 702

EMBA-2, BUP

M. ASAD

Network-Planning Models A project is made up of a sequence of

activities that form a network representing a project.

Two best known network models are: CPM PERT

By using PERT or CPM, managers are able to obtain:•A graphical display of project activities•An estimate of how long the project will take.•An indication of which activities are the most critical to timely project completion.•An indication of how long any activity can be delayed without delaying the project.

14EO - 702

EMBA-2, BUP

M. ASAD

Salient Features of CPM and PERT

Item CPM PERTTime estimation Used

Single, Multiple

Multiple

Activity time estimation

Fairly certain, Uncertain

Uncertain / Probabilistic

Activities represented as

Arrowed lines or Nodes

Network construction approach

Activity on Arrow (AOA) orActivity on Node (AON)

Use of Dummy activity

Yes No

15EO - 702

EMBA-2, BUP

M. ASAD

Network-Planning Models Early Start Early Finish Backward pass Late Start Late Finish

Path Critical path Critical activities Dummy activity Forward pass

Slack – is the amount of time an activity can be delayed without delaying the project.

Slack = LS-ES or LF-EF

16EO - 702

EMBA-2, BUP

M. ASAD

Preparing/Scheduling Project Network

Single Time Estimate (using CPM) Used when activity times are known with certainty Used to determine timing estimates for the

project, each activity in the project, and slack time

Three Activity Time Estimates (using CPM / PERT ) Used when activity times are uncertain Used to obtain probability information

Time-Cost Models (using CPM / PERT ) Used when cost trade-off information is a major

consideration in planning To determine least cost in reducing total project

time

17EO - 702

EMBA-2, BUP

M. ASAD

Steps in the CPM with Single Time Estimate

1. Activity Identification2. Activity Sequencing and Network

Construction3. Determine the critical path4. Determine ES /EF and LS / LF to

determine Slack Time

18EO - 702

EMBA-2, BUP

M. ASAD

CPM with Single Time Estimate Step-1: Activity identification

Consider the following internship project:Activity DesignationImmed. Pred.Time (Weeks)

Submit proposal to org supervisor

A None 2

Submit proposal to faculty supervisor B A 1

Obtain approval C B 1

Submit org part completed D C 2

Carry out survey & write research partE C 5

Submit draft paper F D, E 5

Submit final internship paper G F 1

Draw and find its critical path, total duration and activities having slack time

19EO - 702

EMBA-2, BUP

M. ASAD

Critical Path & Slack

LS=4LF=9 Duration = 15 weeks

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

LS=14LF=15

LS=9LF=14

LS=7LF=9

LS=3LF=4

LS=2LF=3

LS=0LF=2

Slack=(7-4)=(9-6)= 3 Wks

20EO - 702

EMBA-2, BUP

M. ASAD

Three Activity Time Estimates

When single estimate of time is not reliable. Activity times are unknown and subject to

variation. This approach involves weighted average

method of three time estimates:

a=Optimistic time : min reasonable time to complete the activity. (error 1%)

b=Pessimistic time : max reasonable time to complete the activity. (error 1%)

m=Most likely time : The best guessed time to complete the activity. (mode of beta distribution )

21EO - 702

EMBA-2, BUP

M. ASAD

Three Time Estimates

1. Activity Identification 2. Activity Sequencing3. Calculation of Expected time from 3 time

estimates

4. Network Construction and determining Critical Path

5. Determine activity variance

6. Determine probability of completing on a given date

Expected Time = Opt. Time + 4(Most Likely Time) + Pess. Time

6Expected Time =

Opt. Time + 4(Most Likely Time) + Pess. Time

6

22 )

6

Optim. - Pessim.( = ariance,Activity v

22 )

6

Optim. - Pessim.( = ariance,Activity v

22EO - 702

EMBA-2, BUP

M. ASAD

Step 1 and 2 : Activity identification, Sequencing

TaskImmediate

Predecesors Optimistic Most Likely PessimisticA None 3 6 15B None 2 4 14C A 6 12 30D A 2 5 8E C 5 11 17F D 3 6 15G B 3 9 27H E,F 1 4 7I G,H 4 19 28

23EO - 702

EMBA-2, BUP

M. ASAD

Step 6 : Probability Exercise

What is the probability of finishing this project in less than 53 days?What is the probability of finishing this project in less than 53 days?

Z = D - TE

cp2

Z = D - TE

cp2

p(t < D)

TE = 54t

D=53