1. OPERATIONS MANAGEMENT for MBAs Second Edition
Meredith and Shafer
Prepared by
Scott M. Shafer
Wake Forest University
John Wiley and Sons, Inc.

2. Chapter 12: Project Management

3. Chapter 12: Project Management
Introduction
Chapter 12: Project Management

4. Previous Examples of Projects
Transporting Olympic Flame (Chapter 1)
Product Development Projects in Chapter 4 (Thermos’s electric grill)
Mercedes-Benz facility location (Chapter 6)
Chapter 12: Project Management

5. Viper Development Project
Project team given 3 years to go from concept to roadster.
Needed to develop new 8.0-litter V-10 aluminum engine and new high performance six-speed transmission.
Comparable projects usually require five years at Chrysler.
Chapter 12: Project Management

6. Viper Development Project continued
Project team members hand-picked.
Artemis Prestige selected to help manage project
ability to track several projects concurrently
interactive use
provide broad picture of entire project
help identify the impact of each activity on the ultimate completion of the project
Chapter 12: Project Management

7. Viper Development Project: An Overwhelming Success
First test engine required less than a year to develop.
Transmission developed in 1.5 years compared to the usual 5 to 6 years.
Many important innovations in the frame, body, and brakes were incorporated .
Chapter 12: Project Management

8. Zeneca Pharmaceuticals
Mission is the development of new drugs for the medical community.
The development of a new drug is a complex project with typical durations of 10 years.
Chapter 12: Project Management

9. Zeneca Pharmaceuticals: Major Steps in Drug Development
Preclinical Testing
Investigational New Drug
Human Clinical Testing
three separate phases
New Drug Application
Approval
Chapter 12: Project Management

10. Differences Between Pharmaceutical R&D Projects and Other Industries
Final product is information rather than a physical product.
Long duration, extreme costs, and high chances for failure.
Chapter 12: Project Management

11. Chapter 12: Project Management
Background
Project management concerned with managing organizational activities.
Often used to integrate and coordinate diverse activities.
Projects are special types of processes.
Chapter 12: Project Management

12. Chapter 12: Project Management
Examples of Projects
Constructing highways, bridges, tunnels and dams
Erecting skyscrapers, steel mills, and homes
Organizing conferences and conventions
Managing R&D projects
Running political campaigns, war operations, and advertising campaigns
Chapter 12: Project Management

13. Reasons for Growth in Project Operations
More Sophisticated Technology
Better-Educated Citizens
More Leisure Time
Increased Accountability
Higher Productivity
Faster Response to Customers
Greater customization for customers
Chapter 12: Project Management

14. Chapter 12: Project Management
Planning the Project
Chapter 12: Project Management

15. Life Cycle of a Project (Stretched-S)
Chapter 12: Project Management

16. Life Cycle of a Project (Exponential)
Chapter 12: Project Management

17. Organizing the Project Team
Ad Hoc Project Form
Weak Functional Matrix
Strong Project Matrix
Chapter 12: Project Management

18. Types of Project Team Members
Those having a long-term relationship with the project.
Those that the PM will need to communicate with closely.
Those with rare skills necessary to project success.
Chapter 12: Project Management

19. Work Breakdown Structure
Chapter 12: Project Management

20. Project Master Schedule
Chapter 12: Project Management

21. Complexity of Scheduling Project Activities
Large number of activities
Precedence relationships
Limited time of the project
Chapter 12: Project Management

22. Planning and Scheduling Projects
Planning. Determining what must be done and which tasks must precede others.
Scheduling. Determining when the tasks must be completed; when they can and when they must be started; which tasks are critical to the timely completion of the project; and which tasks have slack and how much.
Chapter 12: Project Management

23. Scheduling the Project: PERT and CPM
Chapter 12: Project Management

24. Chapter 12: Project Management
Terminology
Activity
Event
Network
Path
Critical Path
Critical Activities
Dummy Activities
Chapter 12: Project Management

25. Project Planning When Activity Times are Known
Inputs
activity completion times
activity precedence relationships
Outputs
graphical representation of project
time to complete project
identification of critical path(s) and activities
activity and path slack
earliest start, earliest finish, latest start, and latest finish times for each activity
Chapter 12: Project Management

26. Chapter 12: Project Management
Example
Chapter 12: Project Management

27. Network Diagram 2 4 1 6 3 5 Paths Time Slack A-D-F 35 0 A-C-E-G 33 2
B(7)
E(4)
G(14) 3 5
Paths Time Slack
A-D-F
A-C-E-G
B-E-G
critical path

28. Early Start and Finish Times
Chapter 12: Project Management

29. Latest Start and Finish Times
Chapter 12: Project Management

30. Activity Slack Time TES = earliest start time for activity
TLS = latest start time for activity
TEF = earliest finish time for activity
TLF = latest finish time for activity
Activity Slack = TLS - TES = TLF - TEF
Chapter 12: Project Management

31. Chapter 12: Project Management
Path Slack
Duration of Critical Path
- Path Duration
Path Slack
Chapter 12: Project Management

