Project Planning & Scheduling Chapter 14 INTRODUCTION to Operation Management 4e, Schroeder McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc., All Rights Reserved.

Chapter 14 Outline What is a “project”? Objectives and tradeoffs Planning and Control in Projects Scheduling Methods Constant-Time Networks PERT Method CPM Method Use of Project Management Concepts

What is a “Project”? Unique item - often a single unit. Often located on one place. The unit does not move during production. Resources are brought to the project. May be of any size, although we focus on large projects.

Examples of Projects A wedding A divorce Building construction Bridge construction Build aircraft carrier R&D project Audit New product introduction Open or close a facility Make a movie Fund raising campaign Ad campaign Software installation

Objectives and Tradeoffs Stay within the budget Meet the Deadline--schedule Due Date! Meet the specifications

Project Management Stages Planning Scheduling Execution Control

Planning Activities & Decisions Identify the project customer Establish the end product or service Set project objectives Estimate total resources and time required Decide on the form of project organization Make key personnel appointments Define major tasks required Establish a budget

Scheduling Activities & Decisions Develop a detailed work-breakdown structure Estimated time required for each task Sequence tasks in proper order Develop a start/stop time for each task Develop detailed budget for each task Assign people to tasks

Execution & Control Monitor actual time, cost, and performance Compare planned to actual figures Determine whether corrective action is needed Evaluate alternative corrective actions Take appropriate corrective actions

Execution and Control What are ‘corrective actions?’ When one or more activities threaten the time, cost, or performance of the project, a corrective action is necessary: Redefine the activity (e.g. split the activity). Add resources to the activity. Shift resources from one activity to another Resources = people, equipment, money

Scheduling Methods Gantt Charts Network Methods Shown as a bar charts Do not show precedence relations Visual & easy to understand Network Methods Shown as a graphs or networks Show precedence relations More complex, difficult to understand and costly than Gantt charts

Gantt Chart Project Example (Figure 14.1) Week No. 1 2 3 4 5 6 7 8 Lease the site Hire the workers Arrange for the Furnishings Install the furnishings Arrange for the phones Install the phones Move into the Office

Constant-Time Networks Activity times are assumed to be constant Activities are represented by nodes in the network Arrows show the precedence relationships Notations used in calculating start and finish times: ES(a) = Early Start of activity a EF(a) = Early Finish of activity a LS(a) = Late Start of activity a LF(a) = Late Finish of activity a

‘Write a Business Report’ Table 14.3 Immediate Duration Activity Description Predecessors Days A Decide on Topic None 1 B Collect Data 2 C Search the Internet 3 D Write the Report B and C 5

Network Diagram for ‘Write a Business Plan’ (Figure 14.2) C

Forward Pass for ‘Write a Business Plan’ (Figure 14.3) 1 3 B 0 1 4 9 A D ES EF 1 4 C

Calculating ES, EF, LS, LF, and Completion Time Forward Pass: ES (a) = 0 for the starting activity EF (a) = ES (a) + t (a)* ES (a) = max [EF (all predecessors of a)] Project completion time = max [EF(all ending activities)] Backward pass: LF (a) = min [LS (all successors of a)] LS (a) = LF - t(a)* * t (a) denotes the duration of activity a

Backward Pass for ‘Write a Business Plan’ (Figure 14.4) 1 3 B 0 1 4 9 2 4 A D 0 1 4 9 ES EF 1 4 C LS LF 1 4

Critical Path Critical Path = longest path in the network All activities for which ES=LS and EF=LF Length of critical path is equal to the project completion time If there is any delay on the critical path, the project will be delayed (unless one takes ‘corrective actions’) Critical path in example is A-C-D

Slack Times Slack time equals amount of time a path may be delayed without delaying the project Paths not on the critical path have slack Slack = LS-ES or LF-EF

Precedence and times for Opening a New Office (Table 14.4) Immediate Activity Computed Description Predecessors Time Slack 1 Lease the site None 2 Hire the workers 5 3 Arrange for the Furnishings 4 Install the furnishings Arrange for the phones 6 Install the phones 4,5 7 Move into the Office 2,6,4

Network for ‘Open a New Office’ (Figure 14.5) 1 6 2 1 6 6 8 0 1 1 2 4 5 7 1 5 6 6 8 0 1 4 5 5 6 1 2 2 4 ES EF 3 4 LS LF 2 3 3 5

PERT Program Evaluation Review Technique Used under conditions of uncertainty in activity times Requires three time estimates for each activity Optimistic Most likely Pessimistic Times distributed according to beta distribution

PERT Activity Times Estimate three times for each activity Compute mean completion time for each activity:

PERT Activity Times Compute the variance for each activity: Assumes pessimistic and optimistic times cover six standard deviations

PERT Activity Times If T = total completion time of the project, then and

CPM Critical Path Method Used under conditions of certainty in activity times Requires one time estimate for each activity Looks at time/cost trade-offs Normal activity time Normal cost Crash time Crash cost

Time-Cost Relationship in CPM Crash Cost Cost Normal Cost Crash Time Normal Time Time

Use of Project Management Concepts Scheduling is only part of a complete approach to project management Trade-off between sophistication and cost of methods Choice between constant time, PERT, CPM or more advanced techniques Choice of project management software packages, e.g. Microsoft Project

Summary What is a “project”? Objectives and tradeoffs Planning and Control in Projects Scheduling Methods Constant-Time Networks PERT Method CPM Method Use of Project Management Concepts

End of Chapter Fourteen