operations management
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9_ProjectManagementII.pptxClass 9: Project Management II
Instructor: Mani Lakshmanan
P300 Introduction to Operations Management
Review: Project Management
Project Planning
List Detailed Project Activities
Budgeting for Time and Cost
Detailed Scheduling Using the Critical Path Method (CPM)
Network diagram
Duration of a project
Critical path
Slack
2
A,0
3
B,3
I,3
D,5
C,5
E,6
F,4
J,14
K,2
L,1
G,3
H,1
| 0 | 0 |
| 0 | 0 |
| 0 | 5 |
| 1 | 6 |
| 0 | 3 |
| 0 | 3 |
| 3 | 6 |
| 3 | 6 |
| 6 | 11 |
| 6 | 11 |
| 11 | 17 |
| 11 | 17 |
| 17 | 21 |
| 17 | 21 |
| 21 | 24 |
| 21 | 24 |
| 3 | 17 |
| 7 | 21 |
| 3 | 5 |
| 18 | 20 |
| 5 | 6 |
| 20 | 21 |
| 24 | 25 |
| 24 | 25 |
| ES | EF |
| LS | LF |
Critical Path: The longest path from the beginning node to the end node in the project.
Outline
Project crashing: making time-cost trade-offs
Project Execution
Project progression measures
4
Project Crashing
Crashing a project
Need to accelerate the project due to time constraint
Need to speed up projects that are behind schedule
Deadlines have been changed
How best to spend more money (resources) to speed up a project
Project
Deliverables
Scope/Quality
(Better)
Schedule
(Faster)
Budget
(Cheaper)
5
Accelerate a Project with Minimal Costs
Q: Determine a cost-effective way to reduce the project completion time to 175 days.
A precedence table for designing and building a township playground:
6
Crash Time: the total time needed for the task after being accelerated!
Minimal-Cost Scheduling with Expediting
Step 1: Get the critical path diagram
A, 20
B, 60
D, 30
C,100
E, 20
F, 10
H, 10
G, 20
I, 30
7
A, 20
B, 60
D, 30
C,100
E, 20
F, 10
H, 10
G, 20
I, 30
150 170
80
80 110
120 140
140 150
150 160
170 200
120
0 20
0 20
30 90
90 120
120 140
20 120
140 150
150 170
160 170
170 200
Early Start/Finish and Late Start/Finish Times
8
10 days Slack
10 days Slack
Minimal-Cost Scheduling with Expediting
Step 1: Get the critical path diagram
Step 2: Determine which activities to accelerate
Step 3: Determine how long to accelerate
9
Acceleration vs. Cost
$20/day
$4/day
$15/day
$30/day
A, 20
B, 60
D, 30
C,100
E, 20
F, 10
H, 10
G, 20
I, 30
10 days Slack
10 days Slack
10
Duration: 200
Objective: 175 days
A, 20
B, 60
D, 30
C,90
E, 20
F, 10
H, 10
G, 20
I, 30
$20/day
$4/day
$15/day
$30/day
10 Days Reduced by Accelerating C
11
10 days Slack
Duration: 190
Objective: 175 days
10 days Slack
Optimal Acceleration Strategy
Step 1: Get the critical path diagram
Step 2: Determine which activities to accelerate
With only one critical path
The activities on critical path
The activity with the lowest accelerate cost
Accelerate only one activity one time
Step 3: Determine how long to accelerate. Stop when:
New critical path appears
Or the task reaches its shortest duration possible
12
A, 20
B, 60
D, 30
C,90
E, 20
F, 10
H, 10
G, 20
I, 30
$20/day
$4/day
$15/day
$30/day
Duration: 190
10 Days Reduced by Accelerating C
Objective: 175 days
13
10 days Slack
10 Days Reduced by Accelerating C & B Together
A, 20
B, 50
D, 30
C,80
E, 20
F, 10
H, 10
G, 20
I, 30
$20/day
$4/day
$15/day
$30/day
Duration: 180
Objective: 175 days
14
Minimal-Cost Scheduling with Expediting
Step 1: Use Single-Time-Estimate to get the critical path diagram
Step 2: Determine which activities to accelerate
With only one critical path (discussed before)
With more than one critical path. E.g. 2 critical paths:
One or two activities that can reduce both critical paths simultaneously
The combination of activities with lowest combined accelerate costs
Step 3: Determine how long to accelerate. Stop when:
New critical path appears
Or the task reaches its shortest duration possible
15
10 Days Reduced by Accelerating C & B Together
A, 20
B, 50
D, 30
C,80
E, 20
F, 10
H, 10
G, 20
I, 30
$20/day
$15/day
$30/day
Duration: 180
Objective: 175 days
16
5 Days Reduced by Accelerating A
A,15
B, 50
D, 30
C,80
E, 20
F, 10
H, 10
G, 20
I, 30
$20/day
$4/day
$15/day
$30/day
Duration: 175
17
Objective: 175 days
Exercise: What if We Change the Crash Cost:
Q: Determine a cost-effective way to reduce the project completion time to 155 days.
