18-1 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management PROJECT MANAGEMENT PART SIX Chapter Eighteen Project Management

18-2 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Chapter 18 Project Management

18-3 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame. Build A A Done Build B B Done Build C C Done Build D Ship JANFEBMARAPRMAYJUN On time! Projects

18-4 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Deciding which projects to implement Selecting a project manager Selecting a project team Planning and designing the project Managing and controlling project resources Deciding if and when a project should be terminated Key Decisions

18-5 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Project Manager Responsible for: WorkQuality Human ResourcesTime CommunicationsCosts

18-6 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Temptation to understate costs Withhold information Misleading status reports Falsifying records Comprising workers’ safety Approving substandard work Ethical Issues

18-7 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Project Life Cycle Concept Feasibility Planning Execution Termination Management

18-8 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Risk: occurrence of events that have undesirable consequences –Delays –Increased costs –Inability to meet specifications –Project termination Project Risk

18-9 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Identify potential risks Analyze and assess risks Work to minimize occurrence of risk Establish contingency plans Risk Management

18-10 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Work Breakdown Structure Project X Level 1 Level 2 Level 3 Level 4 Figure 18-3

18-11 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management MARAPRMAYJUNJULAUGSEPOCTNOVDEC Locate new facilities Interview staff Hire and train staff Select and order furniture Remodel and install phones Move in/startup Planning and Scheduling Gantt Chart

18-12 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management PERT and CPM PERT: Program Evaluation and Review Technique CPM: Critical Path Method Graphically displays project activities Estimates how long the project will take Indicates most critical activities Show where delays will not affect project

18-13 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Project Network – Activity on Arrow Locate facilities Order furniture Furniture setup Interview Hire and train Remodel Move in

18-14 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Project Network – Activity on Node Locate facilities Order furniture Furniture setup Interview Remodel Move in 4 Hire and train 7S

18-15 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Network Conventions a b ca b c a b c d a b c Dummy activity

18-16 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Example weeks 6 weeks 3 weeks 4 weeks 9 weeks 11 weeks 1 week Locate facilities Order furniture Furniture setup Interview Hire and train Remodel Move in

18-17 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Example 1 Solution Critical Path

18-18 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Network activities –ES: early start –EF: early finish –LS: late start –LF: late finish Used to determine –Expected project duration –Slack time –Critical path Computing Algorithm

18-19 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Probabilistic Estimates Activity start Optimistic time Most likely time (mode) Pessimistic time opmtete Figure 18-8

18-20 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Example a d e f b h g i c Optimistic time Most likely time Pessimistic time

18-21 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management 17 Weeks a-b-c d-e-f g-h-i Example 6

18-22 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Computer aided design (CAD) Groupware (Lotus Notes) Project management software –CA Super Project –Harvard Total Manager –MS Project –Sure Track Project Manager –Time Line Technology

18-23 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Imposes a methodology Provides logical planning structure Enhances team communication Flag constraint violations Automatic report formats Multiple levels of reports Enables what-if scenarios Generates various chart types Advantages of PM Software

18-24 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Time-Cost Trade-Offs: Crashing Total cost Shorten Cumulative cost of crashing Expected indirect costs Optimum CRASH Figure 18-11

18-25 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management 6a6a 4d4d 5c5c 10 b 9e9e 2f2f Example 7

18-26 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Advantages of PERT Forces managers to organize Provides graphic display of activities Identifies –Critical activities –Slack activities

18-27 McGraw-Hill/Irwin Operations Management, Seventh Edition, by William J. Stevenson Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. Project Management Limitations of PERT Important activities may be omitted Precedence relationships may not be correct Estimates may include a fudge factor weeks