1. Project Management Chapter 16

2. MGMT 326 Foundations of Operations Introduction Strategy Managing Projects Quality Assurance Facilities Products & Processes Planning & Control

3. Project Management Outline Project management concepts Basic project scheduling Project schedule computations

4. Project Management Concepts What is a project? Examples of projects Project performance expectations Project life cycle

5. What is a project? A one-time set of related tasks that produce a major output and usually Involves many tasks Requires significant investment Uses significant inputs Has some tasks must be completed before others can be started Is strategically important to the firm

6. Examples of Projects Entrepreneurship: Starting a new business Marketing: Designing and launching a new product or model Finance: Evaluating a merger or acquisition Finance: Developing a new financial product for investors Accounting: Changing accounting practices to conform to a new accounting regulation

7. Examples of Projects (2) Health care management: Opening a new hospital Operations: renovating a building CIFS: Selecting and installing new software Human resources management: Developing a new training program Economics: developing a new index to measure inflation

8. Project Performance Expectations Achieve project objectives Meet quality specifications Completed on time Completed within budget

9. Five Project Life Cycle Phases Conception: Identify a possible need Feasibility analysis: Identify costs, benefits, and risks. Decide whether to do the project. Planning: Determine project objectives and budget. Select a project leader. Set up project team and schedule. Execution: Do the project. Respond to unexpected problems. Termination: End project. Re-assign team members. Evaluate the project. What lessons should be learned from this project for use in future projects?

10. Basic Project Scheduling Overview of project scheduling Precedence tables Activity-on-node diagrams Paths and path lengths Critical path and project duration

11. Overview of Project Scheduling 1. Determine what tasks (activities) must be done. 2. Determine the time for each activity 3. Determine the order in which the tasks must be done For a given activity X, it is enough to know what activities come immediately before activity X (called immediate predecessors or immediately preceding activities) 4. Set up a precedence table with activity times and immediate predecessors.

12. Overview of Project Scheduling (2) 5. Draw a network diagram for the project. We will use activity on node (AON) diagrams. Use a node (circle or box) to represent each activity Draw an arrow from each immediate predecessor to the activities that it precedes 6. Perform scheduling computations. 7. Determine the project duration and critical path. 8. Set up the project schedule

13. Precedence Table for Example 16.1, page 599 ActivityDescription Immediate Predecessor Duration (weeks) ADevelop product specificationsNone4 BDesign manufacturing processA6 CSource & purchase materialsA3 D Source & purchase tooling & equipment B6 EReceive & install tooling & equipmentD14 FReceive materialsC5 GPilot production runE & F2 HEvaluate product designG2 IEvaluate process performanceG3 JWrite documentation reportH & I4 KTransition to manufacturingJ2

14. Network Diagrams Activity-on-Node (AON): Uses nodes to represent the activity Uses arrows to represent precedence relationships

15. fig_16_02 Network Diagram for Example 16.1

16. Paths and Path Lengths A path is a connected series of activities that begins with the first activity and ends with the last activity. The length of a path is the sum of the activity times for the activities on the path.

17. Critical Path and Project Duration The critical path is the longest path in the project. The project duration is the length of the longest path. The project duration is also the time required to complete the project. Activities that are not on the critical path can be completed at the same time as critical path activities.

18. Project Schedule Computations Definitions used in scheduling computations Computing early start (ES) and early finish (EF) Computing late finish (LF) and late start (LS) Computing slack Determining the critical path and project duration from these calculations Critical and non-critical activities ES and LS schedules

19. Definitions Used in Schedule Computations For each activity in a project: The early start (ES) is the earliest time that an activity can be started. The early finish (EF) is the earliest time that an activity can be finished. The late finish (LF) is the latest time that an activity can be finished. The late start is the latest time that an activity can be started.

20. Computing ES and EF Work from left to right (L  R) For first activity, ES = 0 For all other activities, ES = Largest {EF for immediately preceding activities} For all activities, EF = ES + activity time (inside the circle or box)

21. Computing LF and LS Work from right to left (R  L) For last activity, LF = EF For all other activities, LF = smallest {LS for immediately following activities} For all activities, LS = LF – activity time Caution: LS and LF should never be negative. If you get a negative LS or LF, re-check all your computations (forward and backward) up to that point.

22. Project Duration and Slack Project duration is the amount of time required to finish the project. Duration = EF for the last activity Slack is the amount of flexibility that we have in scheduling an activity Slack = LF – EF = LS – ES. The two formulas should give the same answer. If they do not, re-check your computations. The critical path is the set of activities with zero slack.

23. Critical Activities Critical activities are those on the critical path. Critical activities should be completed on time to avoid delaying project completion. If a critical activity is not completed on time, the schedule must be adjusted so that the project can still be finished on time. This requires spending more money for additional equipment, extra workers, or overtime labor For a critical activity, there is only one start date and one end date that will allow the project to be completed on time without spending extra money.

24. Non-critical Activities Non-critical activities are not on the critical path. For a non-critical activity, there is a range of start dates and a range of end dates that will allow the project to be completed on time without spending extra money. In scheduling non-critical activities, we can consider factors such as cash flow and resource availability.

25. ES and LS Schedules In an early start (ES) schedule, each activity begins at time ES and ends at time EF In a late start (LS) schedule, each activity begins at time LS and ends at time LF Other schedules may be possible. For all activities, we must have ES < start time < LS The activity must start between ES and LS (inclusive)