Transcript Chapter 16 – Project Management Operations Management by R. Dan Reid & Nada R.
Chapter 16 –
Project Management
Operations Management
by
R. Dan Reid & Nada R. Sanders
2nd Edition © Wiley 2005 PowerPoint Presentation by R.B. Clough - UNH
Project Management Applications
What is a project?
Any endeavor with objectives With multiple activities With defined precedent relationships With a specific time period for completion
Examples?
A major event like a wedding Any construction project Designing a political campaign
Five Project Life Cycle Phases
Conception:
identify the need
Feasibility analysis or study:
benefits, and risks costs
Planning:
who, how long, what to do?
Execution:
doing the project
Termination:
ending the project
Network Planning Techniques
Program Evaluation & Review Technique (PERT):
Developed to manage the Polaris missile project Many tasks pushed the boundaries of science & engineering (tasks’ duration = probabilistic)
Critical Path Method (CPM):
Developed to coordinate maintenance projects in the chemical industry A complex undertaking, but individual tasks are routine (tasks’ duration = deterministic)
Both PERT and CPM
Graphically display the precedence relationships & sequence of activities Estimate the project’s duration Identify critical activities that cannot be delayed without delaying the project Estimate the amount of slack associated with non-critical activities
Network Diagrams
Activity-on-Node (AON):
Uses nodes to represent the activity Uses arrows to represent precedence relationships
Step 1-Define the Project:
Cables By Us
is bringing a new product on line to be manufactured in their current facility in some existing space. The owners have identified 11 activities and their precedence relationships. Develop an AON for the project.
Activity
H I J K A B C D E F G
Description
Develop product specifications Design manufacturing process Source & purchase materials Source & purchase tooling & equipment Receive & install tooling & equipment Receive materials Pilot production run Evaluate product design Evaluate process performance Write documentation report Transition to manufacturing
Immediate Predecessor
None A A B D C E & F G G H & I J
Duration (weeks)
4 6 3 6 14 5 2 2 3 4 2
Step 2- Diagram the Network for Cables By Us
Step 3 (a)- Add Deterministic Time Estimates and Connected Paths
Step 3 (a) (
Continued
): Calculate the Path Completion Times
Paths
ABDEGHJK ABDEGIJK
Path duration
40 41 ACFGHJK 22 ACFGIJK 23 The longest path (ABDEGIJK) limits the project’s duration (project cannot finish in less time than its longest path)
ABDEGIJK is the project’s critical path
Some Network Definitions
All
activities Slack
on the
critical path
defines how long have
zero slack non-critical activities delayed without delaying the project
can be
Slack
= the activity’s
late finish minus its early finish
(or its
late start minus its early start
) Earliest Start (
ES
) = the earliest finish of the immediately preceding activity Earliest Finish (
EF
) = is the
ES plus
the
activity time
Latest Start (
LS
) and Latest Finish (
LF
) depend on whether or not the activity is on the critical path
ES, EF Network
LS, LF Network
Calculating Slack
Activity
A B C D E F G H I J K
Late Finish
4 10 25 16 30 30 32 35 35 39 41
Early Finish
4 10 7 16 30 12 32 34 35 39 41
Slack (weeks)
0 0 18 0 0 18 0 1 0 0 0
A B C D H I J K E F G 0
Earliest Start Gantt Chart
5 10 15 20 25 30 35 40 45
A B C D H I J K E F G 0
Latest Start Gantt Chart
5 10 15 20 25 30 35 40 45
Revisiting
Cables By Us
Using Probabilistic Time Estimates
Activity
H I J K A B C D E F G
Description
Develop product specifications Design manufacturing process Source & purchase materials Source & purchase tooling & equipment Receive & install tooling & equipment Receive materials Pilot production run Evaluate product design Evaluate process performance Write documentation report Transition to manufacturing
Optimistic time
2 3 2 4 12 2 2 2 2 2 2
Most likely time
4 7 3 7 16 5 2 3 3 4 2
Pessimistic time
6 10 5 9 20 8 2 4 5 6 2
Using Beta Probability Distribution to Calculate Expected Time Durations
A typical beta distribution is shown below, note that it has definite end points The expected time for finishing each activity is a weighted average Exp.
