1 EO EMBA-2, BUP M. ASAD Operations Management for Competitive Advantages

Major Asad EO EMBA-2, BUP M. ASAD Chapter 3 (A+B) Project Management

3 EO EMBA-2, BUP M. ASAD Project Management What is a Project? a coherent set of actions aiming to well defined results in a restricted period of time A project is characterized as: unique and one-time operation designed to accomplish a series of related jobs activities are accomplished in a order requiring a significant period of time to perform usually directed toward some major output finally, has a beginning and ending time point

4 EO EMBA-2, BUP M. ASAD Project Management What is Project Management ? are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project. Project manager is responsible for : The work activities - accomplishing in desired sequence to meet performance goal. Directing and motivating human resources Communications Quality Time Cost

5 EO EMBA-2, BUP M. ASAD Project Life Cycle and Structure Project Life Cycle: Organizational Structure of the Project Pure project Functional project Matrix project Conception Planning Execution Termination

6 EO EMBA-2, BUP M. ASAD Pure Project A pure project is where a self-contained team works full-time on the project Advantages Project manager has full authority over the project Team members report to one boss Shortened communication lines Team pride, motivation, commitment are high Disadvantages Organizational goals and policies are ignored Lack of technology transfer Team members have no functional area "home" Duplication of resources

7 EO EMBA-2, BUP M. ASAD Functional Project Advantages A team member can work on several projects Technical expertise is maintained within the functional area Functional area is a home after project completes Critical mass of specialized knowledge Disadvantages Motivation of team members is often weak Needs of other part are responded to slowly Decision for aspects of the project that are not directly related to the functional area suffers This project is housed within a functional division

8 EO EMBA-2, BUP M. ASAD Matrix Project Advantages Better communications between functional areas Pinpointed responsibility for project manager Duplication of resources is minimized Functional home for team members Policies of the parent organization are followed Disadvantages Too many bosses Depends on project managers negotiating skills Potential for sub-optimization This project attempts to blend properties of both functional and pure projects

9 EO EMBA-2, BUP M. ASAD Build-Own-Operate-Transfer (BOOT) Project A BOOT funding model involves a single organization, (BOOT provider) designing, building, funding, owning and operating the scheme for a defined period of time and then transferring this ownership across to an agreed party. Customers enter into long term supply contracts with the BOOT operator and are charged accordingly for the service delivered. The service charge includes capital and operating cost recovery and project profit.

10 EO EMBA-2, BUP M. ASAD Turn-key Project A turn-key project is a type of project that is constructed by a developer and sold or turned over to a buyer in a ready-to-use condition. Turn-key refers to something that is ready for immediate use, generally used in the sale or supply of goods or services. The term is common in the construction industry, for instance, in which it refers to the bundling of materials and labor by sub-contractors. Everything is done by General Contractor and client have to pay only payment. Client is not affected by market rise. Owner put minimum efforts for his project so he has less stress.

11 EO EMBA-2, BUP M. ASAD SOW, WBS, Milestones SOW (Statement of Work)- form of a formal written description of objectives, brief statement of the work, works to be done, project time frame and etc Work Breakdown Structure - is a method for project planning. In a WBS, a project is broken down into major components- Task / Modules subcomponents (Sub Task) Finally – Individual task / Activities Project Milestone – Completion of any event in activities. i.e. completion of design, completion of production of a prototype, completion of testing of prototype, Approval of pilot run

12 EO EMBA-2, BUP M. ASAD Project Control Charts

13 EO EMBA-2, BUP M. ASAD Network-Planning Models A project is made up of a sequence of activities that form a network representing a project. Two best known network models are: CPM PERT By using PERT or CPM, managers are able to obtain: A graphical display of project activities An estimate of how long the project will take. An indication of which activities are the most critical to timely project completion. An indication of how long any activity can be delayed without delaying the project.

14 EO EMBA-2, BUP M. ASAD Salient Features of CPM and PERT ItemCPMPERT Time estimation Used Single, Multiple Multiple Activity time estimation Fairly certain, Uncertain Uncertain / Probabilistic Activities represented as Arrowed lines or Nodes Network construction approach Activity on Arrow (AOA) or Activity on Node (AON) Use of Dummy activity YesNo

15 EO EMBA-2, BUP M. ASAD Network-Planning Models Early Start Early Finish Backward pass Late Start Late Finish Path Critical path Critical activities Dummy activity Forward pass Slack – is the amount of time an activity can be delayed without delaying the project. Slack = LS-ES or LF-EF

16 EO EMBA-2, BUP M. ASAD Preparing/Scheduling Project Network Single Time Estimate (using CPM) Used when activity times are known with certainty Used to determine timing estimates for the project, each activity in the project, and slack time Three Activity Time Estimates (using CPM / PERT ) Used when activity times are uncertain Used to obtain probability information Time-Cost Models (using CPM / PERT ) Used when cost trade-off information is a major consideration in planning To determine least cost in reducing total project time

17 EO EMBA-2, BUP M. ASAD Steps in the CPM with Single Time Estimate 1. Activity Identification 2. Activity Sequencing and Network Construction 3. Determine the critical path 4. Determine ES /EF and LS / LF to determine Slack Time

18 EO EMBA-2, BUP M. ASAD CPM with Single Time Estimate Step-1: Activity identification Consider the following internship project: ActivityDesignationImmed. Pred.Time (Weeks) Submit proposal to org supervisorANone2 Submit proposal to faculty supervisorBA1 Obtain approvalCB1 Submit org part completedDC2 Carry out survey & write research partEC5 Submit draft paperFD, E 5 Submit final internship paper GF1 Draw and find its critical path, total duration and activities having slack time

19 EO EMBA-2, BUP M. ASAD Critical Path & Slack LS=4 LF=9 Duration = 15 weeks ES=9 EF=14 ES=14 EF=15 ES=0 EF=2 ES=2 EF=3 ES=3 EF=4 ES=4 EF=9 ES=4 EF=6 A(2)B(1)C(1) D(2) E(5) F(5) G(1) LS=14 LF=15 LS=9 LF=14 LS=7 LF=9 LS=3 LF=4 LS=2 LF=3 LS=0 LF=2 Slack=(7-4)=(9-6)= 3 Wks

20 EO EMBA-2, BUP M. ASAD Three Activity Time Estimates When single estimate of time is not reliable. Activity times are unknown and subject to variation. This approach involves weighted average method of three time estimates: a=Optimistic time : min reasonable time to complete the activity. (error 1%) b=Pessimistic time : max reasonable time to complete the activity. (error 1%) m=Most likely time : The best guessed time to complete the activity. (mode of beta distribution )

21 EO EMBA-2, BUP M. ASAD Three Time Estimates 1. Activity Identification 2. Activity Sequencing 3. Calculation of Expected time from 3 time estimates 4. Network Construction and determining Critical Path 5. Determine activity variance 6. Determine probability of completing on a given date

22 EO EMBA-2, BUP M. ASAD Step 1 and 2 : Activity identification, Sequencing

23 EO EMBA-2, BUP M. ASAD Step 6 : Probability Exercise What is the probability of finishing this project in less than 53 days? p(t < D) T E = 54 t D=53