OPERATION & QUALITY MANAGEMENT 2
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mbaln_670_t05.pdf
MBALN-670 Operations Management
Title of the topic 5 Project Management Tools and Techniques
Topic’s learning objectives
1. Identify and critique the strategic frameworks of operations and quality
management within a global business environment. 2. Comprehensive knowledge of the main concept and methods related to
designing and managing operations and supply chains. 3. Systematic application of a range of fundamental operational improvement
concepts. 4. Critically evaluate the role of operations within different business models /
functions.
Introduction
Were any of you lucky enough to attend the Olympic Games London 2012?
How was your experience? Fun, safe, affordable? Have you considered what the
project plan might have looked like?
The whole project cost around £6bn and took 5 years.
One large-scale project to manage is the Olympic Games—a project that
necessitates an exceptional amount of advance research and planning. The logistics
and infrastructures of the city that hosts the Olympic Games and the Organizing
Committee for the Games both have to oversee hundreds of smaller projects that
culminate to ensure a successful run of the Olympics. From tasks such as shipping
and receiving the tremendous amount of freight (for example, broadcast equipment)
to facilitating the stay of the athletes, project managers must pay close attention to
details. Of course, with such a large-scale event comes a myriad of problems, such
as enough timely transportation, leadership changes, and security concerns. Only
with extensive preparation can such a large-scale event be successful
This table gives you an idea of the time scale.
More information is available:
http://www.london2012.com/spectators/venues/building-london-2012/
Project management techniques are useful when a project consists of several
activities, some simultaneous and others sequential. A project is a unique, one-time
set of activities that is intended to achieve an objective in a given time period. The
project is of some length (weeks, months, or even years) and uses resources
(human, capital, materials, and equipment).
In the business world, projects can be designing new products, installing new
systems, constructing new facilities, designing an advertising campaign, designing
information systems, and developing company Web sites. In politics, a project can
be designing a political campaign. Projects consist of several tasks and take place in
a given time period. Every project has a life cycle.
This week you will study some of the tools and techniques available to manage
projects of any size.
Learning Material
Before you embark on this week’s topic, please spend 30 minutes to study the
following 2 areas:
Gantt charts
Time Standards
Gantt Charts
A Gantt chart is a type of bar chart, developed by Henry Gantt, that illustrates a
project schedule. Gantt charts illustrate the start and finish dates of the terminal
elements and summary elements of a project. Terminal elements and summary
elements comprise the work breakdown structure of the project. Some Gantt charts
also show the dependency (i.e., precedence network) relationships between
activities. Gantt charts can be used to show current schedule status using percent-
complete shadings and a vertical "TODAY" line as shown here. Source: http://en.wikipedia.org/wiki/Gantt_charthttp://www.netmba.com/operations/project/gantt/
A simple explanation can be found on the following link. Also Gantt charts are
covered in the eBook under chapter
Gantt charts can be constructed with Microsoft Excel, but for larger and more
complex planning Microsoft Project is used.
Video 7 How to create a Gantt Chart In Microsoft Project
http://www.youtube.com/watch?v=inCkcgRCFGM
Video 8 How to create a Gantt Chart in Excel 2010
http://www.youtube.com/watch?v=sA67g6zaKOE
Time Schedules
The following information is taken from your eBook Chapter 11
Setting Standard Times
Among the commonly used processes for setting standard times are the time study,
elemental time data, predetermined time data, and work sampling. The time study
dates back to Frederick Winslow Taylor in the late nineteenth century.
How to Do a Time Study
The time study sets a standard time based on timed observations of one employee
taken over a number of cycles. A cycle includes all the elements of the job. This
standard time is applied to all workers doing the job. Table 11-2 shows the steps in a
time study.
Table 11-2 Procedure for a Time Study
Now let's look at these steps in detail.
Step 1. As an individual, you set standards for yourself based on the tasks that
are typical of your workday. The same is true for your company: you base
standard times on the routine, labour-intensive jobs rather than one-of-a-kind
jobs. Use this criterion for choosing your time-study job in Step 1.
Step 1. Choose the job for the time study.
