Operations

Management
Project Management
Chapter 3 - Heizer
3-1

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

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
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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Examples of Projects
Building construction
Software development

Staging a play
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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Characteristics of Projects
Single unit
Relatively low frequency
Defined starting points and ending points
Defined outcomes / goals
Complex interrelated tasks, often transcending
functional boundaries
Require special management tools

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Project Management Activities

Planning

Scheduling

Objectives
Resources
Work breakdown structure
Organization

Project
activities
Start & end
times
Network

Controlling

Monitor, compare,
revise, action
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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Project Planning, Scheduling & Controlling

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

WBS Work Breakdown Structure

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

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Project Scheduling

3-8

1995 Corel Corp.

v ity
Acti ign
nth
es ild
MoMF J DB
u t
MA
Tes
JJ

Identifying precedence relationships

Sequencing activities
Determining activity times & costs
Estimating material & worker
requirements
Determining critical activities

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Project Management Techniques

Gantt chart
Critical Path Method (CPM)
Program Evaluation & Review
Technique (PERT)

1984-1994 T/Maker Co.

3-9

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Gantt Chart
Activity

Time Period
J

Design
Build
Test

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

PERT / CPM
Network planning methods that generate:
Relationship between activities
Project duration
Critical path
Slack for non critical activities
Crashing (cost / time trade-offs)
Resource usage

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

St. Pauls Hospital

Activity
A
B
C
D
E
F
G
H
I
J
K

Immediate
Predecessor(s)

Description

Select administrative and medical staff.

Select site and do site survey.
Select equipment.
Prepare final construction plans and layout.
Bring utilities to the site.
Interview applicants and fill positions in nursing,
support staff, maintenance, and security.
Purchase and take delivery of equipment.
Construct the hospital.
Develop an information system.
Install the equipment.
Train nurses and support staff.
3-12

A
B
B
A
C
D
A
E,G,H
F,I,J

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

St. Pauls Hospital

Activity
A
B
C
D
E
F
G
H
I
J
K

Immediate
Predecessor(s)

AON Network
Description
I

Select administrative and medical staff.

Select site and do site survey.
A
F
K
Select equipment.
Prepare final construction plans and layout.
Bring utilities to the site.
Start
Finish
C fill positions
G
Interview
applicants and
in nursing,
support staff, maintenance, and security.
Purchase and take delivery of equipment.
D
B hospital.
H
J
Construct the
Develop an information system.
Install the equipment.
E staff.
Train nurses and support
3-13

A
B
B
A
C
D
A
E,G,H
F,I,J

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

St. Pauls Hospital

Immediate
Predecessor(s)

Completion Time
I
Activity
Description
15
A
B
C
D
E
F
G
H
I
J
K

Select administrative and medical staff.

A do site F
K
Select site and
survey.
12
10
9
Select equipment.
Prepare final construction plans and layout.
C
G
BringStart
utilities to the site.
Finish
10
35
Interview applicants and fill positions in nursing,
support staff, maintenance, and security.
B
D
H
J
Purchase and
take
delivery
of
equipment.
9
10
40
4
Construct the hospital.
Develop an information system.
E
Install the equipment. 24
Train nurses and support staff.
3-14

A
B
B
A
C
D
A
E,G,H
F,I,J

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Path

St. Pauls Hospital

A-I-K

Expected Time (wks)

36
A-F-K
31 Critical
Immediate
Completion Time
A-C-G-J-K
70 Path
I
Activity
Description
Predecessor(s)
B-D-H-J-K
72
15
B-E-J-K
46
A
Select administrative and medical
staff.
B
Select site

A and do Fsite survey.