A precedence table for designing and building a township playground:
18
Crash Time: the total time needed for the task after being accelerated!
Acceleration vs. Cost
$30/day
$15/day
$4/day
$20/day
$25/day
$10/day
A, 20
B, 60
D, 30
C,100
E, 20
F, 10
H, 10
G, 20
I, 30
10 days Slack
10 days Slack
Duration: 200
19
Objective: 155 days
Acceleration vs. Cost
A, 15
B, 60
D, 30
C,100
E, 20
F, 10
H, 10
G, 20
I, 30
10 days Slack
10 days Slack
Duration: 195
$30/day
$15/day
$4/day
$20/day
$25/day
$10/day
20
Objective: 155 days
Acceleration vs. Cost
A, 15
B, 60
D, 30
C,100
E, 20
F, 10
H, 10
G, 10
I, 30
10 days Slack
Duration: 185
$30/day
$15/day
$4/day
$25/day
$10/day
21
Objective: 155 days
Acceleration vs. Cost
A, 15
B, 60
D, 30
C, 90
E, 20
F, 10
H, 10
G, 10
I, 30
Duration: 175
$30/day
$15/day
$4/day
$25/day
$10/day
22
Objective: 155 days
Acceleration vs. Cost
A, 15
B, 60
D, 20
C, 80
E, 20
F, 10
H, 10
G, 10
I, 30
Duration: 165
$30/day
$15/day
$4/day
$25/day
$10/day
23
Objective: 155 days
Acceleration vs. Cost
A, 15
B, 60
D, 20
C, 80
E, 20
F, 10
H, 5
G, 5
I, 30
Duration: 160
$30/day
$15/day
$25/day
$10/day
24
Objective: 155 days
Acceleration vs. Cost
A, 15
B, 55
D, 20
C, 75
E, 20
F, 10
H, 5
G, 5
I, 30
Duration: 155
$15/day
25
Objective: 155 days
Outline
Project Planning
4. Project crashing: making time-cost trade-offs
Project Execution
Project progression measures
26
Progression Measures
ACWP: actual cost (“value”) of work performed to date, also called Actual
BCWS: budgeted cost (“value”) of work scheduled (planned) to date
BCWP: budgeted cost (“value”) of work performed to date
27
Progression Measures
Example 1
BCWS = $100, BCWP = $105, ACWP = $95
Example 2
BCWS = $100, BCWP = $80, ACWP = $95
28
Project is $5 worth of work ahead schedule (BCWP – BCWS)
and $10 under budget (BCWP – ACWP).
Project is $20 worth of work behind schedule ($80-$100= -$20)
and $15 over budget ($80 - $95 =-$15).
