Operations Management

Project ManagementChapter 3 - Heizer

Why a separate topic ?If you look back to the product-process matrix, there is a focus on volume - as volume increases, we become more standardized and efficient - as volume decreases, we have more customization Project-based work is becoming increasingly prevalent for market-driven reasons - Growing project complexity - Collapsing product/service life cycles

Examples of Projects

Characteristics of ProjectsSingle unitRelatively low frequencyDefined starting points and ending pointsDefined outcomes / goalsComplex interrelated tasks, often transcending functional boundariesRequire special management tools

Project Management Activities

Project Planning, Scheduling & Controlling

WBS Work Breakdown StructureProject Major tasks in the project Subtasks in the major tasks Activities (or work packages) to be completedA statement of all work that has to be completed. A list of all activities or tasks that constitute the project.

Identifying precedence relationships Sequencing activitiesDetermining activity times & costsEstimating material & worker requirementsDetermining critical activitiesProject Scheduling

Project Management TechniquesGantt chartCritical Path Method (CPM)Program Evaluation & Review Technique (PERT) 1984-1994 T/Maker Co.

Gantt Chart

Relationship between activities Project durationCritical pathSlack for non critical activitiesCrashing (cost / time trade-offs) Resource usagePERT / CPMNetwork planning methods that generate:

St. Pauls Hospital ImmediateActivity Description Predecessor(s)ASelect administrative and medical staff.BSelect site and do site survey.CSelect equipment.DPrepare final construction plans and layout.EBring utilities to the site.FInterview applicants and fill positions in nursing,support staff, maintenance, and security.GPurchase and take delivery of equipment.HConstruct the hospital.IDevelop an information system.JInstall the equipment.KTrain nurses and support staff.ABB

ACDAE,G,HF,I,J

St. Pauls Hospital ImmediateActivity Description Predecessor(s)ASelect administrative and medical staff.BSelect site and do site survey.CSelect equipment.DPrepare final construction plans and layout.EBring utilities to the site.FInterview applicants and fill positions in nursing,support staff, maintenance, and security.GPurchase and take delivery of equipment.HConstruct the hospital.IDevelop an information system.JInstall the equipment.KTrain nurses and support staff.ABB

ACDAE,G,HF,I,J

St. Pauls Hospital ImmediateActivity Description Predecessor(s)ASelect administrative and medical staff.BSelect site and do site survey.CSelect equipment.DPrepare final construction plans and layout.EBring utilities to the site.FInterview applicants and fill positions in nursing,support staff, maintenance, and security.GPurchase and take delivery of equipment.HConstruct the hospital.IDevelop an information system.JInstall the equipment.KTrain nurses and support staff.ABB

ACDAE,G,HF,I,J

St. Pauls Hospital ImmediateActivity Description Predecessor(s)ASelect administrative and medical staff.BSelect site and do site survey.CSelect equipment.DPrepare final construction plans and layout.EBring utilities to the site.FInterview applicants and fill positions in nursing,support staff, maintenance, and security.GPurchase and take delivery of equipment.HConstruct the hospital.IDevelop an information system.JInstall the equipment.KTrain nurses and support staff.ABB

ACDAE,G,HF,I,JCritical Path

Critical Path

Earliest Start and Earliest FinishBegin at starting event and work forwardES is earliest startES = 0 for starting activitiesES = Maximum EF of all predecessors for non-starting activitiesEF is earliest finishEF = ES + Activity time

A

12K

9C

10G

35J

4H

40B

9D

10E

24I

15F

10FinishStartEarliest Start / Earliest Finish

Earliest Start / Earliest FinishFinishEarliest start timeEarliest finish timeA

12K

9C

10G

35J

4H

40B

9D

10E

240 12I

15F

1012 2712 2263 7222 5759 6319 599 330 99 1912 22Critical pathStart

Latest Start and Latest FinishBegin at ending event and work backwardLF is latest finishLF = Maximum EF for ending activitiesLF = Minimum LS of all successors for non-ending activitiesLS is latest startLS = LF Activity timeESLSEFLFActivity NameActivity Duration

Latest Start / Latest FinishA

12K

9C

10G

35J

4H

40B

9D

10E

240 12I

15F

1012 2712 2263 7222 5759 6319 599 330 99 1912 2248 632 1453 6363 7214 2424 590 99 1919 5935 5959 63Latest start timeLatest finish timeCritical pathFinishStart

Activity Slack AnalysisA

12K

9C

10G

35J

4H

40B

9D

10E

240 12I

15F

1012 2712 2263 7222 5759 6319 599 330 99 1912 2248 632 1453 6363 7214 2424 590 99 1919 5935 5959 63Latest start timeLatest finish timeCritical pathFinishStartSlackK = 63 63 = 0

or

SlackK = 72 72 = 0Slack = LS ES

or

Slack = LF EF

Activity Slack AnalysisA

12K

9C

10G

35J

4H

40B

9D

10E

240 12I

15F

1012 2712 2263 7222 5759 6319 599 330 99 1912 2248 632 1453 6363 7214 2424 590 99 1919 5935 5959 63Latest start timeLatest finish timeCritical pathFinishStart

Activity SlackHow much would we like to reduce the time for activity B?

Activity Times & Project Times3 activity time estimatesOptimistic times (a)Most-likely time (m)Pessimistic time (b)Follow beta distributionExpected time: t = (a + 4m + b) / 6Variance of times: v = (b - a)2 / 6 Expected project time: T = sum of critical path activity times, tProject variance: V = sum of critical path activity variances

Completion Time for Noncritical ActivitiesVariability of times for activities on non-critical paths must be considered when determining the probability of finishing in a specified time.Variation in non-critical activity may cause change in critical path.

Cost / Time Trade-offs Most activities can be done faster if you pay more money Work overtime / hire more people / rent extra equipment / incentive contractsPERT / CPM have the ability to crash a schedule to shorten activity time in a network to reduce project completion time.

Cost / Time Relationship8000 7000 6000 5000 4000 3000 0 Direct cost (dollars)Crash costNormal cost||||||567891011Crash timeNormal timeActivity B

Project Control ReportsPerformance vs. scheduleExpected time to project completionCost vs. budgetDetailed cost breakdowns for each task and organizationExpected total project costResource reportsCorrective action / contingency reports

SummaryProject management requires special tools PERT / CPM Network planning methods that generate relationship between activities, project duration, critical path, slack for non-critical activities, crashing (cost / time trade-offs), and resource usage Project-based work is becoming increasingly prevalent for market-driven reasons - Growing project complexity - Collapsing product/service life cycles People with these skills are in demandWe have only scratched the surface if you are interested, take the PM elective BA 462

It is helpful here to provide an expanded discussion of the activities.A useful project management technique must contribute in all areas.As you discuss the various project scheduling techniques, you should include at least: - the basic assumptions of the technique - problems typically encountered in applying it - the nature of the effort required to keep the tool current - sources of problems - the nature of the decisions supported by the tool - the nature of the management effort and cost associated with using the tool.In your discussion of activity times, you should probably at least make note of the difference between most likely and average or expected completion times.