1. 3 Project Management PowerPoint presentation to accompany
Heizer and Render
Operations Management, Eleventh Edition
Principles of Operations Management, Ninth Edition
PowerPoint slides by Jeff Heyl
© 2014 Pearson Education, Inc.

2. Outline The Importance of Project Management
Project Planning
Project Scheduling
Project Controlling
Project Management Techniques: PERT
A Critique of PERT

3. MANAGEMENT OF PROJECTS

4. Importance of Project Management
Project: unique, one-time operations designed to accomplish a set of objectives in a limited time frame.
Building Construction
Research Project

5. Importance of Project Management
Planning - goal setting, defining the project, team organization
Scheduling - relate people, money, and supplies to specific activities and activities to each other
Controlling - monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands
Planning
Scheduling
Controlling

6. Project Planning Establishing objectives Defining project
Creating work breakdown structure
Determining resources
Forming organization

7. Project Planning Project Organization Often temporary structure
Uses specialists from entire company
Headed by project manager
Coordinates activities
Monitors schedule and costs
Permanent structure called ‘matrix organization’

8. Project Planning A Sample Project Organization Project No. 1
Marketing
Finance
Human
Resources
Design
Quality
Mgt
Production
President
Test
Engineer
Mechanical
Project No. 1
Project
Manager
Technician
Technician
Project No. 2
Project
Manager
Electrical
Engineer
Computer Engineer
Figure 3.2

9. Project Planning Matrix Organization
Marketing Operations Engineering Finance
Project 1
Project 2
Project 3
Project 4

10. Project Planning The Role of Project Manager:
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

11. Project Planning The Role of Project Manager:
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
Project managers should be:
Good coaches
Good communicators
Able to organize activities from a variety of disciplines

12. Project Planning Work Breakdown Structure
Dividing a project into more and more detailed tasks (or activities)
Level
1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or “work packages”) to be completed

13. Work Breakdown Structure
Level 1
Develop Windows 8 Operating System
1.0
Level 2
Software Design
Cost Management Plan
System Testing
1.1
1.2
1.3
Level 3
Develop GUIs
Design Cost Tracking Reports
Module Testing
Ensure Compatibility with Earlier Versions
Develop Cost/Schedule Interface
Defect Testing
1.1.1
1.2.2
1.3.2
1.3.1
1.2.1
1.1.2
Level 4
Compatible with Windows 7
Compatible with Windows Vista
Compatible with Windows XP
(Work packages)
Figure 3.3

14. Project Scheduling
Shows the relationship of each activity to others and to the whole project
Identifies the precedence relationships among activities
Encourages the setting of realistic time and cost estimates for each activity
Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project

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

16. A Simple Gantt Chart Project : establish a new department
Activity Time
Activity Sequence
Project Duration

17. Project Controlling
Close monitoring of resources, costs, quality, budgets
Feedback enables revising the project plan and shift resources
Computerized tools produce extensive reports

18. Project Management Software
There are several popular packages for managing projects
Primavera
MacProject
MindView
HP Project
Fast Track
Microsoft Project
© 2014 Pearson Education, Inc.

19. 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

20. PROJECT MGMT TECHNIQUES: PERT

21. PERT and CPM Network techniques Developed in 1950s
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

22. Six Steps PERT
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

23. Six Steps PERT 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

24. PERT: AON Convention Activity on Activity Node (AON) Meaning (a) A B C
A comes before B, which comes before C
(a) A B C
3.0
2.5
2.0
A and B must both be completed before C can start
(b) A C B
3.0
2.5
2.0

25. PERT: AON Convention Activity on Activity Node (AON) Meaning (c) B A C
B and C cannot begin until A is completed
(c) B A C
3.0
2.5
2.0
C and D cannot begin until A and B have both been completed
(d) A B C D
3.0
2.5
2.0
3.5

26. PERT: AON Convention Activity on Activity Node (AON) Meaning (e) A B C
C cannot begin until both A and B are completed; D cannot begin until B is completed.
(e) A B C D
3.0
2.5
2.0
3.5
B and C cannot begin until A is completed. D cannot begin until both B and C are completed.
(f) A C D B
3.0
2.5
3.5
2.0

27. AON Example
Example 3.1: Milwaukee has identified the eight activities that need to be performed in order to install air pollution control equipment in its facility.
Activity
Description
Immediate Predecessors
Estimated Time (weeks) A
Build internal components — 2 B
Modify roof and floor 3 C
Construct collection stack D
Pour concrete and install frame
A, B 4 E
Build high-temperature burner F
Install pollution control system G
Install air pollution device
D, E 5 H
Inspect and test
F, G

