Production and Operations Management: Manufacturing and Services

Production and Operations Management: Manufacturing and Services

1 McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 2 Chapter 3 Project Management McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 3 OBJECTIVES Definition of Project Management Work Breakdown Structure Project Control Charts Structuring Projects Critical Path Scheduling McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 4 Project Management Defined Project is a series of related jobs usually directed toward some major output and requiring a significant period of time to perform

Project Management are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 5 Gantt Chart Vertical VerticalAxis: Axis: Always AlwaysActivities Activities or or Jobs Jobs Horizontal Horizontalbars barsused usedtotodenote denotelength length ofoftime timefor foreach eachactivity activityor orjob. job. Activity 1 Activity 2 Activity 3

Activity 4 Activity 5 Activity 6 Time McGraw-Hill/Irwin Horizontal HorizontalAxis: Axis: Always AlwaysTime Time 2006 The McGraw-Hill Companies, Inc., All 6 Pure Project A pure project is where a self-contained team works full-time on the project Structuring Projects: Pure Project Advantages The project manager has full authority over the project Team members report to one boss Shortened communication lines Team pride, motivation, and commitment are high McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 7 Structuring Projects: Pure Project Disadvantages Duplication of resources Organizational goals and policies are ignored Lack of technology transfer Team members have no functional area "home"

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 8 Functional Project A functional project is housed within a functional division President Research and Development Engineering Manufacturing Project Project Project A B C Project Project Project D E F Project Project Project G H I Example, Example, Project Project B B is is in in the the functional

functional area area of of Research Research and and Development. Development. McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 9 Structuring Projects Functional Project: Advantages A team member can work on several projects Technical expertise is maintained within the functional area The functional area is a home after the project is completed Critical mass of specialized knowledge McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 10 Structuring Projects Functional Project: Disadvantages Aspects of the project that are not directly related to the functional area get short-changed Motivation of team members is often weak Needs of the client are secondary

and are responded to slowly McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 11 Matrix Project Organization Structure President Research and Engineering Manufacturing Development Marketing Manager Project A Manager Project B Manager Project C McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 12 Structuring Projects Matrix: Advantages Enhanced communications between functional areas Pinpointed responsibility

Duplication of resources is minimized Functional home for team members Policies of the parent organization are followed McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 13 Structuring Projects Matrix: Disadvantages Too many bosses Depends on project managers negotiating skills Potential for sub-optimization McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Work Breakdown Structure A work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages

Level Program 1 2 Project 1 Project 2 Task 1.1 Task 1.2 3 Subtask 1.1.1 4 Work Package 1.1.1.1 McGraw-Hill/Irwin Subtask 1.1.2 Work Package 1.1.1.2 2006 The McGraw-Hill Companies, Inc., All 14 15 Network-Planning Models A project is made up of a sequence of activities

that form a network representing a project The path taking longest time through this network of activities is called the critical path The critical path provides a wide range of scheduling information useful in managing a project Critical Path Method (CPM) helps to identify the critical path(s) in the project networks McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 16 Prerequisites for Critical Path Methodology A project must have: well-defined jobs or tasks whose completion marks the end of the project; independent jobs or tasks; and tasks that follow a given sequence. McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 17 Types of Critical Path Methods

CPM with a Single Time Estimate Used when activity times are known with certainty Used to determine timing estimates for the project, each activity in the project, and slack time for activities CPM with Three Activity Time Estimates Used when activity times are uncertain Used to obtain the same information as the Single Time Estimate model and probability information Time-Cost Models Used when cost trade-off information is a major consideration in planning Used to determine the least cost in reducing total project time McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 18 Steps in the CPM with Single Time Estimate 1. Activity Identification 2. Activity Sequencing and Network Construction 3. Determine the critical path From the critical path all of the project and activity timing information can be obtained McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All

19 CPM with Single Time Estimate Consider the following consulting project: Activity Assess customer's needs Write and submit proposal Obtain approval Develop service vision and goals Train employees Quality improvement pilot groups Write assessment report Designation Immed. Pred. Time (Weeks) A None 2 B A 1 C B 1 D C 2 E C 5 F D, E 5 G F 1 Develop a critical path diagram and determine the duration of the critical path and slack times for all activities.

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 20 First draw the network Act. Imed. Pred. Time A B C None A B 2 1 1 D E F C C D,E 2 5 5 G F 1

A(2) B(1) D(2) C(1) F(5) G(1) E(5) McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 21 Determine early starts and early finish times ES=4 EF=6 ES=0 EF=2 ES=2 EF=3 ES=3 EF=4 A(2) B(1) C(1) Hint: Hint:Start Startwith

withES=0 ES=0 and andgo goforward forwardininthe the network networkfrom fromAAtotoG. G. McGraw-Hill/Irwin D(2) ES=4 EF=9 ES=9 EF=14 ES=14 EF=15 F(5) G(1) E(5) 2006 The McGraw-Hill Companies, Inc., All 22 Determine late starts and late finish times ES=0 EF=2

ES=2 EF=3 ES=3 EF=4 A(2) B(1) C(1) LS=0 LF=2 LS=2 LF=3 LS=3 LF=4 ES=4 EF=6 D(2) LS=7 LF=9 ES=4 EF=9 E(5) Hint: Hint:Start Startwith withLF=15 LF=15 or orthe thetotal totaltime timeof ofthe

the project project and andgo go backward backwardin inthe the network networkfrom fromGGto toA. A. ES=9 ES=14 EF=14 EF=15 F(5) G(1) LS=9 LF=14 LS=14 LF=15 LS=4 LF=9 McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 23 Critical Path & Slack ES=4 EF=6 ES=0 EF=2

