Operations Research

PROJECT MANAGEMENT
The Strategic Importance of Project
Management
 Scheduling large, often one-time projects is a
difficult challenge to operations managers and
is one of the 10 OM decisions. The stakes in
project management are high Millions of
dollars in cost overruns have been wasted due
to poor planning on projects, unnecessary
delays have occurred due to poor scheduling,
and companies have gone bankrupt due to
poor controls.
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 activities
and relates activities to each other.
4. Controlling. Here the firm monitors
resources, costs, quality, and budgets. It
also revises or changes plans and shifts
resources to meet time and cost demands.
PROJECT PLANNING
Projects can be defined as a series of related tasks
directed toward a major output. A project
organization is developed to make sure
existing programs continue to run smoothly on
a day-to-day basis while new projects are
successfully completed. The project
organization works best when;
2. Work can be defined with a specific goal and
deadline
3. The job is unique or somewhat unfamiliar to
the existing organization
4. The work contains complex interrelated tasks
requiring specialized skills
5. The project is temporary but critical to the
organization.
PROJECT SCHEDULING
Project scheduling involves sequencing and
allotting time to all project activities. At this
stage, managers decide how long each
activity will take and compute how many
people 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).
PROJECT SCHEDULING
To summarize, whatever the approach taken
by a project manager, project scheduling
serves several purposes:
2. It shows the relationship of each activity to
others and to the whole project
3. It identifies the precedence relationships
among activities
4. It encourages the setting of realistic time
and cost estimates for each activity.
5. It helps make better use of people, money,
and material by identifying critical
bottlenecks in the project
PROJECT CONTROLLING
The control of large projects, like the control of
any management system, involves close
monitoring of resources, costs, quality, and
budgets. Control means using a feedback
loop to revise the project plan and having
the ability to shift resources to where they
are needed most.
PROJECT MANAGEMENT TECHNIQUES
Program Evaluation and Review Techniques
A technique to enable managers to
schedule, monitor, and control large and
complex projects by employing three time
estimates for each activity.
Critical Path Method (CPM)
A network technique using only one time
factor per activity that enables managers to
schedule, monitor, and control large and
complex projects.
Critical Path
The computed longest time path(s) through
a network.
PROJECT MANAGEMENT
TECHNIQUES
PERT and CPM are important because they can
help answer questions such as the
following 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 delay
the entire project if they are late?
4. Which are the noncritical activities-the
ones that can run late without delaying the
whole project’s completion?
PROJECT MANAGEMENT TECHNIQUES
4. 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 spent
equal to, less than, or greater than the
budgeted amount?
7. Are there enough resources available to
finish the project on time?
8. If the project is to be finished in a shorter
amount of time, what is the best way to
accomplish this goal at the least cost?
Network Conventions
If the diagram had looked like the one following,
both activities a and b would have to be
completed before activity c could begin, but a
and b could be performed at the same time;
performance of a is independent of
performance of b.
a

b
Network Conventions
If activity a must precede b and c, the
appropriate network would look like this:

c
Network Conventions
When multiple activities enter a node, this
implies that all those activities must be
completed before any activities that are to
begin at that node can start. Hence, in this
next diagram, activities a and b must both be
finished before either activity c or activity d
can start.
a c

b d
Network Conventions
When two activities both have the same
beginning and ending nodes, a dummy node
and activity is used to preserve the separate
identity of each activity. In the diagram below,
activities a and b must be completed before
activity c can be started.
c
a

b
Dummy Activity/Broken Line
Example #1: Given the following
information

6 wks

3 wks
8 wks
11 wks

1 wk

4 wks
9 wks
Determine:
a. The length of each path
b. The critical path
c. The expected length of the project
d. Amount of slack time for each path
Example #2:

Compute the earliest starting time and earliest

finishing time for each activity.
Example #3:
The network diagram for a project is shown in
the accompanying figure, with three time
estimates for each activity. Activity times are
in months.
b.Compute the expected time for each activity
and the expected duration for each path.
c.Identify the critical path.
d.Compute the variance of each activity and the
variance of each path.
Diagram for Example #3

2-4-6

2-3-5

1-3-4

3-4-5 3-5-7 5-7-9

3-4-6
2-3-6

4-6-8
Example #4:
Using the information from the previous
example, answer the following:
b.Can the paths be considered independent?
Why?
c.What is the probability that the project can be
completed within 17 of its start?
d.What is the probability that the project will be
completed within 15 months of its start?
e.What is the probability that the project will not
be completed within 15 months of its start?