28. Immediate Predecessors Estimated Time (weeks)
Activity
Immediate Predecessors
Estimated Time (weeks) A — 2 B 3 C D
A, B 4 E F G
D, E 5 H
F, G 4 3 2 5 C F H E A B
Start D G

29. EX1 in class Estimated Time Immediate Task (weeks) predecessor
Construct a PERT network for this project by using AON convention
A 8 —
B 6 A
C 4 —
D 9 C
E 11 A
F 3 B, E
G 1 B, C, E
H 5 D, F, G

30. PERT Important concepts
Path: A sequence of activities leading from the beginning node to the ending node of a PERT network.
Path length: The sum of the time estimates of the activities on a path.
Critical path: The longest path in a PERT network.
Critical activities: The activities on the critical path.
Project duration (or completion time): The length of the critical path.
Path slack: The difference between the length of a path and the project duration.

31. PERT Analysis
Deterministic PERT Analysis
Computational Algorithm

32. Deterministic PERT Analysis
Enumeration method
Calculate and compare the lengths of all paths
Determine the critical path, critical activities, and the path slacks

33. Deterministic PERT Analysis
Example 3.2: Do deterministic PERT analysis.
Estimated
Time Immediate
Task (weeks) predecessor
A 8 —
B 6 A
C 4 —
D 9 C
E 11 A
F 3 B
G 1 D, E, F G F B E D A C
Start 9 4 6 11 1 8 3
Total 42

34. Deterministic PERT AnalysisG F B E D A C
Start 9 4 6 11 1 8 3
(1) What is the critical path?
What are the critical activities?
(2) What is the duration of the project?
Are there any path slacks?
If so, how long is each of the slacks?
Critical Path
Path Length (weeks) Slack
Start – A – B – F – G =18 2
Start – A – E – G =20
Start – C – D – G =14 6
(1) The critical path is Start – A – E - G. The critical activities are A, E, G.
(2) The duration of the project is 20 weeks.
Path Start – A – B – F – G has a slack of 2 weeks,
and path Start – C – D – G has a slack of 6 weeks.

35. Deterministic PERT 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

36. Deterministic PERT Analysis
Example 3.3
(1) What is the critical path?
What are the critical activities?
(2) What is the duration of the project?
Are there any path slacks?
If so, how long is each of the slacks?
Path Length (weeks) Slack
Critical Path
Start – A – C – F – H
Start – A – C – E – G – H
Start – A – D – G – H
Start – B – D – G – H
(1) The critical path is Start – A – C – E – G – H. The critical activities are A, C, E, G, H.
(2) The duration of the project is 15 weeks.
(3) Path Start – A – C – F – H has a slack of 6 weeks, path Start – A – D – G – H has a slack of 2 weeks, and path Start – B – D – G – H has a slack of 1 week.

37. Immediate Predecessor(s) Estimated Time (weeks)
EX2 in class
Activity
Immediate Predecessor(s)
Estimated Time (weeks) J -- 10 K 8 L 6 M 3 N
K, M 5 O 7 P
L, N
Draw the diagram by using the information above, and determine the project duration, critical activity and path slacks

38. PERT Computational Algorithm
Earliest start (ES) = earliest time at which an activity can start, assuming all predecessors have been completed
Earliest finish (EF) = earliest time at which an activity can be finished
Latest start (LS) = latest time at which an activity can start so as to not delay the completion time of the entire project
Latest finish (LF) = latest time by which an activity has to be finished so as to not delay the completion time of the entire project ES EF LS LF

39. PERT: Forward Pass Begin at starting event and work forward
Earliest Start Time Rule:
If an activity has only one immediate predecessor, its ES equals the EF of the predecessor
If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors
ES = Max (EF of all immediate predecessors)

40. PERT: Forward Pass Begin at starting event and work forward
Earliest Finish Time Rule:
The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time
EF = ES + Activity time

41. PERT: Forward Pass (Example 3.4)
Step 1: Use forward pass to calculate ES and EF ES EF LS LF 2 4 4 7 3 2 2 F C 2 4 8 A 4 2 E H
Start 13 15 5 3 4 B D G 3 3 7 8 13

42. PERT: Backward Pass Begin with the last event and work backwards
Latest Finish Time Rule:
If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it
If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it
LF = Min (LS of all immediate following activities)

43. PERT: Backward Pass Begin with the last event and work backwards
Latest Start Time Rule:
The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time
LS = LF – Activity time

