MSOM online homework Scofied only

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Operations Management

Chapter 3 –

Project Management

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PowerPoint presentation to accompany

Heizer/Render

Principles of Operations Management, 6e

Operations Management, 8e

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Strategic Importance of
Project Management

Microsoft Windows Longhorn Project:

hundreds of programmers

millions of lines of code

millions of dollars cost

Ford Redesign of Mustang Project:

450 member project team

Cost $700-million

25% faster and 30% cheaper than comparable project at Ford

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Single unit

Many related activities

Difficult production planning and inventory control

General purpose equipment

High labor skills

Project Characteristics

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Examples of Projects

• Building Construction

• Research Project

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Project Organization
Works Best When

Work can be defined with a specific goal and deadline

The job is unique or somewhat unfamiliar to the existing organization

The work contains complex interrelated tasks requiring specialized skills

The project is temporary but critical to the organization

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Management of Projects

Planning - goal setting, defining the project, team organization

Scheduling - relates people, money, and supplies to specific activities and activities to each other

Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands

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Planning

Objectives

Resources

Work break-down schedule

Organization

Scheduling

Project activities

Start & end times

Network

Controlling

Monitor, compare, revise, action

Project Management Activities

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Project Planning, Scheduling, and Controlling

Figure 3.1

Before Start of project During

project Timeline project

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Project Planning, Scheduling, and Controlling

Figure 3.1

Before Start of project During

project Timeline project

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Project Planning, Scheduling, and Controlling

Figure 3.1

Before Start of project During

project Timeline project

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Project Planning, Scheduling, and Controlling

Figure 3.1

Before Start of project During

project Timeline project

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Project Planning, Scheduling, and Controlling

Figure 3.1

Before Start of project During

project Timeline project

Budgets

Delayed activities report

Slack activities report

Time/cost estimates

Budgets

Engineering diagrams

Cash flow charts

Material availability details

CPM/PERT

Gantt charts

Milestone charts

Cash flow schedules

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Establishing objectives

Defining project

Creating work breakdown structure

Determining
resources

Forming organization

Project Planning

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Often temporary structure

Uses specialists from entire company

Headed by project manager

Coordinates activities

Monitors schedule
and costs

Permanent
structure called
‘matrix organization’

Project Organization

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A Sample Project Organization

Figure 3.2

Test

Engineer

Mechanical

Engineer

Project 1

Project

Manager

Technician

Technician

Project 2

Project

Manager

Electrical

Engineer

Computer
Engineer

Marketing

Finance

Human

Resources

Design

Quality

Mgt

Production

President

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The Role of
the Project Manager

Highly visible

Responsible for making sure that:

• All necessary activities are finished in order and on time
• The project comes in within budget
• The project meets quality goals
• The people assigned to the project receive motivation, direction, and information

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The Role of
the Project Manager

Highly visible

Responsible for making sure that:

• All necessary activities are finished in order and on time
• The project comes in within budget
• The project meets quality goals
• The people assigned to the project receive motivation, direction, and information

Project managers should be:

• Good coaches
• Good communicators
• Able to organize activities from a variety of disciplines

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Ethical Issues

• Bid rigging – divulging confidential information to give some bidders an unfair advantage
• “Low balling” contractors – try to “buy” the project by bidding low and hope to renegotiate or cut corners
• Bribery – particularly on international projects
• Expense account padding
• Use of substandard materials
• Compromising health and safety standards
• Withholding needed information
• Failure to admit project failure at close

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Work Breakdown Structure

Level

• Project
• Major tasks in the project
• Subtasks in the major tasks
• Activities (or work packages)
  to be completed

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Work Breakdown Structure

Figure 3.3

Level ID
Level Number Activity

1 1.0 Develop/launch Windows Longhorn OS

2 1.1 Development of GUIs

2 1.2 Ensure compatibility with earlier
Windows versions

3 1.21 Compatibility with Windows ME

3 1.22 Compatibility with Windows XP

3 1.23 Compatibility with Windows 2000

4 1.231 Ability to import files

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Identifying precedence relationships

Sequencing activities

Determining activity times & costs

Estimating material and worker requirements

Determining critical activities

Project Scheduling

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Purposes of Project Scheduling

Shows the relationship of each activity to others and to the whole project

Identifies the precedence relationships among activities

Encourages the setting of realistic time and cost estimates for each activity

Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project

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Gantt chart

Critical Path Method (CPM)

Program Evaluation and Review Technique (PERT)

Project Management Techniques

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A Simple Gantt Chart

Time

J F M A M J J A S

Design

Prototype

Test

Revise

Production

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Service For A Delta Jet

Figure 3.4

Passengers

Baggage

Fueling

Cargo and mail

Galley servicing

Lavatory servicing

Drinking water

Cabin cleaning

Cargo and mail

Flight services

Operating crew

Baggage

Passengers

Deplaning

Baggage claim

Container offload

Pumping

Engine injection water

Container offload

Main cabin door

Aft cabin door

Aft, center, forward

Loading

First-class section

Economy section

Container/bulk loading

Galley/cabin check

Receive passengers

Aircraft check

Loading

Boarding

0 15 30 45 60

Minutes

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Project Control Reports

Detailed cost breakdowns for each task

Total program labor curves

Cost distribution tables

Functional cost and hour summaries

Raw materials and expenditure forecasts

Variance reports

Time analysis reports

Work status reports

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Network techniques

Developed in 1950’s

CPM by DuPont for chemical plants (1957)

PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)

Consider precedence relationships and interdependencies

Each uses a different estimate of activity times

PERT and CPM

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Six Steps PERT & CPM

Define the project and prepare the work breakdown structure

Develop relationships among the activities - decide which activities must precede and which must follow others

Draw the network connecting all of the activities

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Six Steps PERT & CPM

Assign time and/or cost estimates to each activity

Compute the longest time path through the network – this is called the critical path

Use the network to help plan, schedule, monitor, and control the project

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• When will the entire project be completed?
• What are the critical activities or tasks in the project?
• Which are the noncritical activities?
• What is the probability the project will be completed by a specific date?

Questions PERT & CPM
Can Answer

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• Is the project on schedule, behind schedule, or ahead of schedule?
• Is the money spent equal to, less than, or greater than the budget?
• Are there enough resources available to finish the project on time?
• If the project must be finished in a shorter time, what is the way to accomplish this at least cost?

Questions PERT & CPM
Can Answer

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A Comparison of AON and AOA Network Conventions

Activity on Activity Activity on

Node (AON) Meaning Arrow (AOA)

Figure 3.5

A comes before B, which comes before C

(a)

A

B

C

B

A

C

A and B must both be completed before C can start

(b)

A

C

C

B

A

B

B and C cannot begin until A is completed

(c)

B

A

C

A

B

C

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A Comparison of AON and AOA Network Conventions

Activity on Activity Activity on

Node (AON) Meaning Arrow (AOA)

Figure 3.5

A

B

C

D

B

A

C

D

C and D cannot begin until A and B have both been completed

(d)

C

A

B

D

Dummy activity

A

B

C

D

C cannot begin until both A and B are completed; D cannot begin until B is completed. A dummy activity is introduced in AOA

(e)

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A Comparison of AON and AOA Network Conventions

Activity on Activity Activity on

Node (AON) Meaning Arrow (AOA)

Figure 3.5

A

C

D

B

A

B

C

D

Dummy activity

B and C cannot begin until A is completed. D cannot begin until both B and C are completed. A dummy activity is again introduced in AOA.

(f)

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AON Example

Milwaukee Paper Manufacturing's
Activities and Predecessors

Table 3.1

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AON Network for Milwaukee Paper

Figure 3.6

A

Start

B

Start Activity

Activity A

(Build Internal Components)

Activity B

(Modify Roof and Floor)

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AON Network for Milwaukee Paper

Figure 3.7

C

D

A

Start

B

Activity A Precedes Activity C

Activities A and B Precede Activity D

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AON Network for Milwaukee Paper

Figure 3.8

G

E

F

H

C

A

Start

D

B

Arrows Show Precedence Relationships

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AOA Network for Milwaukee Paper

Figure 3.9

H

(Inspect/ Test)

7

Dummy Activity

6

F

(Install Controls)

E

(Build Burner)

G

(Install Pollution Device)

5

D

(Pour Concrete/ Install Frame)

4

C

(Construct Stack)

1

3

2

B

(Modify Roof/Floor)

A

(Build Internal Components)

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CPM assumes we know a fixed time estimate for each activity and there is no variability in activity times

PERT uses a probability distribution for activity times to allow for variability

Variability in Activity Times

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Three time estimates are required

Optimistic time (a) – if everything goes according to plan

Most–likely time (m) – most realistic estimate

Pessimistic time (b) – assuming very
unfavorable conditions

Variability in Activity Times

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Probability of Project Completion

PERT makes two more assumptions:

• Total project completion times follow a normal probability distribution
• Activity times are statistically independent

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Trade-Offs And Project Crashing

The project is behind schedule

The completion time has been moved forward

It is not uncommon to face the following situations:

Shortening the duration of the project is called project crashing

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Factors to Consider When Crashing A Project

The amount by which an activity is crashed is, in fact, permissible

Taken together, the shortened activity durations will enable us to finish the project by the due date

The total cost of crashing is as small as possible

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Advantages of PERT/CPM

Especially useful when scheduling and controlling large projects

Straightforward concept and not mathematically complex

Graphical networks help to perceive relationships among project activities

Critical path and slack time analyses help pinpoint activities that need to be closely watched

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Advantages of PERT/CPM

Project documentation and graphics point out who is responsible for various activities

Applicable to a wide variety of projects

Useful in monitoring not only schedules but costs as well

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Project activities have to be clearly defined, independent, and stable in their relationships

Precedence relationships must be specified and networked together

Time estimates tend to be subjective and are subject to fudging by managers

There is an inherent danger of too much emphasis being placed on the longest, or critical, path

Limitations of PERT/CPM

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Using Microsoft Project

Program 3.1

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Using Microsoft Project

Program 3.2

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Using Microsoft Project

Program 3.3

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Using Microsoft Project

Program 3.4

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Using Microsoft Project

Program 3.5

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Using Microsoft Project

Program 3.6

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Using Microsoft Project

Program 3.7