Transcript PRODUCTIONS/OPERATIONS MANAGEMENT
17-1 Project Management
Operations Management
William J. Stevenson
8 th edition
17-2 Project Management
CHAPTER 17
Project Management
Operations Management, Eighth Edition, by William J. Stevenson Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
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Projects
JAN FEB MAR APR MAY JUN
Build A A Done Build B B Done Build C C Done Build D Ship
On time!
Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame.
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Project Management How is it different?
Limited time frame Narrow focus, specific objectives Less bureaucratic Why is it used?
Special needs Pressures for new or improves products or services
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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
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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
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Project Management What are the tools?
Work breakdown structure Network diagram Gantt charts Risk management
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Planning and Scheduling Gantt Chart
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
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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
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Project Manager Responsible for: Work Human Resources Communications Quality Time Costs
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Ethical Issues Temptation to understate costs Withhold information Misleading status reports Falsifying records Comprising workers’ safety Approving substandard work
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Project Life Cycle Concept
Feasibility Planning Execution Termination
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Work Breakdown Structure Figure 17.2
Project X Level 1 Level 2 Level 3 Level 4
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PERT and CPM
PERT
:
CPM
: Program Evaluation and Review Technique 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
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The Network Diagram Network (precedence) diagram Activity-on-arrow (AOA) Activity-on-node (AON) Activities Events
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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
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Project Network – Activity on Arrow Figure 17.4
AOA
Order furniture 4 Locate facilities 2 Furniture setup Remodel 1 5 6 Move in Interview Hire and train 3
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Project Network – Activity on Node Figure 17.4
Order furniture Locate facilities 2 Furniture setup
AON
1 6 Remodel Move in S 5 7 Interview 3 Hire and train 4
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Network Conventions
a b c a b c a b c d b a c Dummy activity
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Time Estimates Deterministic Time estimates that are fairly certain Probabilistic Estimates of times that allow for variation
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Figure 17.5
Deterministic time estimates
8 weeks 1 4 weeks
Example 1
2 6 weeks 4 11 weeks 3 weeks 5 Move in 1 week 6 9 weeks 3
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Example 1 Solution
Critical Path
Path 1-2-3-4-5-6 1-2-5-6 1-3-5-6 Length (weeks) 18 20 14 Slack 2 0 6
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Computing Algorithm Network activities ES: early start EF: early finish LS: late start LF: late finish Used to determine Expected project duration Slack time Critical path
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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
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Probabilistic Estimates Figure 17.8
Activity start t o Optimistic time t m t e Most likely time (mode) t p Pessimistic time
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Expected Time t e = t o + 4t m 6 +t p t e t o t m t p = expected time = optimistic time = most likely time = pessimistic time
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Variance 2 = (t p – t o ) 2 36 t 2 t p o = variance = optimistic time = pessimistic time
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Optimistic time
Example 5
Most likely time 2-4-6 b Pessimistic time 3-4-5 d 3-5-7 e 4-6-8 h 5-7-9 f
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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.
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Example 6
17 Weeks a-b-c 1.00
10.0
d-e-f 16.0
g-h-i 1.00
13.5
Weeks Weeks Weeks
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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
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Time-Cost Trade-Offs: Crashing Figure 17.11
Total cost Expected indirect costs Cumulative cost of crashing Shorten CRASH Shorten Optimum
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Example 7
f 2 4 d
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Advantages of PERT Forces managers to organize Provides graphic display of activities Identifies Critical activities Slack activities 2 4 1 5 3 6
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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 4 5 6
142 weeks
3
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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
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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
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Project Risk Management Risk: occurrence of events that have undesirable consequences Delays Increased costs Inability to meet specifications Project termination
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Risk Management Identify potential risks Analyze and assess risks Work to minimize occurrence of risk Establish contingency plans
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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
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CHAPTER 17
Additional PowerPoint slides contributed by Geoff Willis, University of Central Oklahoma.
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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.
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Projects — Concepts PM1 Definition/Example Alton Bridge