1. Operations Management
William J. Stevenson
8th edition

2. 17 Project Management CHAPTER
Operations Management, Eighth Edition, by William J. Stevenson
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

3. Projects
Build A
A Done
Build B
B Done
Build C
C Done
Build D
Ship
JAN
FEB
MAR
APR
MAY
JUN
On time!
Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame.

4. Project Management How is it different? Why is it used?
Limited time frame
Narrow focus, specific objectives
Less bureaucratic
Why is it used?
Special needs
Pressures for new or improves products or services

5. 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

6. 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

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

8. Planning and Scheduling
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Locate new facilities
Interview staff
Hire and train staff
Select and order furniture
Remodel and install phones
Move in/startup
Gantt Chart

9. Key Decisions 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

10. Project Manager Responsible for: Work Quality Human Resources Time
Communications Costs

11. Ethical Issues Temptation to understate costs Withhold information
Misleading status reports
Falsifying records
Comprising workers’ safety
Approving substandard work

12. Project Life Cycle Concept Feasibility Planning Execution Termination
Management

13. Work Breakdown Structure
Figure 17.2
Project X
Level 1
Level 2
Level 3
Level 4

14. 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

15. The Network Diagram Network (precedence) diagram
Activity-on-arrow (AOA)
Activity-on-node (AON)
Activities
Events

16. The Network Diagram (cont’d)
Path
Sequence of activities that leads from the starting node to the finishing node
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

17. Project Network – Activity on Arrow
Figure 17.4 1 2 3 4 5 6
Locate facilities
Order furniture
Furniture setup
Interview
Hire and train
Remodel
Move in
AOA

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

19. Network Conventions a b c d
Dummy
activity

20. Time Estimates Deterministic Probabilistic
Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation

21. Example 1 Figure 17.5 1 2 3 4 5 6 Deterministic time estimates 6 weeks
Locate facilities
Order furniture
Furniture setup
Interview
Hire and train
Remodel
Move in
Deterministic
time estimates

22. Example 1 Solution
Critical Path

23. Computing Algorithm Network activities Used to determine
ES: early start
EF: early finish
LS: late start
LF: late finish
Used to determine
Expected project duration
Slack time
Critical path

24. Probabilistic Time Estimates
Optimistic time
Time required under optimal conditions
Pessimistic time
Time required under worst conditions
Most likely time
Most probable length of time that will be required

25. Probabilistic Estimates
Figure 17.8
Activity
start
Optimistic time
Most likely
time (mode)
Pessimistic
time to tp tm te

26. te = to + 4tm +tp 6 Expected Time te = expected time
to = optimistic time
tm = most likely time
tp = pessimistic time

27. (tp – to)2 2 = 36 Variance 2 = variance to = optimistic time
2 =
(tp – to)2 36
2 = variance
to = optimistic time
tp = pessimistic time

28. Example 5 1-3-4 a 3-4-5 d 3-5-7 e 5-7-9 f 2-4-6 b 4-6-8 h 2-3-6 g
3-4-6 i
2-3-5 c
Optimistic
time
Most likely
Pessimistic

29. Path Probabilities Z = Specified time – Path mean
Path standard deviation
Z indicates how many standard deviations
of the path distribution the specified tine
is beyond the expected path duration.

30. Example 6 17
Weeks
10.0
16.0
13.5
1.00
a-b-c
d-e-f
g-h-i

31. Time-cost Trade-offs: Crashing
Crash – shortening activity duration
Procedure for crashing
Crash the project one period at a time
Only an activity on the critical path
Crash the least expensive activity
Multiple critical paths: find the sum of crashing the least expensive activity on each critical path

32. Time-Cost Trade-Offs: Crashing
Figure 17.11
Total
cost
Shorten
Cumulative
cost of crashing
Expected indirect costs
Optimum
CRASH

33. Example 7 6 a 4 d 5 c 10 b 9 e 2 f

34. Advantages of PERT Forces managers to organize
Provides graphic display of activities
Identifies
Critical activities
Slack activities 1 2 3 4 5 6

35. 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 5 6
142 weeks

36. Technology for Managing Projects
Computer aided design (CAD)
Groupware (Lotus Notes)
Project management software
CA Super Project
Harvard Total Manager
MS Project
Sure Track Project Manager
Time Line

37. Advantages of PM Software
Imposes a methodology
Provides logical planning structure
Enhances team communication
Flag constraint violations
Automatic report formats
Multiple levels of reports
Enables what-if scenarios
Generates various chart types

38. Project Risk Management
Risk: occurrence of events that have undesirable consequences
Delays
Increased costs
Inability to meet specifications
Project termination

39. Risk Management Identify potential risks Analyze and assess risks
Work to minimize occurrence of risk
Establish contingency plans

40. Summary Projects are a unique set of activities
Projects go through life cycles
PERT and CPM are two common techniques
Network diagrams
Project management software available

41. CHAPTER 17
Additional PowerPoint slides contributed by Geoff Willis, University of Central Oklahoma.

42. Project Crashing
Crashing a project involves paying more money to complete a project more quickly.
Since the critical path determines the length of a project, it makes sense to reduce the length of activities on the critical path.
CP activities should be reduced until the project is reduced to the desired length or you are paying more per day than you save.
If you have multiple CPs, they should be shortened simultaneously.

43. Definition/Example Alton Bridge
Projects — Concepts
PM1
Definition/Example Alton Bridge