32
Progression Measures
Time: Schedule Variance (SV) = BCWP-BCWS
In term of bucks
Compare between:
How much of work should be performed to date? (BCWS)
How much of work has been performed to date? (BCWP)
Cost: Cost Variance (CV) = BCWP-ACWP
Focus on the performed work
Compare between:
The actual cost (ACWP)
The budget cost (BCWP)
29
| Activity | Budget $ | Scheduled % | Performed % | Actual (ACWP) | BCWS | BCWP |
| A | $3,000 | 50% | 30% | $1,100 | ||
| B | $10,000 | 20% | 40% | $4,700 | ||
| C | $2,000 | 100% | 100% | $1,700 | ||
| Total | $7,500 |
Progression Measures
30
32
| Activity | Budget $ | Scheduled % | Performed % | Actual (ACWP) | BCWS | BCWP |
| A | $3,000 | 50% | 30% | $1,100 | $900 | |
| B | $10,000 | 20% | 40% | $4,700 | $4,000 | |
| C | $2,000 | 100% | 100% | $1,700 | $2,000 | |
| Total | $7,500 | $6,900 |
Time: $_____ ahead of or behind schedule
Cost: $__________ above or below the budget.
| $1,500 |
| $2,000 |
| $2,000 |
| $5,500 |
Progression Measures
31
| Activity | Budget $ | Scheduled % | Performed % | Actual (ACWP) | BCWS | BCWP |
| A | $3,000 | 50% | 30% | $1,100 | $900 | |
| B | $10,000 | 20% | 40% | $4,700 | $4,000 | |
| C | $2,000 | 100% | 100% | $1,700 | $2,000 | |
| Total | $7,500 | $6,900 |
Time: $1,400, or ($6,900 - $5,500) / $5,500 = 25.5% ahead of schedule
Cost: $600, or ($7,500 - $6,900) / $6,900 = 8.70% above the budget.
| $1,500 |
| $2,000 |
| $2,000 |
| $5,500 |
Progression Measures
32
Code Activity Time
(days)
Immediate
Predecessors
Cost Shortest
time
Possible
Accelration
Cost/day
A Planning 20 None $300 15 days $30
B Purchasing 60 A $2100 50 days $4
C Excavation 100 A $4000 75 days $20
D Sawing 30 B $2850 20 days $15
E Placement 20 C,D $500
F Assembly 10 E $200
G Infill 20 F $400
H Outfill 10 F $600
I Decoration 30 G,H $1350
|
Code |
Activity |
Time (days) |
Immediate Predecessors |
Cost |
Shortest time Possible |
Accelration Cost/day |
|
A |
Planning |
20 |
None |
$300 |
15 days |
$30 |
|
B |
Purchasing |
60 |
A |
$2100 |
50 days |
$4 |
|
C |
Excavation |
100 |
A |
$4000 |
75 days |
$20 |
|
D |
Sawing |
30 |
B |
$2850 |
20 days |
$15 |
|
E |
Placement |
20 |
C,D |
$500 |
|
|
|
F |
Assembly |
10 |
E |
$200 |
|
|
|
G |
Infill |
20 |
F |
$400 |
|
|
|
H |
Outfill |
10 |
F |
$600 |
|
|
|
I |
Decoration |
30 |
G,H |
$1350 |
|
|
Code Activity Time
(days)
Immediate
Predecessors
Cost Shortest
time
possible
Crash
Cost/day
A Planning 20 None $300 15 days $20
B Purchasing 60 A $2100 50 days $15
C Excavation 100 A $4000 75 days $30
D Sawing 30 B $2850 20 days $4
E Placement 20 C,D $500
F Assembly 10 E $200
G Infill 20 F $400 5 days $25
H Outfill 10 F $600 5 days $10
I Decoration 30 G,H $1350
|
Code |
Activity |
Time (days) |
Immediate Predecessors |
Cost |
Shortest time possible |
Crash Cost/day |
|
A |
Planning |
20 |
None |
$300 |
15 days |
$20 |
|
B |
Purchasing |
60 |
A |
$2100 |
50 days |
$15 |
|
C |
Excavation |
100 |
A |
$4000 |
75 days |
$30 |
|
D |
Sawing |
30 |
B |
$2850 |
20 days |
$4 |
|
E |
Placement |
20 |
C,D |
$500 |
|
|
|
F |
Assembly |
10 |
E |
$200 |
|
|
|
G |
Infill |
20 |
F |
$400 |
5 days |
$25 |
|
H |
Outfill |
10 |
F |
$600 |
5 days |
$10 |
|
I |
Decoration |
30 |
G,H |
$1350 |
|
|