Step 2 Tell the worker whose job you will be studying
Step 3. Break the job into easily recognizable units
Step 4. Calculate the number of cycles you must observe.
Step 5. Time each element, record the times, and rate the worker's
performance.
Step 6. Compute normal time. NT = (MOT) (PRF) (F)
Step 7. Compute the standard tune. ST = (NT) (AF)
Step 2. It is also important to inform the employee in advance that you will be
making a time study of the job. Be sensitive to how the employee will feel as you
time performance.
Step 3. To break a job down into easily recognizable elements, think about
making a hand-tossed pizza:
1. Find the right-sized ball of dough (this depends on the pizza size).
2. Flatten out the dough.
3. Spin and toss the dough until it is the size you want.
4. Put the pizza on the working area.
5. Add sauce.
6. Add cheese.
7. Add additional toppings.
8. Put the pizza in the oven and bake.
Each of these elements has a clear starting and ending point, and you cannot
break it down any further.
Step 4. When making a time study, you need to know how many cycles, or how
many times, you must observe the worker to ensure the results you want. The
number of cycles is a function of the variability of observed times, the desired
level of accuracy or precision, and the desired level of confidence for the
estimated standard times. We often express the desired accuracy level as a
percentage of the mean observed times. For example, we might want an
accuracy level so that the standard time is within 10 percent of the true mean of
the time it takes to do the job.
The formula for determining the number of observations needed is
Continue reading from Chapter 11 to obtain the full calculations and method.
Project Life Cycle
Projects vary in terms of objectives, but each project has a common life cycle or
sequence of activities. The life cycle begins with an initial concept, followed by a
feasibility study, the planning of the project, the execution of the plan, and finally the
termination of the project. Let's look at each phase of a project life cycle.
Conception
The concept might be the company's decision to launch a new product, implement a
new information system, or become involved in e-commerce. In politics, the concept
might be a candidate's decision to run for office.
Feasibility Analysis or Study
Evaluate expected costs, benefits, and risks of the project. For the company
launching a new product, a feasibility study means examining the potential market,
the market share, and profits for the new product compared to the costs. In politics, a
feasibility study is a candidate's assessment of the resources needed to run a
successful political campaign and the benefits of elected office.
Planning
Analyze the work to be done and develop time estimates for completing each of the
activities. For example, the company must design the new product; source and order
the materials, equipment, and tools; choose the process to use; design the layout;
write the job instructions; do a pilot run; evaluate the process and the product design;
and transition the product to manufacturing. In politics, planning might include
deciding how to raise funds, schedule personal appearances and debates, handle
public relations, and adopt policy positions.
Execution
Carry out the activities that make up the project. In business, the execution of the
project entails completing the product design, obtaining the materials and equipment
needed, setting up the process, writing job instructions, and making the product. For
a political candidate, execution includes fund-raising, making public appearances,
and showcasing the political message.
Termination
End the project. After this date, resources can be used for different activities. In
business, termination means product design engineers work on new products,
purchasing agents can return to routine activities or a new project, and
manufacturing engineers work on new projects. For a political candidate, termination
means serving in an elected office or looking for a new job. See the below table for a
summary of these project life-cycle phases.
Concept Identify the need for the project.
Feasibility analysis or
study
Evaluate costs, benefits and risks.
Planning Decide who does what, how long it should take, and
what you need to do it.
Network Planning Techniques
Program evaluation and review technique (PERT) and critical path method (CPM)
date back to the 1950s. PERT was originally developed to plan and monitor the
Polaris missile, an extremely large project using over 3000 contractors and involving
thousands of activities. PERT is credited with reducing the project duration by two
years. Because of its success, most government contracts still require the use of
PERT or a similar technique. CPM was initially developed to plan and coordinate
maintenance projects in chemical plants.
The benefits of network planning techniques include the following:
• Graphical display of the project, including the relationships and sequence of
activities.
• Estimate of the expected project length.
• Method for determining which activities are critical to the timely completion of
the project and are therefore included in the critical path.
• Method for determining the amount of slack associated with individual project
activities.