time
optimistic
4
most likely
pessimisti c 6
Calculating Expected Task Times
Expected time
optimistic
4
most likely
pessimisti c
6
Activity
A B C D E F G H I J K
Optimistic time
2 3 2 4 12 2 2 2 2 2 2
Most likely time
4 7 3 7 16 5 2 3 3 4 2
Pessimistic time
6 10 5 9 20 8 2 4 5 6 2
Expected time
4 6.83
3.17
6.83
16 5 2 3 3.17
4 2
Network Diagram with Expected Activity Times
Estimated Path Durations through the Network
Activities on paths
ABDEGHJK ABDEGIJK ACFGHJK ACFGIJK
Expected duration
44.66
44.83
23.17
23.34
ABDEGIJK is the expected critical path & the project has an expected duration of
44.83 weeks
Estimating the Probability of Completion Dates
Using probabilistic time estimates offers the advantage of predicting the probability of project completion dates We have already calculated the expected time for each activity by making three time estimates Now we need to calculate the variance for each activity The variance of the beta probability distribution is:
σ 2
p
o 6
2
where p=pessimistic activity time estimate o=optimistic activity time estimate
Project Activity Variance
Activity H I J K E F G A B C D Optimistic 2 2 2 2 12 2 2 2 3 2 4 Most Likely 3 3 4 2 16 5 2 4 7 3 7 Pessimistic 4 5 6 2 6 10 5 9 20 8 2 Variance 0.44
1.36
0.25
0.69
1.78
1.00
0.00
0.11
0.25
0.44
0.00
Variances of Each Path through the Network
Path Number 1 Activities on Path A,B,D,E,G,H,J,k Path Variance (weeks) 4.82
2 3 A,B,D,E,G,I,J,K A,C,F,G,H,J,K 4.96
2.24
4 A,C,F,G,I,J,K 2.38
Calculating the Probability of Completing the Project in Less Than a Specified Time
When you know:
The expected completion time Its variance
You can calculate the probability of completing the project in “X” weeks with the following formula: z
specified time
path expected time path standard time
D T
EF P σ P 2
Where DT = the specified completion date
EF P = the expected completion time of the path σ P 2
variance of path
Example: Calculating the probability of finishing the project in 48 weeks Use the z values in Appendix B to determine probabilities E.G. for path 1
z
48 weeks
44.66
weeks 4.82
1.52
Path Number 1 2 3 Activities on Path Path Variance (weeks) z-value A,B,D,E,G,H,J,k A,B,D,E,G,I,J,K A,C,F,G,H,J,K 4.82
4.96
2.24
1.5216
1.4215
16.5898
4 A,C,F,G,I,J,K 2.38
15.9847
Probability of Completion 0.9357
0.9222
1.000
1.000
Reducing the Time of a Project (crashing) A H I J K B C D E F G Activity Normal Time (wk) 4 2 3 4 2 6 3 6 14 5 2 Normal Cost ($) 8,000 30,000 6,000 24,000 60,000 5,000 6,000 4,000 4,000 4,000 5,000 Crash Time 3 2 2 2 2 5 3 4 12 4 2 Crash Cost ($) 11,000 35,000 6,000 28,000 72,000 6,500 6,000 4,000 5,000 6,400 5,000 Max. weeks of reduction 1 0 1 2 0 1 0 2 2 1 0 Reduce cost per week 3,000 5,000 0 2,000 6,000 1500 0 0 1,000 1,200 0
Crashing Example: Suppose the
Us
product project from 41 to 36
Cables By
project manager wants to reduce the new weeks.
Crashing Costs are considered to be linear Look to crash activities on the critical path Crash the least expensive activities on the critical path first (based on cost per week)
Crash
activity I
from 3 weeks to 2 weeks $1000 Crash
activity J
Crash
activity D
from 4 weeks to 2 weeks $2400 from 6 weeks to 4 weeks $4000
Recommend Crash Cost $7400
Will crashing 5 weeks return more than it costs?
Crashed Network Diagram
Chapter 16 HW Assignment
Problems 1 – 8, 13 - 16