1. 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. 2 Project Management Lecture 5 Project Management Chapter 17

3. 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. 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. 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. 6 Project Management  What are the tools?  Work breakdown structure  Network diagram  Gantt charts  Risk management

7. 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. 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. 9 Project Management Project Manager Responsible for: WorkQuality Human ResourcesTime CommunicationsCosts

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

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

12. 12 Project Management Work Breakdown Structure

13. 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. 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. 15 Project Management Project Network – Activity on Arrow 1 2 3 4 56 Locate facilities Order furniture Furniture setup Interview Hire and train Remodel Move in Figure 17.4 AOA

16. 16 Project Management Project Network – Activity on Node 1 2 3 5 6 Locate facilities Order furniture Furniture setup Interview Remodel Move in 4 Hire and train 7S Figure 17.4 AON

17. 17 Project Management The Network Diagram (cont’d)  Path  Sequence of activities that leads from the starting node to the finishing node  AOA path: 1-2-4-5-6  AON path: S-1-2-6-7  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. 18 Project Management Network Conventions a b ca b c a b c d a b c Dummy activity

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

20. 20 Project Management Example 1 1 2 3 4 56 8 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. 21 Project Management Example 1 Solution Critical Path

22. 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. 23 Project Management Advantages of PERT  Forces managers to organize  Provides graphic display of activities  Identifies  Critical activities  Slack activities 1 2 3 4 56

24. 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 1 2 3 4 56 142 weeks