K
9
C
Select 12
equipment.10
A
D
Prepare final construction plans and layout.
B
E
Bring utilities to the
site. G
B
C
Start
Finish
F
Interview
applicants
10 and fill 35
positions in nursing,
support staff, maintenance, and security.
A
G
Purchase
C
B and takeDdelivery of
H equipment.
J
9 the hospital.
10
40
4
H
Construct
D
I
Develop an information system.
A
J
Install the equipment.
E,G,H
E
K
Train nurses and 24
support staff.
F,I,J
3-15

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Critical Path
The longest path in the network
Defines the shortest time project can be completed
Critical path activity delay
project delay

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Earliest Start and Earliest Finish

Begin at starting event and work forward
ES is earliest start
ES = 0 for starting activities
ES = Maximum EF of all
predecessors for
non-starting activities

ES

Activity
Name

EF

EF is earliest finish
EF = ES + Activity time

LS

3-17

Activity
Duration

LF

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Earliest Start / Earliest Finish

I
15
A

12

10

10

35

10

40

Start

Finish

E
24
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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Earliest Start / Earliest Finish

12 I 27

Earliest start time

Start

15

Earliest finish time

0 A 12

12 F 22

63 K 72

12

10

12 C 22

22 G 57

10

35

0 B 9

9 D 19

19 H 59

59 J 63

10

40

Critical
path

Finish

9 E 33

24
3-19

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Latest Start and Latest Finish

Begin at ending event and work backward
LF is latest finish
LF = Maximum EF for
ending activities
LF = Minimum LS of all
successors for
non-ending activities

LS is latest start

ES

LS

LS = LF Activity time

3-20

Activity
Name

Activity
Duration

EF

LF

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Latest Start / Latest Finish

Latest start time
0
2

Start

A 12
12

14

Critical
path
0
0

B 9
9 9

12
48

I 27
15 63

Latest finish time

12 F 22
53
63

63 K 72
63
72

10

12 C 22
14
24

22 G 57
24
59

9 D 19
9
19

19 H 59
19
59

10

40

10

9 E 33
35

24

Finish

35

59
3-21

59 J 63
59
63

What do you
notice about
ES/LS & EF/LF?
2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Activity Slack Analysis

Slack
= LS
ES
Latest
start
time
or A
0
2

12
14

Slack = LF12 EF

12
48

I 27
15 63

Latest finish time

12 F 22
53
63

63 K 72
63
72

10

12 C 22
14
24

22 G 57
24
59

9 D 19
9
19

19 H 59
19
59

Start
Slack
63 = 0 10
K = 63Critical

Finish

35

path

or
0
0

B 9

SlackK = 72
9 972 = 0 10

40

59 J 63
59
63

9 E 33
35
59

24

3-22

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Activity Slack Analysis

LS

12 I 27
48Slack
63

0
2
A012 0
12 14 14
129
9
9 35
12 53
22 24
Critical
19 19
path
12 48
B 9 59
59
63 9 63

2
0
12 F 22
53 2 63
10
0
26
C 22
12 41
14 2 24
10
0
36
0 19
9 D
9 0 19

Node Duration ES
Latest
start time
A
B
C
D
E
F
Start
G
H
I
J
K

12
9
10
10
24
10
35
40
15
4
6

0
2

0
0

Latest finish time

15

63 K 72
63
72

22 G 57
24
59

Finish

35

19 H 59
19
59

40

10

59 J 63
59
63

Activity slack = maximum delay time

9 E 33
35
59

Critical
24 path activities have zero slack
3-23

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Activity Slack
How much would we like to reduce
the time for activity B?
5

Start

B 25

5 20 25

25
35
25 10 35

0
5
0 5 5

Finish

5
20
10 15 25

3-24

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Activity Times & Project Times

3 activity time estimates

Optimistic times (a)

Most-likely time (m)
Pessimistic time (b)

Follow beta distribution

Expected time: t = (a + 4m + b) / 6
Variance of times: v = (b - a)2 / 6

Expected project time:

T = sum of critical path activity times, t
Project variance:
V = sum of critical path activity variances
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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Completion Time for Noncritical Activities

Variability 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.

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Cost / Time Trade-offs

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

3-27

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Cost / Time Relationship

Direct cost (dollars)

8000

Crash cost

7000
6000

Activity B

5000

Normal cost

4000
3000
0
|
5

Crash
time

|
6

|
7

3-28

|
9

|
10

|
11

Normal
time

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Project Control Reports

Performance vs. schedule
Expected time to project completion
Cost vs. budget
Detailed cost breakdowns for each task
and organization
Expected total project cost
Resource reports
Corrective action / contingency reports

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2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Summary
Project 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 demand

We have only scratched the surface if you are interested,
take the PM elective BA 462
3-30

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458