Estimating The Probability Of Completion Dates
An advantage of using probabilistic time estimates is the ability to predict the
probability of project completion dates. We learned how to calculate the expected
time for each activity with the three time estimates provided. Now we need to
calculate the variance for each activity. The variance of the beta probability
distribution for each activity is
When you know the expected completion time of each path and its variance, you can
determine the probability of specific completion dates. For example, you may want to
know the probability of completing the project in 48 weeks. We can use the following
formula to determine the probability of finishing each of the paths at a specified date:
Execution
Termination
Do the project.
End the Project.
or
For a particular path through the project, the z value shows the path's number of
standard deviations that the specified time is past the expected path completion
time. A negative z value shows that the specified time is earlier than the expected
path completion time. After calculating the z value, you can look it up in Appendix B
to determine the probability of finishing the path by the specified time. Note that the
probability of finishing the path by the specified time equals the area under the
normal curve to the left of z, as shown in Figure 16-12.
Reducing Project Completion Time
You may need to reduce the time you spend finishing a particular project because of
deadlines, promised completion dates, penalty clauses for late completion, or the
need to put resources on a new project. When you plan a project, you make time
estimates based on normal procedures and resources. However, you may be able to
speed up a project by making additional resources available. For example, your
company could have materials shipped via premium rather than normal
transportation to get the materials faster and the activity finished sooner. You could
authorize overtime to speed up an activity. Another possibility, as is done in highway
construction, is to bring in lights so workers can work through the night and minimize
traffic disruptions. Whatever the method, you can often reduce the time needed to
finish an activity.
Crashing Projects
At the same time that you shorten a project's duration, you also need to minimize the
additional expense. We call shortening a project crashing the project. To crash the
project and minimize expense, you need additional information about your project
activities.
Project management techniques provide a structure for the project manager to track the progress of different activities required to complete the project. Particular concern is given to critical path (the longest connected path through the project network) activities. Any delay to a critical path activity affects the project completion time. These techniques indicate the expected completion time and cost of a project. The project manager reviews this information to ensure that adequate resources exist and that the expected completion time is reasonable. If the expected completion date has a high probability of exceeding a contractual due date and incurring penalty costs, the project manager evaluates different methods for crashing the project (reducing project completion time). This evaluation is used to economically justify the application of more resources or to acknowledge a high probability of facing penalty costs. The project manager also looks at the resource load profile in an attempt to level resource requirements for the project.
After resolving the issue of resources, the project manager tracks the progress of the project. Once the earliest and latest start and finish times are determined, the
The Critical Chain Approach
The critical chain approach is to get projects done faster and more consistently at or before the
project due date. The focus is on the final due date rather than on individual activities or project
milestones. The idea of the critical chain is that project activities are uncertain. Because of this
uncertainty, we add safety time to project time estimates. In some cases, the safety time added
exceeds 200 percent of the work time estimate.
The critical chain, focuses on keeping the bottleneck busy, we can put time buffers before
bottlenecks in the critical path. The feeding buffer protects the critical path from delays in
noncritical paths. When the delay exceeds the feeding buffer, the project completion date is still
protected by the project buffer. (For more information, see Critical Chain by Eliyahu M. Goldratt.)
http://www.goldratt.co.uk/resources/critical_chain/index.html
Video 9 http://www.youtube.com/watch?v=BRMDCRPGYBE
Project Management within OM: How it all Fits Together
production and material planners order materials and schedule required operations. The project manager interacts with the people responsible for different project activities and informs them of any proposed project schedule changes.
Project Management OM Across The Organization
Since projects tend to be long term and consume a company's resources, functional areas through the company work with expected completion dates, resource requirements, and the consequences of activity delays. Let's look at how the functional areas use project management information.
Accounting uses project management information to provide a time line for major expenditures associated with the project. Accounting measures actual cost performance against planned costs to calculate profits. Accounting also calculates the cost benefit of crashing a particular project.
Marketing uses project management information to monitor the progress of a project and to provide honest and realistic updates to the customer. The project schedule allows marketing to evaluate whether or not to crash a project.
Information systems develop and maintain the software that supports project management. Choosing, installing, and training users in the appropriate software is vital to successful project management.
