OPERATIONS MANAGEMENT for MBAs Second Edition Meredith and Shafer Prepared by Scott M. Shafer Wake Forest University John Wiley and Sons, Inc.
Chapter 12: Project Management
Chapter 12: Project Management Introduction Chapter 12: Project Management
Previous Examples of Projects Transporting Olympic Flame (Chapter 1) Product Development Projects in Chapter 4 (Thermos’s electric grill) Mercedes-Benz facility location (Chapter 6) Chapter 12: Project Management
Viper Development Project Project team given 3 years to go from concept to roadster. Needed to develop new 8.0-litter V-10 aluminum engine and new high performance six-speed transmission. Comparable projects usually require five years at Chrysler. Chapter 12: Project Management
Viper Development Project continued Project team members hand-picked. Artemis Prestige selected to help manage project ability to track several projects concurrently interactive use provide broad picture of entire project help identify the impact of each activity on the ultimate completion of the project Chapter 12: Project Management
Viper Development Project: An Overwhelming Success First test engine required less than a year to develop. Transmission developed in 1.5 years compared to the usual 5 to 6 years. Many important innovations in the frame, body, and brakes were incorporated . Chapter 12: Project Management
Zeneca Pharmaceuticals Mission is the development of new drugs for the medical community. The development of a new drug is a complex project with typical durations of 10 years. Chapter 12: Project Management
Zeneca Pharmaceuticals: Major Steps in Drug Development Preclinical Testing Investigational New Drug Human Clinical Testing three separate phases New Drug Application Approval Chapter 12: Project Management
Differences Between Pharmaceutical R&D Projects and Other Industries Final product is information rather than a physical product. Long duration, extreme costs, and high chances for failure. Chapter 12: Project Management
Chapter 12: Project Management Background Project management concerned with managing organizational activities. Often used to integrate and coordinate diverse activities. Projects are special types of processes. Chapter 12: Project Management
Chapter 12: Project Management Examples of Projects Constructing highways, bridges, tunnels and dams Erecting skyscrapers, steel mills, and homes Organizing conferences and conventions Managing R&D projects Running political campaigns, war operations, and advertising campaigns Chapter 12: Project Management
Reasons for Growth in Project Operations More Sophisticated Technology Better-Educated Citizens More Leisure Time Increased Accountability Higher Productivity Faster Response to Customers Greater customization for customers Chapter 12: Project Management
Chapter 12: Project Management Planning the Project Chapter 12: Project Management
Life Cycle of a Project (Stretched-S) Chapter 12: Project Management
Life Cycle of a Project (Exponential) Chapter 12: Project Management
Organizing the Project Team Ad Hoc Project Form Weak Functional Matrix Strong Project Matrix Chapter 12: Project Management
Types of Project Team Members Those having a long-term relationship with the project. Those that the PM will need to communicate with closely. Those with rare skills necessary to project success. Chapter 12: Project Management
Work Breakdown Structure Chapter 12: Project Management
Project Master Schedule Chapter 12: Project Management
Complexity of Scheduling Project Activities Large number of activities Precedence relationships Limited time of the project Chapter 12: Project Management
Planning and Scheduling Projects Planning. Determining what must be done and which tasks must precede others. Scheduling. Determining when the tasks must be completed; when they can and when they must be started; which tasks are critical to the timely completion of the project; and which tasks have slack and how much. Chapter 12: Project Management
Scheduling the Project: PERT and CPM Chapter 12: Project Management
Chapter 12: Project Management Terminology Activity Event Network Path Critical Path Critical Activities Dummy Activities Chapter 12: Project Management
Project Planning When Activity Times are Known Inputs activity completion times activity precedence relationships Outputs graphical representation of project time to complete project identification of critical path(s) and activities activity and path slack earliest start, earliest finish, latest start, and latest finish times for each activity Chapter 12: Project Management
Chapter 12: Project Management Example Chapter 12: Project Management
Network Diagram 2 4 1 6 3 5 Paths Time Slack A-D-F 35 0 A-C-E-G 33 2 B(7) E(4) G(14) 3 5 Paths Time Slack A-D-F 35 0 A-C-E-G 33 2 B-E-G 25 10 critical path
Early Start and Finish Times Chapter 12: Project Management
Latest Start and Finish Times Chapter 12: Project Management
Activity Slack Time TES = earliest start time for activity TLS = latest start time for activity TEF = earliest finish time for activity TLF = latest finish time for activity Activity Slack = TLS - TES = TLF - TEF Chapter 12: Project Management
Chapter 12: Project Management Path Slack Duration of Critical Path - Path Duration Path Slack Chapter 12: Project Management
Chapter 12: Project Management Activity Slack Times Chapter 12: Project Management
