Business operating management

Yuzhi Zhao

OM6_Collier_Evans_Ch18.pptx

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Project Management

COLLIER/EVANS

Operations + Supply Chain Management

LEARNING OUTCOMES

Explain the key issues associated with project management

Describe how to apply the Critical Path Method (CPM)

Explain how to make time/cost trade-off decisions in projects

Describe how to calculate probabilities for project completion time using the Project Evaluation and Review Technique (PERT)

OM6 | CH18

Project

LO 18-1

Temporary and customized initiative

Consists of smaller tasks and activities that must be coordinated and completed to finish the entire initiative on time and within budget

OM6 | CH18

Project Management

LO 18-1

Activities associated with planning, scheduling, and controlling projects

Ensures that an organization’s resources are used efficiently and effectively

OM6 | CH18

Scope of Project Management, Part 1

LO 18-1

OM6 | CH18

Scope of Project Management, Part 2

LO 18-1

OM6 | CH18

Principles for Project Managers

LO 18-1

Manage people individually and as a project team

Reinforce commitment and excitement of the project team

Keep everyone informed

Build agreements and consensus among the team

Empower the project team

OM6 | CH18

Organizational Structure, Part 1

LO 18-1

Pure project structure is easier to manage

Team members are assigned exclusively to projects and report only to a project manager

Results in the duplication of resources

Limits effectiveness of projects that require a systems perspective

OM6 | CH18

Organizational Structure, Part 2

LO 18-1

Matrix structure

Lends resources to projects while maintaining functional control

Minimizes duplication of resources and facilitates communication across the organization

OM6 | CH18

Exhibit 18.2

Contributors and Impediments to Project Success

LO 18-1

EXHIBIT 18.2 Contributors and Impediments to Project Success

Contributors to Project Success	Impediments to Project Success
Well-defined and agreed-upon objectives	Ill-defined project objectives
Strong project manager leadership	Inability to develop and motivate people
Well-defined project definition	Poorly defined project definition
Accurate time and cost estimates	Lack of data accuracy and integrity
Teamwork and cooperation	Poor interpersonal relations and teamwork
Effective use of project management tools	Ineffective use of project management tools
Clear channels of communication	Poor communication among stakeholders
Adequate resources and reasonable deadlines	Unreasonable time pressures and lack of resources
Constructive response to conflict	Inability to resolve conflicts

OM6 | CH1

Project Management Decision Factors

LO 18-2

OM6 | CH18

Project Planning, Scheduling, and Controlling Steps, Part 1

LO 18-2

OM6 | CH18

Project Planning, Scheduling, and Controlling Steps, Part 2

LO 18-2

OM6 | CH18

Project Definition, Part 1

LO 18-2

Activities: Discrete tasks that consume resources and time

Immediate predecessors: Activities that must be completed immediately before an activity may start

Precedence relationships ensure that activities are performed in a proper sequence when they are scheduled

OM6 | CH18

Project Definition, Part 2

LO 18-2

Work breakdown structure: Hierarchical tree of end items that will be accomplished by a project team during a project

Project network (Activity-on-node network representation)

Consists of nodes and arcs

Nodes: Set of circles or boxes that represent activities

Arcs: Set of arrows defining the precedence relationships between activities

OM6 | CH18

Resource Planning

LO 18-2

Develops time estimates for each activity

Activity times can be estimated from historical data of similar work tasks or by judgment and experience

Allocates resources that may be required

Aids in cost control

OM6 | CH18

Project Scheduling with the Critical Path Method, Part 1

LO 18-2

Critical path: Sequence of activities that takes the longest time and defines the total project completion time

Assumptions

Project network defines a correct sequence of work in terms of technology and workflow

Activities are independent of one another, with clearly defined start and finish dates

OM6 | CH18

Project Scheduling with the Critical Path Method, Part 2

LO 18-2

Activity time estimates are accurate and stable

Once an activity is started, it continues uninterrupted until it is completed

OM6 | CH18

Project Scheduling with the Critical Path Method, Part 3

LO 18-2

Forward pass

Computation of the earliest start (ES) and earliest finish (EF) times from start to finish through the network

Rule 1 - EF = ES + T

Rule 2 - ES time for an activity equals the largest EF time of all immediate predecessors

OM6 | CH18

Project Scheduling with the Critical Path Method, Part 4

LO 18-2

Backward pass

Computation of the latest start (LS) and latest finish (LF) times beginning with the ending project activity

Rule 3 - LS = LF - T

Rule 4 - LF time for an activity is the smallest LS time of all immediate successors

OM6 | CH18

Project Scheduling with the Critical Path Method, Part 5

LO 18-2

Slack time (ST)

ST = LS − ES = LF − EF

Critical path (CP)

Longest path(s) through the project network

Activities on the critical path have zero slack time

OM6 | CH18

Exhibit 18.6

Activity-on-Node Format and Definitions

LO 18-2

OM6 | CH1

Schedule

LO 18-2

Specifies when activities are to be performed

Projects rarely progress on schedule due to uncertainty of task times, unavoidable delays, etc.

Depicted graphically using a Gantt chart

Enables project managers to monitor daily progress of projects so that corrective actions can be taken when necessary

Works well for small projects

OM6 | CH18

Time/Cost Trade-Offs, Part 1

LO 18-3

Evaluated before rescheduling a project to meet deadlines

Crashing a project: Reducing the total time to complete the project to meet a revised due date

Crash time: Shortest possible time an activity can realistically be completed

Crash cost: Total additional cost associated with completing an activity in its crash time rather than in its normal time

OM6 | CH18

Time/Cost Trade-Offs, Part 2

LO 18-3

Slope of line in a normal versus crash activity analysis

Crashing an activity

Reducing an activity’s normal time, possibly up to its crash time

OM6 | CH18

Project Evaluation and Review Technique (PERT), Part 1

LO 18-4

Developed to handle uncertainties in activity completion times

Uses the variance in critical path activities to understand the risk associated with completing a project on time

Uncertain activity times are treated as random variables with associated probability distributions

OM6 | CH18

Project Evaluation and Review Technique (PERT), Part 2

LO 18-4

Time estimates are obtained for each activity

Optimistic time (a) - Activity time under ideal conditions

Most probable time (m) - Most likely activity time under normal conditions

Pessimistic time (b) - Activity time if breakdowns or serious delays occur

OM6 | CH18

Project Evaluation and Review Technique (PERT), Part 3

LO 18-4

Assumes a beta probability distribution among other distributions

Beta probability distribution

Describes the inherent variability in time estimates

Helps identify the best case, worst case, and most likely case for activity times

Provides flexibility in characterizing the distribution of times

OM6 | CH18

Project Evaluation and Review Technique (PERT), Part 4

LO 18-4

OM6 | CH18

KEY TERMS

Project

Project management

Activities

Immediate predecessors

Work breakdown structure

Project network

Nodes

Arcs

Critical path

Schedule

Crashing a project

Crash time

Crash cost

Crashing an activity

OM6 | CH18

SUMMARY

Project management is based on defining, planning, organizing, controlling, and closing a project’s life cycle

Critical Path Method (CPM) helps schedule and control project activities

Trade-offs between faster completion times and additional costs need to be evaluated

PERT was developed as a means of handling the uncertainties in activity completion times

OM6 | CH18

4LTR Press

OM6 | CH7