Purchasing uses project management information to deal with project delays by de- expediting items and rescheduling these items for later delivery. This allows the company to keep a lower inventory investment. Purchasing can also suggest when to avoid late deliveries to keep the project on schedule and how to reduce delivery time to help put a project back on schedule.
Operations uses project management information to monitor the progress of activities on and off the critical path and to manage resource requirements in terms of the quantity and time needed for operations. Within an organization, the project manager or an assistant may develop the project schedule, typically using software for projects with many activities. Project managers can be product managers, manufacturing engineers, operations analysts, or office managers. Project management is a function not only of manufacturing companies but of service organizations too. Suppose you are planning the worldwide tour of a major art exhibit. Project scheduling techniques will help you effectively manage the many activities in this and other similar projects for your organization.
The Supply Chain Link
Project management provides a structure to track the progress of a project. Any delays in an activity on the critical path delay the completion date for the entire project. Projects, such as introducing new products, can be undertaken by a supply chain. Communication among members of the chain to ensure a timely completion of the project is critical. Given that members of the supply chain share information, as well as a common database, all members should have real-time access to the project's progress. Any delays should be communicated throughout the chain. The project management approach indicates the timing and the quantity of resources needed. For manufacturing, this input is needed
by the master production scheduler and is used to develop a valid MPS. Subsequently, this is input into the MRP system to develop the planned orders necessary to support the project. Project tracking allows supply chain members to make changes as needed without surprising other members of the chain, thus increasing the chances of completing the project on schedule.
For service projects, the input is used by the project manager to develop the project structure. The project manager ensures that members are aware of progress in the service project and the impact of any delays.
Think Theory 5
Activity Activity Time (weeks) Immediate predecessor(s)
A 3 none
B 4 A
C 2 B
D 5 B
E 4 C
F 3 D
G 2 E, F
1. Construct a network diagram using AON notation 2. Using the network diagram constructed
(a) Calculate the completion time for the project.
(b) Determine which activities are included on the
critical path.
Summary A project is a unique, one-time event of some duration (weeks, months, or even
years) that consumes resources (human, capital, materials, and equipment capacity)
and is designed to achieve an objective in a given time period. In business, projects
can be designing new products, installing new systems, constructing new facilities,
mounting advertising campaigns, designing information systems, and developing
company Web pages. In politics, a project can be designing a political campaign.
Each project goes through a five-phase life cycle: concept, feasibility study, planning,
execution, and termination. In the concept phase, we identify the need for the
project. With the feasibility study, we evaluate expected costs, benefits, and risks.
Planning consists of calculating the work and the time to do it; execution is doing the
work; and termination is finishing the project.
Two network planning techniques are PERT and CPM. PERT uses probabilistic time
estimates. CPM uses deterministic time estimates.
PERT and CPM determine the critical path of the project and the estimated
completion time. On smaller projects, we determine completion time by evaluating
each connected path through the network. On larger projects, software programs are
available to identify the critical path.
PERT uses probabilistic time estimates to determine the probability that a project will
be done by a specified time. We calculate a z value and then determine the
probability that the critical path and other near-critical paths will be completed by a
given date.
To reduce the length of a project, we need to know the critical path and the cost of
reducing individual activity times. Crashing activities that are not on the critical path
typically does not reduce project completion time.
The critical chain approach removes excess safety time from individual activities and
creates a project buffer at the end of the critical path. Feeder buffers are used on
noncritical paths merged with the critical path.
Practical Questions The “problems” within chapter 16 are good practice. The answers are given for most
of them; I have the rest, let me know if you need any in particular. Spend 20 minutes
to go through all these problems.
Discussion Question There will be no discussion question this week. Spend your time working on the
assignment and the practical problems.
Article to read This web site had some interesting blogs. Check out this blog “How to Avoid Project
Burnout”, less than 5 minutes reading.
http://www.projectsmart.co.uk/how-to-avoid-project-burnout.html
E Reading References
1. http://www.netmba.com/operations/project/gantt/ - Gantt Charts
2. Reid R., Operations Management, 4 th
Edition, 2011, Wiley Publishers
Think Theory Ideas - Solutions 1.
2.
a. Project completion time = 17 weeks
b. Critical activities: A, B, D, F, G