Project Planning When Activity Times are Uncertain Inputs Optimistic (to), most likely (tm), and pessimistic (tp) time estimate for each activity activity precedence relationships Outputs graphical representation of project expected activity and path completion times variance of activity and path completion times probability that project completed by specified time Chapter 12: Project Management
Expected Activity Time and Variance of Activity Time Chapter 12: Project Management
Chapter 12: Project Management Example Chapter 12: Project Management
Network Diagram with Expected Activity Times and Variances [5.5, 0.694] [10, 0.0] 2 4 D [11.5, 0.913] F A 1 [4.83, 0.250] C 6 B [7.0, 0.444] G E [4.33, 1.0] 3 5 [4.0, 0.111] Chapter 12: Project Management
Expected Completion Time and Variance of Path A-D-F = 27 Path Variance = 0.694 + 0 + 0.913 = 1.607 Chapter 12: Project Management
Path Expected Times and Variances Chapter 12: Project Management
Probabilities of Completion Chapter 12: Project Management
Probability of Project Being Completed on or Before Time 25 Only path A-D-F has reasonable chance of taking 25 or more: From standard normal table in Appendix A, there is a 5.82% chance of completing project on or before time 25. Chapter 12: Project Management
Probability of Path A-D-F being Completed on or Before Time 25 5.82% Chapter 12: Project Management
Plan E Project Operations Network Chapter 12: Project Management
Proper Use of Dummy Activities Chapter 12: Project Management
Activity Expected Times and Variances Chapter 12: Project Management
Simulating Project Completion Times with Spreadsheets F D B E Chapter 12: Project Management
Simulating Project Completion Times Chapter 12: Project Management
Chapter 12: Project Management
Chapter 12: Project Management
Chapter 12: Project Management
Chapter 12: Project Management
Chapter 12: Project Management
Project Management Software Capabilities Chapter 12: Project Management
Microsoft Project’s Gantt Chart Chapter 12: Project Management
Pert Chart Generated by Microsoft Project Chapter 12: Project Management
Calendar of Activities Created by Microsoft Project Chapter 12: Project Management
Controlling the Project: Cost and Performance Chapter 12: Project Management
Chapter 12: Project Management Variance Report Cost standard determined using engineering estimates or analysis of past performance Actual cost monitored and compared with cost standard Project manager can exert control if difference between standard and actual (called a variance) is considered significant. Chapter 12: Project Management
Cost-Schedule Reconciliation Charts Chapter 12: Project Management
Chapter 12: Project Management Earned Value Chart Chapter 12: Project Management
Goldratt’s Critical Chain Chapter 12: Project Management
Chapter 12: Project Management Introduction Similar issues that trouble people about working on projects regardless of type of project unrealistic due dates too many changes resources and data not available unrealistic budget These issues/problems related to need to make trade-offs To what extent are these problems caused by human decisions and practices? Chapter 12: Project Management
Three Project Scenarios Chapter 12: Project Management
Chapter 12: Project Management Project Completion Time Statistics Based on Simulating Three Projects 200 Times Chapter 12: Project Management
Chapter 12: Project Management Observations Average Completion Times Implications of Assuming Known Activity Times Shape of the Distribution Worker Time Estimates Impact of Inflated Time Estimates Student Syndrome Chapter 12: Project Management
Chapter 12: Project Management Multitasking Chapter 12: Project Management
Alternative Gantt Charts for Projects A and B Chapter 12: Project Management
Chapter 12: Project Management Common Chain of Events Underestimate time needed to complete project assumption of known activity times and independent paths Project team members inflate time estimates Work fills available time student syndrome early completions not reported Chapter 12: Project Management
Common Chain of Events continued Safety time misused Misused safety time results in missed deadlines Hidden safety time complicates task of prioritizing project activities Lack of clear priorities results in poor multitasking Chapter 12: Project Management
Common Chain of Events concluded Poor multitasking increases task durations Uneven demand on resources also results due to poor multitasking More projects undertaken to ensure all resources fully utilized More projects further increases poor multitasking Chapter 12: Project Management
Chapter 12: Project Management Reversing the Cycle Reduce number of projects assigned to each individual Schedule start of new projects based on availability of bottleneck resources Reduce amount of safety time added to individual tasks and then add some fraction back as project buffer activity durations set so that there is a high probability the task will not be finished on time Chapter 12: Project Management
Chapter 12: Project Management The Critical Chain Longest chain of consecutively dependent events considers both precedence relationships and resource dependencies Project Buffer Feeding Buffer Chapter 12: Project Management
Sample Network Diagram Chapter 12: Project Management
Figure 6-25 Project and Feeder Buffers Chapter 12: Project Management
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