1. Project Management Dr. Ron Lembke Operations Management

2. What’s a Project? Changing something from the way it is to the desired state Never done one exactly like this Many related activities Focus on the outcome Regular teamwork focuses on the work process

3. Examples of Projects Building construction New product introduction Software implementation Training seminar Research project

4. Why are projects hard? Resources- –People, materials Planning –What needs to be done? –How long will it take? –What sequence? –Keeping track of who is supposedly doing what, and getting them to do it

5. IT Projects Half finish late and over budget Nearly a third are abandoned before completion –The Standish Group, in Infoworld Get & keep users involved & informed Watch for scope creep / feature creep

6. Pinion Pine Power Plant DOE Clean Coal –Air-blown Integrated Gasification Combined Cycle –Kellogg/Rust/Westinghouse gasifier –GE Frame 6FA combustion turbine –$335.9m, half DOE, half SPP

7. Coal Gasification Coal Gasification (new) –Coal into Low Heat Value (LHV) gas 130 btus/standard foot –Crushed coal and limestone absorbs sulfur –Hot gas desulfirized –Particulate removal Gas Fed into turbine –Tested fine on nat gas

8. Technology Development Ash created in gasification, collected Hot-gas cleanup (new technology) –SO 2 in collected in calcium sulfate –Hot-gas filter, then to combustion turbine –Fines combustor burns particles bottom of filter Main problem was filter-fines removal Never operated more than 24 hrs. Tried 24 times to start it. Eventually mothballed

9. Project Scheduling Establishing objectives Determining available resources Sequencing activities Identifying precedence relationships Determining activity times & costs Estimating material & worker requirements Determining critical activities

10. Project Personnel Structure Pure project “Skunk Works” Functional Project Matrix Project

11. Work Breakdown Structure Hierarchy of what needs to be done, in what order For me, the hardest part –I’ve never done this before. How do I know what I’ll do when and how long it’ll take? –I think in phases –The farther ahead in time, the less detailed –Figure out the tricky issues, the rest is details –A lot will happen between now and then –It works not badly with no deadline

12. Mudroom

13. Mudroom Remodel Big-picture sequence easy: –Demolition –Framing –Plumbing –Electrical –Drywall, tape & texture –Slate flooring –Cabinets, lights, paint Hard: can a sink fit? D W DW

14. Project Scheduling Techniques Gantt chart Critical Path Method (CPM) Program Evaluation & Review Technique (PERT)

15. Gantt Chart

18. PERT & CPM Network techniques Developed in 1950’s CPM by DuPont for chemical plants PERT by U.S. Navy for Polaris missile Consider precedence relationships & interdependencies Each uses a different estimate of activity times

19. Completion date? On schedule? Within budget? Probability of completing by...? Critical activities? Enough resources available? How can the project be finished early at the least cost? Questions Answered by PERT & CPM

20. PERT & CPM Steps Identify activities Determine sequence Create network Determine activity times Find critical path Earliest & latest start times Earliest & latest finish times Slack

21. Activity on Node (AoN) 2 4? Years Enroll Receive diploma Project: Obtain a college degree (B.S.) 1 month Attend class, study etc. 1 1 day 3

22. Activity on Arc (AoA) 4,5 ? Years Enroll Receive diploma Project: Obtain a college degree (B.S.) 1 month Attend class, study, etc. 1 1 day 234

23. AoA Nodes have meaning Graduating Senior Applicant Project: Obtain a college degree (B.S.) 1 Alum 234 Student

24. We’ll use Activity on Node 1-2 must be done before 2-3 or 3-4 can start 2 3 4 1

25. Activity Relationships 2-3 must be done before 3-4 or 3-5 can start 2 3 4 1 5

26. Activity Relationships 2-4 and 3-4 must be done before 4-5 can start 2 3 4 1 5

27. Activity Relationships When 5-6 is done, project is complete. 2 3 4 1 56

28. Network Example You’re a project manager for Bechtel. Construct the network. ActivityPredecessors A-- BA CA DB EB FC GD HE, F

