1 Project Management Inventory Management – In-class Example  Number 2 pencils at the campus book-store are sold at a fairly steady rate of 60 per week. It cost the bookstore $12 to initiate an order to its supplier and holding costs are $0.005 per pencil per year.  Determine  The optimal number of pencils for the bookstore to purchase to minimize total annual inventory cost,  Number of orders per year,  The length of each order cycle,  Annual holding cost,  Annual ordering cost, and  Total annual inventory cost.  If the order lead time is 4 months, determine the reorder point.  Illustrate the inventory profile graphically.

2 Project Management Lecture 5 Project Management Chapter 17

3 Project Management  How is it different?  Limited time frame  Narrow focus, specific objectives  Less bureaucratic  Why is it used?  Special needs  Pressures for new or improves products or services

4 Project Management  What are the Key Metrics  Time  Cost  Performance objectives  What are the Key Success Factors?  Top-down commitment  Having a capable project manager  Having time to plan  Careful tracking and control  Good communications

5 Project Management  What are the Major Administrative Issues?  Executive responsibilities  Project selection  Project manager selection  Organizational structure  Organizational alternatives  Manage within functional unit  Assign a coordinator  Use a matrix organization with a project leader

6 Project Management  What are the tools?  Work breakdown structure  Network diagram  Gantt charts  Risk management

7 Project Management Planning and Scheduling MARAPRMAYJUNJULAUGSEPOCTNOVDEC Locate new facilities Interview staff Hire and train staff Select and order furniture Remodel and install phones Move in/startup Gantt Chart

8 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

9 Project Management Project Manager Responsible for: WorkQuality Human ResourcesTime CommunicationsCosts

10 Project Management  Temptation to understate costs  Withhold information  Misleading status reports  Falsifying records  Compromising workers’ safety  Approving substandard work Ethical Issues

11 Project Management Project Life Cycle Concept Feasibility Planning Execution Termination Management

12 Project Management Work Breakdown Structure

13 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

14 Project Management The Network Diagram  Network (precedence) diagram  Activity-on-arrow (AOA)  Activity-on-node (AON)  Activities  consume resources and/or time  Events  points in time

15 Project Management Project Network – Activity on Arrow Locate facilities Order furniture Furniture setup Interview Hire and train Remodel Move in Figure 17.4 AOA

16 Project Management Project Network – Activity on Node Locate facilities Order furniture Furniture setup Interview Remodel Move in 4 Hire and train 7S Figure 17.4 AON

17 Project Management The Network Diagram (cont’d)  Path  Sequence of activities that leads from the starting node to the finishing node  AOA path:  AON path: S  Critical path  The longest path; determines expected project duration  Critical activities  Activities on the critical path  Slack  Allowable slippage for path; the difference the length of path and the length of critical path

18 Project Management Network Conventions a b ca b c a b c d a b c Dummy activity

19 Project Management Time Estimates  Deterministic  Time estimates that are fairly certain  Probabilistic  Estimates of times that allow for variation

20 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 Deterministic time estimates Figure 17.5

21 Project Management Example 1 Solution Critical Path

22 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

23 Project Management Advantages of PERT  Forces managers to organize  Provides graphic display of activities  Identifies  Critical activities  Slack activities

24 Project Management Limitations of PERT  Important activities may be omitted  Precedence relationships may not be correct  Estimates may include a fudge factor  May focus solely on critical path weeks