1. Operations Management MSOM 306.001 Lecture 4 – Project Management Al Baharmast, Ph.D.

2. Some lecture content courtesy of Prentice Hall, Rights Reserved Bechtel Asked by Kuwait to begin rebuilding after Desert Storm 650 wells ablaze, others uncapped No water, electricity, food or facilities Land mines! Bombs! Grenades! Many fires inaccessible because of oil-covered roads Project required: Storage, docking, and warehousing facilities at Dubai 125,000 tons of equipment and supplies 150 kilometers of pipeline capable of delivering 20,000,000 gallons of water per day to the fire site more than 200 lagoons with 1,000,000 gals of seawater

3. Some lecture content courtesy of Prentice Hall, Rights Reserved Strategic Importance of Project Management Bechtel Kuwait Project:  8,000 workers  1,000 construction professionals  100 medical personnel  2 helicopter evacuation teams  6 full-service dining halls  27,000 meals per day  40 bed field hospital

4. Some lecture content courtesy of Prentice Hall, Rights Reserved Strategic Importance of Project Management Microsoft Windows Longhorn Project :  hundreds of programmers  millions of lines of code  millions of dollars cost Ford Redesign of Mustang Project:  450 member project team  Cost $700-million  25% faster and 30% cheaper than comparable project at Ford

5. Some lecture content courtesy of Prentice Hall, Rights Reserved  Single unit  Many related activities  Difficult production planning and inventory control  High labor skills  Temporary Project Characteristics But, projects can vary substantially – Construction Information Systems Administrative Production and Product Rollout

6. Some lecture content courtesy of Prentice Hall, Rights Reserved Management of Projects  Planning - goal setting, defining the project, team organization  Scheduling - relates people, money, and supplies to specific activities and activities to each other  Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands

7. Some lecture content courtesy of Prentice Hall, Rights Reserved  Planning  Objectives  Resources  Work break-down  Organization  Scheduling  Project activities  Start & end times  Network  Controlling  Monitor, compare, revise, action Project Management Activities

8. Some lecture content courtesy of Prentice Hall, Rights Reserved Project Organization Works Best When  Work can be defined with a specific goal and deadline  The job is unique or somewhat unfamiliar to the existing organization  The work contains complex interrelated tasks requiring specialized skills  The project is temporary but critical to the organization

9. Some lecture content courtesy of Prentice Hall, Rights Reserved Project Planning, Scheduling, and Controlling Project Planning 1. Setting goals 2. Defining the project 3. Tying needs into timed project activities 4. Organizing the team Project Scheduling 1. Tying resources to specific activities 2. Relating activities to each other 3. Updating and revising on a regular basis Time/cost estimates Budgets Engineering diagrams Cash flow charts Material availability details CPM/PERT Gantt charts Milestone charts Cash flow schedules Project Controlling 1. Monitoring resources, costs, quality, and budgets 2. Revising and changing plans 3. Shifting resources to meet demands Reports budgets delayed activities slack activities Before Project During Project

10. Some lecture content courtesy of Prentice Hall, Rights Reserved Management of Projects Planning and Controlling: Three Key Project Management Levers (also known as the ‘Triple Constraints’) – Cost Schedule Performance (Quality) Defect-reduction Innovation (Scope/Requirements) Trade-offs between Cost, Schedule and Performance

11. Some lecture content courtesy of Prentice Hall, Rights Reserved  Often temporary structure  Uses specialists from entire company  Headed by project manager  Coordinates activities  Monitors schedule and costs  Permanent structure called ‘matrix organization’ Project Organization

12. Some lecture content courtesy of Prentice Hall, Rights Reserved The Role of the Project Manager Highly visible Responsible for making sure that:  All necessary activities are finished in order and on time  The project comes in within budget  The project meets quality goals  The people assigned to the project receive motivation, direction, and information

13. Some lecture content courtesy of Prentice Hall, Rights Reserved Ethical Issues  Bid rigging – divulging confidential information to give some bidders an unfair advantage  “Low balling” contractors – try to “buy” the project by bidding low and hope to renegotiate or cut corners  Bribery – particularly on international projects  Expense account padding  Use of substandard materials  Compromising health and safety standards  Withholding needed information  Failure to admit project failure at close