29. Network Example - AON ACEFBDGHZ

30. Network Example - AOA 2 4 5136879 A C F E B D H G

31. AOA Diagrams 231 A C B D A precedes B and C, B and C precede D 241 A C B D 354 Add a phantom arc for clarity.

32. Critical Path Analysis Provides activity information Earliest (ES) & latest (LS) start Earliest (EF) & latest (LF) finish Slack (S): Allowable delay Identifies critical path Longest path in network Shortest time project can be completed Any delay on activities delays project Activities have 0 slack

33. Critical Path Analysis Example

34. Network Solution A A E E D D B B C C F F G G 1 6 2 3 1 43

35. Earliest Start & Finish Steps Begin at starting event & work forward ES = 0 for starting activities ES is earliest start EF = ES + Activity time EF is earliest finish ES = Maximum EF of all predecessors for non-starting activities

36. Activity A Earliest Start Solution For starting activities, ES = 0. A A E E D D B B C C F F G G 1 6 2 3 1 43

37. Earliest Start Solution A A E E D D B B C C F F G G 1 6 2 3 1 43

38. Latest Start & Finish Steps Begin at ending event & work backward LF = Maximum EF for ending activities LF is latest finish; EF is earliest finish LS = LF - Activity time LS is latest start LF = Minimum LS of all successors for non-ending activities

39. Earliest Start Solution A A E E D D B B C C F F G G 1 6 2 3 1 4 3

40. Latest Finish Solution A A E E D D B B C C F F G G 1 6 2 3 1 43

41. Compute Slack

42. Critical Path A A E E D D B B C C F F G G 1 6 2 3 1 43

43. New notation Compute ES, EF for each activity, Left to Right Compute, LF, LS, Right to Left C 7 LSLF ESEF

44. Exhibit 7.6, p.195 A 21 E 5 D 2 B 5 C 7 F 8 G 2

45. Exhibit 7.6, p.195 A 21 E 5 D 2 B 5 C 7 F 8 G 2 21282836 3638 2833 26282126 021 F cannot start until C and D are done. G cannot start until both E and F are done.

46. Exhibit 7.6, p.195 A 21 E 5 D 2 B 5 C 7 F 8 G 2 2126 021 26283136 3638 21282836 21282836 3638 2833 26282126 021 E just has to be done in time for G to start at 36, so it has slack. D has to be done in time for F to go at 28, so it has no slack.

47. Gantt Chart - ES 0510152025303540 A B C D E F G

48. Solved Problem 1 A 1 B 4 C 3 D 7 E 6 F 2 H 9 I 4 G 7

49. Solved Problem 1 A 1 0101 0101 B 4 1515 1515 C 3 6969 1414 D 7 2929 1818 E 6 511 F 2 911 810 H 9 918 817 I 4 1822 G 7 1118

50. Can We Go Faster?

52. Time-Cost Models 1. Identify the critical path 2. Find cost per day to expedite each node on critical path. 3. For cheapest node to expedite, reduce it as much as possible, or until critical path changes. 4. Repeat 1-3 until no feasible savings exist.

53. Time-Cost Example ABC is critical path=30 Crash costCrash per weekwks avail A5002 B8003 C5,0002 D1,1002 C 10 B 10 A 10 D 8 Cheapest way to gain 1 Week is to cut A

54. Time-Cost Example ABC is critical path=29 Crash costCrash per weekwks avail A5001 B8003 C5,0002 D1,1002 C 10 B 10 A 9 D 8 Cheapest way to gain 1 wk Still is to cut A Wks IncrementalTotal GainedCrash $Crash $ 1500500

55. Time-Cost Example ABC is critical path=28 Crash costCrash per weekwks avail A5000 B8003 C5,0002 D1,1002 C 10 B 10 A 8 D 8 Cheapest way to gain 1 wk is to cut B Wks IncrementalTotal GainedCrash $Crash $ 1500500 25001,000

