1. F O U R T H E D I T I O N Project Management © The McGraw-Hill Companies, Inc., 2003 supplement 3 DAVIS AQUILANO CHASE PowerPoint Presentation by Charlie Cook

2. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–2 Supplement Objectives Recognize that project management involves both people skills to coordinate and motivate individuals from a range of disciplines and technical skills to properly plan and schedule a project. Explain the role of the project manager in organizing and coordinating all activities performed in a project. Introduce critical path scheduling as a tool for identifying activities that require immediate attention. Identify the time–cost trade-offs involved in expediting the completion of a project. Discuss some of the criticisms often associated with project management techniques.

3. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–3 Definition of Project Management Project –Series of related jobs or tasks focused on the completion of an overall objective. Project Management –Planning, directing, and controlling resources to meet the technical, cost, and time constraints of the project. Program –Synonym for a project, although it also can consist of several interrelated projects.

4. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–4 Project Management: Key Terms Task (Activity) –A subdivision of a project perform by one group or organization. Subtask –Used to break a project into more meaningful pieces. Work Package –A group of activities combined to be assignable to a single organizational unit. Milestones –Specific events to be reached at points in time.

5. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–5 Work Breakdown Structure –Method by which a project is divided into tasks and subtasks. Level 1Program 2Project 3Task 4Subtask 5Work Package

6. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–6 Exhibit S3.1

7. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–7 Key Factors in a Breakdown Structure Allow the activities to be worked on independently. Make them of manageable size. Give authority to carry out the program. Monitor and measure the program. Provide the required measures.

8. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–8 Organizational Considerations in Project Management Role of the Project Manager –Using social and technical skills to manage across traditional functional lines to create a collaborative culture. High-Performance Project Teams –Creating a successful team requires consideration of: Task-related variables People-related variables Leadership variables Organization variables

9. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–9 Organizational Considerations in Project Management (cont’d) Barriers to High Team Performance: –Different points of view –Role conflicts –Power struggles

10. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–10 Project Control Gantt Chart –Graphical technique that shows the amount of time required for each activity and the sequence in which the activities are to be performed.

11. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–11 Gantt Chart Exhibit S3.2A

12. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–12 Total Program Cost Breakdown Exhibit S3.2B

13. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–13 Divisional Breakdown of Costs and Labor Hours Exhibit S3.2C

14. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–14 Cost and Performance Tracking Schedule Exhibit S3.2D

15. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–15 Bar/Milestone Chart Exhibit S3.2E

16. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–16 Critical Path Scheduling PERT (Program Evaluation and Review Technique) –The technique developed by the U.S. Navy for planning the Polaris missile project. CPM (Critical Path Method) –Technique developed by J. E. Kelly and M. R.Walker to schedule preventative maintenance shutdowns of chemical processing plants. Identifies the longest time-consuming path through a network of tasks required to complete a project (i.e., the shortest time in which the project can be completed).

17. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–17 Critical Path Scheduling Project Characteristics –Well-defined jobs or tasks indicating completion of the project. –Tasks must be independent of each other. –Job or tasks are ordered such that each must follow a particular or given sequence.

18. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–18 CPM Key Terms Slack Time – The amount of time the starting of an activity can be delayed without affecting the earliest completion date of the overall project. Early start (ES): the earliest possible time an activity can begin. Early finish time (EF): the early start time plus the time need to complete the activity. Late finish time (LF): the latest time an activity can end without delaying the project. Late start time (LS): the late finish time minus the time needed to complete the activity.

19. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–19 CPM with a Single Time Estimate Step 1:Identify all project activities. Step 2:Sequence activities and construct network. Step 3:Determine the critical path. Step 4:Determine slack times. Step 4.1: Find the EF and ES for each activity. Step 4.2: Find the LS and LF for each activity. Step 4.3: Determined the total slack time for each activity.

20. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–20 CPM Network for Computer Design Project Exhibit S3.3

21. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–21 CPM Key Terms (cont’d) Early Start Schedule –The earliest time that each activity in the project can be started. Late Start Schedule –The latest start time that each activity can be started without affecting the overall completion time.

22. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–22 CPM Network for Computer Design Project Exhibit S3.4

23. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–23 CPM with Three Activity Time Estimates Step 1:Identify activities. Step 2:Sequence activities and construct network. Step 3:Determine the three time estimates for each activity. a = optimistic time m = most likely time b = pessimistic time Step 4:Calculate the expected time (ET) for each activity. 6 b 4m4m a ET  

24. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–24 Typical Beta Curves Exhibit S3.5

25. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–25 CPM with Three Activity Time Estimates Step 5:Calculate the variance (σ 2 ) for each activity. Exhibit S3.6

26. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–26 CPM with Three Activity Time Estimates Step 6:Identify all of the paths in the network and their estimated completion times and variances. Exhibit S3.7

27. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–27 CPM with Three Activity Time Estimates Step 7:Determine the probability of completing the project by a certain date. D= Desired completion date for the project ET p = Expected completion time for the path σ p = Standard deviation for the path

28. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–28 Probability of Each Path Being Completed in 39 Weeks or Less Exhibit S3.8a

29. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–29 Probability of Each Path Being Completed in 39 Weeks or Less (cont’d) Exhibit S3.8b

30. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–30 Path Values and Probabilities of Completing Each Path in 39 Weeks or Less Exhibit S3.9

31. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–31 Time-Cost Trade-off Models Time-Cost Trade-off Model –A model that develops the relationship between direct project costs, indirect costs, and time to complete the project by minimizing the sum of direct and indirect costs. Crash Costs –The additional costs of an activity when time to complete it is shortened.

32. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–32 Minimum-Cost Scheduling Step 1:Prepare CPM-type network diagram. a. Normal cost (NC) b. Normal time (NT) c. Crash time (CT) d. Crash Cost (CC) Step 2:Determine the cost per unit of time to expedite (or crash) each activity. Step 3:Compute the critical path. Step 4:Shorten the critical path at the least cost. Step 5: Plot project direct, indirect, and total-cost curves and find the minimum-cost schedule.

33. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–33 Exhibit S3.10

34. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–34 Calculation of Cost Per Day to Expedite Each Activity Exhibit S3.11

35. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–35 Reducing Project Completion Time One Day at a Time Exhibit S3.12

36. Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., 2003S3–36 Plot of Costs and Minimum Cost Schedule Exhibit S3.13