14. Some lecture content courtesy of Prentice Hall, Rights Reserved Project Planning Project Charter (Mission)Project Charter (Mission) Detailed Scope DefinitionDetailed Scope Definition Requirements IdentificationRequirements Identification Project OrganizationProject Organization Facilities, Tools and ResourcesFacilities, Tools and Resources Budget/Cost AnalysisBudget/Cost Analysis Work Breakdown StructureWork Breakdown Structure

15. Some lecture content courtesy of Prentice Hall, Rights Reserved Work Breakdown Structure (WBS)Level 1.Project 2.Major tasks in the project 3.Subtasks in the major tasks 4.Activities (or work packages) to be completed

16. Some lecture content courtesy of Prentice Hall, Rights Reserved Work Breakdown Structure (WBS) Figure 3.3 Level ID LevelNumberActivity 11.0Develop/launch Windows Longhorn OS 21.1Development of GUIs 21.2Ensure compatibility with earlier Windows versions 31.21Compatibility with Windows ME 31.22Compatibility with Windows XP 31.23Compatibility with Windows 2000 41.231Ability to import files

17. Some lecture content courtesy of Prentice Hall, Rights Reserved From WBS to Project Plan – Planning a Dinner Party (Task Dependencies) TaskWBSTaskDurationStart DateEnd DateDependency 11Dinner Party Planning11.38 daysFri 2/9/07Mon 2/26/07 21.1Plan Menu0.63 daysFri 2/9/07 31.1.1Look Up Recipes Online1 hrFri 2/9/07 41.1.2Look Up Recipes in Cookbooks1 hrFri 2/9/07 51.1.3Identify Ingredients0.13 daysFri 2/9/07 3,4 61.1.4Buy Ingredients3 hrsFri 2/9/07 5 71.2Plan Guest List0.25 daysFri 2/9/07 81.2.1Recall Who Invited you to Parties2 hrsFri 2/9/07 91.2.2Assess Guest Compatibility1 hrFri 2/9/07 101.3Send Invitations5.63 daysFri 2/9/07Fri 2/16/07 111.3.1Find Invitations on Evites2 hrsFri 2/9/07 121.3.2Load Guest Email Addresses1 hrFri 2/9/07 131.3.3Email Evites1 hrFri 2/9/07 11,12 141.3.4Get Responses5 daysFri 2/9/07Fri 2/16/0713 151.3.5Monitor RSVPs1 hrFri 2/16/07 161.4Cook Food1.13 daysFri 2/16/07Mon 2/19/07 171.4.1Follow Recipe to Cook1 dayFri 2/16/07Mon 2/19/072 181.4.2Place in Serving Dishes1 hrMon 2/19/07 20 191.5Hold Party6 hrsFri 2/16/07Mon 2/19/072,10,16 201.6Clean up5 daysMon 2/19/07Mon 2/26/0719

18. Some lecture content courtesy of Prentice Hall, Rights Reserved Work Breakdown Structure (WBS) Craft Newspaper Article Select Specific Topic Review Topic Assignments Propose Topic Variants Obtain Editor Approval Research Article Review Background Sources Conduct Interviews Conduct Additional Source Research Write Article Write Initial Draft Obtain Editor Reviews Write Final Draft Level 1 Level 2 Level 3

19. Some lecture content courtesy of Prentice Hall, Rights Reserved WBS – Key Concepts A Work Breakdown Structure is a decomposition of those project tasks that will consume resources or time that needs to be tracked/measured or those that impose risk on the project or those tasks that need to be tracked/measured. A WBS should outline the project’s scope (breadth) at such a level detail (depth) required to manage resources and risk. Determination of appropriate depth requires practice. A WBS is not intended to be an exhaustive list of all the tasks within a project. Development of a WBS is necessary prior to scheduling. The WBS lays the foundation upon which scheduling and resource allocation can be accomplished. A WBS should not built around organizational constructs. Work/tasks should be unconstrained by organization, but tasks will be assigned to organizational elements. Once finalized, resourced and scheduled against, the WBS should be subjected to configuration control.