56. Time-Cost Example ABC is critical path=27 Crash costCrash per weekwks avail A5000 B8002 C5,0002 D1,1002 C 10 B 9 A 8 D 8 Cheapest way to gain 1 wk Still is to cut B Wks IncrementalTotal GainedCrash $Crash $ 1500500 25001,000 38001,800

57. Time-Cost Example Critical paths=26 ADC & ABC Crash costCrash per weekwks avail A5000 B8001 C5,0002 D1,1002 C 10 B 8 A 8 D 8 To gain 1 wk, cut B and D, Or cut C Cut B&D = $1,900 Cut C = $5,000 So cut B&D Wks IncrementalTotal GainedCrash $Crash $ 1500500 25001,000 38001,800 48002,600

58. Time-Cost Example Critical paths=25 ADC & ABC Crash costCrash per weekwks avail A5000 B8000 C5,0002 D1,1001 C 10 B 7 A 8 D 7 Can’t cut B any more. Only way is to cut C Wks IncrementalTotal GainedCrash $Crash $ 1500500 25001,000 38001,800 48002,600 51,9004,500

59. Time-Cost Example Critical paths=24 ADC & ABC Crash costCrash per weekwks avail A5000 B8000 C5,0001 D1,1001 C 9 B 7 A 8 D 7 Only way is to cut C Wks IncrementalTotal GainedCrash $Crash $ 1500500 25001,000 38001,800 48002,600 51,9004,500 65,0009,500

60. Time-Cost Example Critical paths=23 ADC & ABC Crash costCrash per weekwks avail A5000 B8000 C5,0000 D1,1001 C 8 B 7 A 8 D 7 No remaining possibilities to reduce project length Wks IncrementalTotal GainedCrash $Crash $ 1500500 25001,000 38001,800 48002,600 51,9004,500 65,0009,500 75,00014,500

61. Time-Cost Example C 8 B 7 A 8 D 7 No remaining possibilities to reduce project length Wks IncrementalTotal GainedCrash $Crash $ 1500500 25001,000 38001,800 48002,600 51,9004,500 65,0009,500 75,00014,500 Now we know how much it costs us to save any number of weeks Customer says he will pay $2,000 per week saved. Only reduce 5 weeks. We get $10,000 from customer, but pay $4,500 in expediting costs Increased profits = $5,500

62. What about Uncertainty?

63. PERT Activity Times 3 time estimates Optimistic times (a) Most-likely time (m) Pessimistic time (b) Follow beta distribution Expected time: t = (a + 4m + b)/6 Variance of times: v = (b - a) 2 /36  

64. Project Times Expected project time (T) Sum of critical path activity times, t Project variance (V) Sum of critical path activity variances, v

65. Example ActivityambE[T]variance A2484.331 B36.111.56.482 C48107.671 Project18.54 C C B B A A 4.33 6.48 7.67

66. Sum of 3 Normal Random Numbers 102030405060 Average value of the sum is equal to the sum of the averages Variance of the sum is equal to the sum of the variances Notice curve of sum is more spread out because it has large variance

67. Back to the Example: Probability of <= 21 wks 18.5 21 Average time = 18.5, st. dev = 2 21 is how many standard deviations above the mean? 21-18.5 = 2.5. St. Dev = 2, so 21 is 2.5/2 = 1.25 standard deviations above the mean Book Table says area between Z=1.25 and –infinity is 0.8944 Probability <= 21 wks = 0.8944 = 89.44%

68. Benefits of PERT/CPM Useful at many stages of project management Mathematically simple Use graphical displays Give critical path & slack time Provide project documentation Useful in monitoring costs

69. Limitations of PERT/CPM Clearly defined, independent, & stable activities Specified precedence relationships Activity times (PERT) follow beta distribution Subjective time estimates Over emphasis on critical path

70. Conclusion Explained what a project is Summarized the 3 main project management activities Drew project networks Compared PERT & CPM Determined slack & critical path Computed project probabilities