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Operations Research

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PROJECT MANAGEMENT The Strategic Importance of Project

ManagementScheduling large, often one-time projects is a

difficult challenge to operations managers andis one of the 10 OM decisions. The stakes inproject management are high Millions of dollars in cost overruns have been wasted dueto poor planning on projects, unnecessarydelays have occurred due to poor scheduling,and companies have gone bankrupt due topoor controls.

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PROJECT MANAGEMENT The management of large projects involves

three phases;2. Planning. This phase involves goal setting,

defining the project, and team organization.3. Scheduling. This phase relates people,

money, and supplies to specific activitiesand relates activities to each other.

4. Controlling. Here the firm monitorsresources, costs, quality, and budgets. It

also revises or changes plans and shiftsresources to meet time and cost demands.

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PROJECT PLANNINGProjects can be defined as a series of related tasks

directed toward a major output. A projectorganization is developed to make sureexisting programs continue to run smoothly ona day-to-day basis while new projects aresuccessfully completed. The projectorganization works best when;

2. Work can be defined with a specific goal anddeadline

3. The job is unique or somewhat unfamiliar to

the existing organization4. The work contains complex interrelated tasks

requiring specialized skills5. The project is temporary but critical to the

organization.

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PROJECT SCHEDULINGProject scheduling involves sequencing and

allotting time to all project activities. At thisstage, managers decide how long eachactivity will take and compute how manypeople and materials will be needed at each

stage of production.Managers also chart separate schedules for

personnel needs by type of skill(management, engineering or pouring

concrete).

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PROJECT SCHEDULING To summarize, whatever the approach taken

by a project manager, project schedulingserves several purposes:

2. It shows the relationship of each activity toothers and to the whole project

3. It identifies the precedence relationshipsamong activities

4. It encourages the setting of realistic timeand cost estimates for each activity.

5. It helps make better use of people, money,and material by identifying criticalbottlenecks in the project

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PROJECT CONTROLLING

The control of large projects, like the control of any management system, involves closemonitoring of resources, costs, quality, andbudgets. Control means using a feedback

loop to revise the project plan and havingthe ability to shift resources to where theyare needed most.

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PROJECT MANAGEMENT TECHNIQUESProgram Evaluation and Review Techniques

A technique to enable managers toschedule, monitor, and control large andcomplex projects by employing three timeestimates for each activity.

Critical Path Method (CPM)A network technique using only one timefactor per activity that enables managers toschedule, monitor, and control large andcomplex projects.

Critical Path The computed longest time path(s) througha network.

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TECHNIQUES

PERT and CPM are important because they canhelp answer questions such as thefollowing about projects with thousands of activities:

2. When will the entire project be completed?3. What are the critical activities or tasks in

the project-that is, the ones that will delaythe entire project if they are late?

4. Which are the noncritical activities-theones that can run late without delaying thewhole projects completion?

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PROJECT MANAGEMENT TECHNIQUES4. What is the probability that the project will

be completed by a specific date?5. At any particular date, is the project on

schedule, behind schedule, or ahead of schedule?

6. On any given date, is the money spentequal to, less than, or greater than thebudgeted amount?

7. Are there enough resources available tofinish the project on time?

8. If the project is to be finished in a shorteramount of time, what is the best way toaccomplish this goal at the least cost?

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Network ConventionsIf the diagram had looked like the one following,

both activities a and b would have to becompleted before activity c could begin, but aand b could be performed at the same time;performance of a is independent of performance of b.

b

a

c

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Network Conventions

If activity a must precede b and c, theappropriate network would look like this:

a

c

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Network ConventionsWhen two activities both have the same

beginning and ending nodes, a dummy nodeand activity is used to preserve the separateidentity of each activity. In the diagram below,activities a and b must be completed beforeactivity c can be started.

Dummy Activity/Broken Line

a c

b

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Example #1: Given the followinginformation

11 wks

3 wks

6 wks

1 wk

9 wks4 wks

8 wks

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Determine:

a. The length of each pathb. The critical pathc. The expected length of the project

d. Amount of slack time for each path

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Example #2:

Compute the earliest starting time and earliestfinishing time for each activity.

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Example #3: The network diagram for a project is shown in

the accompanying figure, with three timeestimates for each activity. Activity times arein months.

b. Compute the expected time for each activityand the expected duration for each path.

c. Identify the critical path.d. Compute the variance of each activity and the

variance of each path.

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Diagram for Example #3

2-4-6

3-5-7

4-6-8

2-3-5

5-7-9

3-4-6

3-4-5

1-3-4

2-3-6

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