20. Some lecture content courtesy of Prentice Hall, Rights Reserved Individual Practice Exercise Practice Exercise (15 minutes) – - Sit with your project team - Open up MS Excel or MS Word on your desktops - Create a three level WBS with task dependencies & save - Here are some project options: Buying a House Agents House location/budget Loans House selection Negotiation Inspection Closing Building a Boat Dock Design concept Budget Contractors Detailed design Permits Build Inspection

21. Some lecture content courtesy of Prentice Hall, Rights Reserved Key Steps Identifying precedence relationships Sequencing activities Determining activity times & costs Estimating material & worker requirements Determining critical activities Purpose of Scheduling Steps Shows the relationships between activities and whole project. Identifies the precedence relationships among activities. Encourages setting realistic time and cost estimates. Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project. Project Scheduling

22. Some lecture content courtesy of Prentice Hall, Rights Reserved  Gantt chart  Critical Path Method (CPM)  Program Evaluation and Review Technique (PERT) Project Management Techniques

23. Some lecture content courtesy of Prentice Hall, Rights Reserved A Simple Gantt Chart Time J F M A M J J A S Design Prototype Test Revise Production

24. Some lecture content courtesy of Prentice Hall, Rights Reserved From WBS to Project Plan – Planning a Dinner Party (GANTT Chart)

25. Some lecture content courtesy of Prentice Hall, Rights Reserved Individual Practice Exercise Practice Exercise (10 minutes) – - Continue with previous WBS - Open WBS and enter start and end dates on each task - For tasks with dependencies, please make sure your start dates take into account the end dates of the prerequisite activities

26. Some lecture content courtesy of Prentice Hall, Rights Reserved Project Control Reports  Detailed cost breakdowns for each task  Total program labor curves  Cost distribution tables  Functional cost and hour summaries  Raw materials and expenditure forecasts  Variance reports  Time analysis reports  Work status reports

27. Some lecture content courtesy of Prentice Hall, Rights Reserved  Network techniques  Developed in 1950’s  CPM by DuPont for chemical plants (1957)  PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)  Consider precedence relationships and interdependencies  Each uses a different estimate of activity times PERT and CPM

28. Some lecture content courtesy of Prentice Hall, Rights Reserved The Six Steps Common to PERT & CPM ©Define the project and prepare the work breakdown structure, ©Develop relationships among the activities. (Decide which activities must precede and which must follow others.) ©Draw the network connecting all of the activities ©Assign time and/or cost estimates to each activity ©Compute the longest time path through the network. This is called the critical path ©Use the network to help plan, schedule, monitor, and control the project

29. Some lecture content courtesy of Prentice Hall, Rights Reserved Determining the Project Schedule Perform a Critical Path Analysis  The critical path is the longest path through the network  The critical path is the shortest time in which the project can be completed  Any delay in critical path activities delays the project  Critical path activities have no slack time

30. Some lecture content courtesy of Prentice Hall, Rights Reserved TaskDurationPredecessor A2 B3A C2A D4B Question - What is the duration of this project and what is the critical path? A-2 B-3 C-2 D-4 Answer – Duration is 9, and the critical path is A-B-D

31. Some lecture content courtesy of Prentice Hall, Rights Reserved Advantages of PERT/CPM Especially useful when scheduling and controlling large projects. Straightforward concept and not mathematically complex. Graphical networks aid perception of relationships among project activities. Critical path & slack time analyses help pinpoint activities that need to be closely watched. Project documentation and graphics point out who is responsible for various activities. Applicable to a wide variety of projects. Useful in monitoring schedules and costs.

32. Some lecture content courtesy of Prentice Hall, Rights Reserved Assumes clearly defined, independent, & stable activities Specified precedence relationships Activity times (PERT) follow beta distribution Subjective time estimates Over-emphasis on critical path Limitations of PERT/CPM