32. Chapter 12: Project Management
Activity Slack Times
Chapter 12: Project Management

33. Project Planning When Activity Times are Uncertain
Inputs
Optimistic (to), most likely (tm), and pessimistic (tp) time estimate for each activity
activity precedence relationships
Outputs
graphical representation of project
expected activity and path completion times
variance of activity and path completion times
probability that project completed by specified time
Chapter 12: Project Management

34. Expected Activity Time and Variance of Activity Time
Chapter 12: Project Management

35. Chapter 12: Project Management
Example
Chapter 12: Project Management

36. Network Diagram with Expected Activity Times and Variances
[5.5, 0.694]
[10, 0.0] 2 4 D
[11.5, 0.913] F A 1
[4.83, 0.250] C 6 B
[7.0, 0.444] G E
[4.33, 1.0] 3 5
[4.0, 0.111]
Chapter 12: Project Management

37. Expected Completion Time and Variance of Path A-D-F
= 27
Path Variance = = 1.607
Chapter 12: Project Management

38. Path Expected Times and Variances
Chapter 12: Project Management

39. Probabilities of Completion
Chapter 12: Project Management

40. Probability of Project Being Completed on or Before Time 25
Only path A-D-F has reasonable chance of taking 25 or more:
From standard normal table in Appendix A, there is a 5.82% chance of completing project on or before time 25.
Chapter 12: Project Management

41. Probability of Path A-D-F being Completed on or Before Time 25
5.82%
Chapter 12: Project Management

42. Plan E Project Operations Network
Chapter 12: Project Management

43. Proper Use of Dummy Activities
Chapter 12: Project Management

44. Activity Expected Times and Variances
Chapter 12: Project Management

45. Simulating Project Completion Times with SpreadsheetsF D B E
Chapter 12: Project Management

46. Simulating Project Completion Times
Chapter 12: Project Management

47. Chapter 12: Project Management

48. Chapter 12: Project Management

49. Chapter 12: Project Management

50. Chapter 12: Project Management

51. Chapter 12: Project Management

52. Project Management Software Capabilities
Chapter 12: Project Management

53. Microsoft Project’s Gantt Chart
Chapter 12: Project Management

54. Pert Chart Generated by Microsoft Project
Chapter 12: Project Management

55. Calendar of Activities Created by Microsoft Project
Chapter 12: Project Management

56. Controlling the Project: Cost and Performance
Chapter 12: Project Management

57. Chapter 12: Project Management
Variance Report
Cost standard determined using engineering estimates or analysis of past performance
Actual cost monitored and compared with cost standard
Project manager can exert control if difference between standard and actual (called a variance) is considered significant.
Chapter 12: Project Management

58. Cost-Schedule Reconciliation Charts
Chapter 12: Project Management

59. Chapter 12: Project Management
Earned Value Chart
Chapter 12: Project Management

60. Goldratt’s Critical Chain
Chapter 12: Project Management

61. Chapter 12: Project Management
Introduction
Similar issues that trouble people about working on projects regardless of type of project
unrealistic due dates
too many changes
resources and data not available
unrealistic budget
These issues/problems related to need to make trade-offs
To what extent are these problems caused by human decisions and practices?
Chapter 12: Project Management

62. Three Project Scenarios
Chapter 12: Project Management

63. Chapter 12: Project Management
Project Completion Time Statistics Based on Simulating Three Projects 200 Times
Chapter 12: Project Management

64. Chapter 12: Project Management
Observations
Average Completion Times
Implications of Assuming Known Activity Times
Shape of the Distribution
Worker Time Estimates
Impact of Inflated Time Estimates
Student Syndrome
Chapter 12: Project Management

65. Chapter 12: Project Management
Multitasking
Chapter 12: Project Management

66. Alternative Gantt Charts for Projects A and B
Chapter 12: Project Management

67. Chapter 12: Project Management
Common Chain of Events
Underestimate time needed to complete project
assumption of known activity times and independent paths
Project team members inflate time estimates
Work fills available time
student syndrome
early completions not reported
Chapter 12: Project Management

68. Common Chain of Events continued
Safety time misused
Misused safety time results in missed deadlines
Hidden safety time complicates task of prioritizing project activities
Lack of clear priorities results in poor multitasking
Chapter 12: Project Management

69. Common Chain of Events concluded
Poor multitasking increases task durations
Uneven demand on resources also results due to poor multitasking
More projects undertaken to ensure all resources fully utilized
More projects further increases poor multitasking
Chapter 12: Project Management

70. Chapter 12: Project Management
Reversing the Cycle
Reduce number of projects assigned to each individual
Schedule start of new projects based on availability of bottleneck resources
Reduce amount of safety time added to individual tasks and then add some fraction back as project buffer
activity durations set so that there is a high probability the task will not be finished on time
Chapter 12: Project Management

71. Chapter 12: Project Management
The Critical Chain
Longest chain of consecutively dependent events
considers both precedence relationships and resource dependencies
Project Buffer
Feeding Buffer
Chapter 12: Project Management

72. Sample Network Diagram
Chapter 12: Project Management

73. Figure 6-25 Project and Feeder Buffers
Chapter 12: Project Management

74. Chapter 12: Project Management
Copyright
Copyright 2002John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.
Chapter 12: Project Management