44. PERT: Backward Pass (Example 3.4)
Step 2: Use backward pass to calculate LS and LF ES EF LS LF 2 4 4 7 2 4 10 13 3 2 2 F 2 C 2 A 4 8 4 2 4 8 E H
Start 13 15 5 3 4 13 15 B D G 3 3 7 8 13 1 4 4 8 8 13

45. PERT: Slack time & Critical activity
After computing the ES, EF, LS, and LF times for all activities, compute the slack time for each activity, and identify the critical activity.
Slack is the length of time an activity can be delayed without delaying the entire project
Slack = LS – ES = LF – EF
Critical activity is an activity with zero slack

46. PERT: Critical activity & Project duration
Noncritical activity is an activity with a positive slack
Project duration is the time to finish the whole project.
Project duration = LF of ending activity
= EF of ending activity

47. PERT: Critical Activity (Example 3.4)
Step 3: Calculate activity slack and decide critical activities & project duration
Slack = 0
Slack = 6 2 4 4 7
Slack = 0 2 4 10 13 3 2 2 F C
Slack = 0 2 2 A 4 8 4 2 4 8 E H
Start
Slack = 0 13 15 5 3 4 13 15 B D G
Slack = 0 3 3 7 8 13 1 4 4 8 8 13
Slack = 1
Slack = 1
Slack = 0

48. PERT: Critical Activity (Example 3.4)
Critical activities: A, C, E, G, H
Slack = 0
Slack = 6
Project duration is 15 weeks. 2 4 4 7
Slack = 0 2 4 10 13 3 2 2 F C
Slack = 0 2 2 A 4 8 4 2 4 8 E H
Start
Slack = 0 13 15 5 3 4 13 15 B D G
Slack = 0 3 3 7 8 13 1 4 4 8 8 13
Slack = 1
Slack = 1
Slack = 0

49. Note Activity slack time: Path slack time: PERT Algorithm Example 3.4
Deterministic PERT Analysis
Example 3.3, 3.2

50. PERT: Computational Algorithm (Example 3.5)
(1) Construct a PERT network for this project by using AON convention
Activity
Immediate Predecessors
Estimated Time (weeks) A — 7 B 3 C 9 D
A, C 5 E 2 F
Dummy Ending Activity
Dummy Starting Activity 9 3 2 5 7 A B D E
Start
End C F

51. PERT: Example 3.5 Step 1: Use forward pass to calculate ES and EF A DLS LF 7 12 17 17 19 7 5 2 A D E 19 19
Start
End 3 9 5 B C F 3 3 12 12 17

52. PERT: Example 3.5 Step 2: Use backward pass to calculate LS and LF A DEF LS LF 7 12 17 17 19 5 12 12 17 17 19 7 5 2 A D E 19 19 19 19
Start
End 3 9 5 B C F 3 3 12 12 17 3 3 12 14 19

53. PERT: Example 3.5
Step 3: Calculate activity slack and decide critical activities & project duration
Slack = 5
Slack = 0
Slack = 0 7 12 17 17 19
Slack = 0 5 12 12 17 17 19 7 5 2
Slack = 0 A D E 19 19 19 19
Start
End 3 9 5 B C F 3 3 12 12 17 3 3 12 14 19
Slack = 0
Slack = 0
Slack = 2

54. PERT: Example 3.5 Critical activities are B, C, D, E.
Slack = 5
Slack = 0
Slack = 0 7 12 17 17 19
Slack = 0 5 12 12 17 17 19 7 5 2
Slack = 0 A D E 19 19 19 19
Start
End 3 9 5 B C F 3 3 12 12 17 3 3 12 14 19
Slack = 0
Slack = 0
Slack = 2
Critical activities are B, C, D, E.
Project duration is 19 weeks.

55. EX3 in class
Use the computational algorithm to determine the critical activities & project duration 10 6 8 J L P 3 5
End M N
Start 8 7 K O

56. Advantages of PERT/CPM
Especially useful when scheduling and controlling large projects
Straightforward concept and not mathematically complex
Graphical networks help highlight relationships among project activities
Critical path and slack time analyses help pinpoint activities that need to be closely watched

57. Advantages of PERT/CPM
Project documentation and graphics point out who is responsible for various activities
Applicable to a wide variety of projects
Useful in monitoring not only schedules but costs as well

58. Limitations of PERT/CPM
Project activities have to be clearly defined, independent, and stable in their relationships
Precedence relationships must be specified and networked together
Time estimates tend to be subjective and are subject to fudging by managers
There is an inherent danger of too much emphasis being placed on the longest, or critical, path