OMG Operations Management Spring 1997 CLASS 16: Project Management Harry Groenevelt

2 Agenda 1. Introduction 2. Planning and scheduling –Scheduling with network diagrams –Scheduling resources 3. Planning for risky projects 4. Reducing project time –‘Crashing’ and changing the project structure –Monitoring and control 5. Summary and comments on Boeing

3 1. Introduction: What is a Project? A project is... a business within a business, designed to go out of business when the goals are met Distinguishing attributes: –low volume –high labor costs, specialization –customized projectjob shopbatchline flowcontinuous flow

4 A Few Examples Installation of automatic readers on 1/2-million RG&E gas and electric meters Development of the Advanced Automation System (AAS) for U.S. air traffic control Launch of an on-line banking service My daughter’s birthday party

5 Introduction: Why Project Management? Effective project management of new product development is a competitive priority in markets with short life-cycles Poor project management can be financially (and emotionally) destructive to the firm Project management is the core business for some firms

6 Introduction: Project Management Stages Stage Decision Level Evaluation strategic Planning tactical Scheduling operational Monitoring and controloperational Terminationall Post-project assessmentstrategic

7 2. Planning and Scheduling MacroTemp precedence relationships

8 earliest start activity, duration, slack earliest finish latest finish latest start Note: you may see a variety of formats in books and software packages Planning and Scheduling with Project Networks (how to represent ‘dependent events’) _____ activity, duration, ____ _____ This activity ends … Before this one begins

9 Calculating start dates, stop dates, slack Notify 1.5, _____ Ppl move 0.5, _____ Set up ppl 1.0, _____ Appt 1.0, _____ Walk 0.5, _____ Move Equip 1.0, _____ Phones 1.0, _____ Network 0.5, _____ Begin End Activity duration, slack earliest start earliest finish latest finish latest start

10 How long will the project take? Critical Activities and Path(s) Notify 1.5, 0 Ppl move 0.5, 1.0 Set up ppl 1.0, 0 Appt 1.0, 0.5 Walk 0.5, 0 Move Equip 1.0, 0 Phones 1.0, 2.0 Network 1.0, 2.0 Begin End

11 Comments on the Critical Path Method (CPM) Critical path = longest ‘path’ of activities from start to finish Activities on the critical path have slack = 0 Duration of project = duration of critical path (CP) “CPM” says: focus attention on critical activities BUT: ignoring other activities may not be wise … Why?

12 Scheduling Resources Scarce resources may be shared between activities Examples: –engineers and programmers for a new electronics product –trucks and crew for a touring rock concert Method for resource scheduling: –determine time and resource needs for each activity –determine resource availability –derive schedule and adjust to fit available resources Is encoded in software (e.g. Microsoft Project)

13 Scheduling Resources Example: a software development project (20 programmers available)

14 ACTIVITIES TIME (IN WEEKS FROM PROJECT START) A B C D E F G H I Software Development Project Schedule GANTT chart with all activities at earliest start date

15 TIME (IN WEEKS FROM PROJECT START) NR OF PROGRAMMERS Resource Consumption number of programmers according to earliest start schedule

16 Scheduling Resources What can be done to satisfy 20-programmer resource constraint?

17 3. Planning for Risky Projects Example: the Air Traffic Control Technology Project Financial Risk Risk to On-Time Delivery What aspects of the project increased these risks? How could the risks have been managed?

18 RADAR TRACKING SOFTWARE DEVELOPMENT 6 months USER INTERFACE 4 months AIRCRAFT HANDOFF SOFTWARE 4 months with probability 1/2 8 months with probability 1/2 INTEGRATION 1 month Duration of HANDOFF 4 months 8 months Probability 1/2 Planning for Risky Projects Quantifying on-time delivery risk.

19 Task Duration Uncertainty Expected duration of HANDOFF = _______ Expected project duration using expected activity times = ________ Expected project duration = _______ To find the expected task of a project, can we ‘plug in’ the expected duration of each activity?

20 Task Duration Uncertainty FACT: when large projects are subject to variability: Expected project duration > Project duration calculated from expected activity times of individual tasks Typically managers ‘plug in’ expected values and under-estimate project duration Does this concept sound familiar?

21 0 A project may have many random (or unknown) activity times and critical paths Use simulation to find distributions of project duration, slack times, probabilities that activities lie on critical paths Schedules and probabilities updated as project progresses Project Duration (weeks) Cumulative Probability Task Duration Uncertainty

22 4. Reducing Project Time Direct costs from ‘crashing’ a new product development program: Indirect costs from (not) crashing:

23 Project time Project cost Direct Cost Indirect Cost Total Cost Normal time Optimal time Expedited time Reducing Project Time: Time/cost Trade-off

24 Reducing Project Time, Using Project Networks as a Guide 1.Construct project network. 2.Select least expensive speed-ups along critical paths until … –Deadline is met –No more speed-up is possible –Other paths become critical 3.If other paths have become critical, return to step 1

25 ABA B Reducing Project Time: Changing the Structure of the Project Do things in parallel –simultaneous engineering –multiple test facilities Note that this can create ‘coupled’ tasks, where each task depends on the output of the other Communication is vital! How can communication be encouraged?

26 Changing the Structure Shorten or eliminate error correction loops –increase communication and information accuracy (when are problems in an activity usually reported?) –use multi-functional teams –clearly define specifications

27 Changing the Structure Do it faster –remove start-up delays –remove ‘waiting delays’ due to busy resources (especially for activities on the critical path) –use proven technology and improve communication from project to project

28 Reducing Project Time: Monitoring and Control While the project is running: –Progress against schedule –Cost against scheduled expenditures –Earned Value =budgeted cost of work performed

29 Earned Value ($) Actual Cost of Work Performed ($) earned value = budgeted cost of work performed cost variance Monitoring and Control: Earned Value

30 5. Project Management Summary Manage effectively to remain competitive Project planning: –tools to schedule and balance resources –planning for and managing risk Speeding up projects: –examine the project structure –consider multiple performance measures –encourage communication

31 Comments on Boeing Consider risks Boeing faces How does Boeing manage those risks? Define criteria for choosing among production options (in-line vs. off-line conversion) Consider pros and cons of each choice Do not try to draw a project network (at Boeing, they cover walls)