ES=2 EF=3 ES=3 EF=4 A(2) B(1) C(1) LS=0 LF=2 LS=2 LF=3 LS=3 LF=4 D(2) LS=7 LF=9 ES=4 EF=9 E(5) LS=4 LF=9 McGraw-Hill/Irwin Slack=(7-4)=(9-6)= 3 Wks ES=9 EF=14 ES=14 EF=15 F(5)

G(1) LS=9 LF=14 LS=14 LF=15 Duration=15 weeks 2006 The McGraw-Hill Companies, Inc., All 24 Example 2. CPM with Three Activity Time Estimates Immediate Task Predecesors Optimistic Most Likely Pessimistic A None 3 6 15 B None 2 4 14 C A 6 12 30 D A 2 5 8 E C

5 11 17 F D 3 6 15 G B 3 9 27 H E,F 1 4 7 I G,H 4 19 28 McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 25 Example 2. Expected Time Calculations ET(A)= ET(A)=3+4(6)+15 3+4(6)+15 Task A B C D E F G

H I Immediate Expected Predecesors Time None 7 None 5.333 A 14 A 5 C 11 D 7 B 11 E,F 4 G,H 18 66 ET(A)=42/6=7 ET(A)=42/6=7 Immediate Task Predecesors Optimistic Most Likely Pessimistic A None 3 6 15 B None 2 4 14 C

A 6 12 30 D A 2 5 8 E C 5 11 17 F D 3 6 15 G B 3 9 27 H E,F 1 4 7 I G,H 4 19 28 Opt. Time ++ 4(Most Likely Time) ++ Pess.

Time Opt. Time 4(Most Likely Time) Pess. Time Expected ExpectedTime Time == 66 McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 26 Ex. 2. Expected Time Calculations Task A B C D E F G H I Immediate Expected Predecesors Time None 7 None 5.333 A 14 A 5

C 11 D 7 B 11 E,F 4 G,H 18 ET(B)= ET(B)=2+4(4)+14 2+4(4)+14 66 ET(B)=32/6=5.333 ET(B)=32/6=5.333 Immediate Task Predecesors Optimistic Most Likely Pessimistic A None 3 6 15 B None 2 4 14 C A 6 12 30 D A 2 5 8 E C

5 11 17 F D 3 6 15 G B 3 9 27 H E,F 1 4 7 I G,H 4 19 28 Opt. Time ++ 4(Most Likely Time) ++ Pess. Time Opt. Time 4(Most Likely Time) Pess. Time Expected ExpectedTime Time ==

66 McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 27 Ex 2. Expected Time Calculations Task A B C D E F G H I Immediate Expected Predecesors Time None 7 None 5.333 A 14 A 5 C 11 D 7 B 11 E,F 4 G,H 18

ET(C)= ET(C)=6+4(12)+30 6+4(12)+30 66 ET(C)=84/6=14 ET(C)=84/6=14 Immediate Task Predecesors Optimistic Most Likely Pessimistic A None 3 6 15 B None 2 4 14 C A 6 12 30 D A 2 5 8 E C 5 11 17 F D 3 6 15 G B 3

9 27 H E,F 1 4 7 I G,H 4 19 28 Opt. Time ++ 4(Most Likely Time) ++ Pess. Time Opt. Time 4(Most Likely Time) Pess. Time Expected ExpectedTime Time == 66 McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 28 Example 2. Network Duration = 54 Days C(14)

E(11) H(4) A(7) D(5) F(7) I(18) B (5.333) McGraw-Hill/Irwin G(11) 2006 The McGraw-Hill Companies, Inc., All 29 Example 2. Probability Exercise What What isis the theprobability probability of of finishing finishing this this project project in in less less than than 53 53 days? days? p(t < D) D=53 TE = 54 McGraw-Hill/Irwin t

DD -- TTEE ZZ == 22 cpcp 2006 The McGraw-Hill Companies, Inc., All 30 Pessim. -- Optim. Pessim. Optim.)22 Activity variance, = ( Activity variance, = ( ) 66 22 Task A B C D E F G H I Optimistic Most Likely Pessimistic Variance 3 6 15 4

2 4 14 6 12 30 16 2 5 8 5 11 17 4 3 6 15 3 9 27 1 4 7 1 4 19 28 16 (Sum the variance along the critical path.) McGraw-Hill/Irwin 22 == 4141 2006 The McGraw-Hill Companies, Inc., All 31

p(t < D) D=53 TE = 54 t D D -- TTEE 53 53--54 54 ZZ == == == -.156 -.156 22 41 41 cpcp p(Z p(Z <<-.156) -.156) ==.438, .438, or or 43.8 43.8 % % (NORMSDIST(-.156)) (NORMSDIST(-.156)) There There isis aa 43.8% 43.8% probability probability that that this this project project will will be be completed

completed in in less less than than 53 53 weeks. weeks. McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 32 Ex 2. Additional Probability Exercise What What is is the the probability probability that that the the project project duration duration will will exceed exceed 56 56 weeks? weeks? McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 33 Example 2. Additional Exercise Solution p(t < D)

TE = 54 t D=56 D -- TTEE 56 --54 D 56 54 ZZ == = == .312 .312 22 = 41 41 cp cp p(Z p(Z >> .312) .312) == .378, .378, or or 37.8 37.8 % % (1-NORMSDIST(.312)) (1-NORMSDIST(.312)) McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 34 Time-Cost Models

Basic Assumption: Relationship between activity completion time and project cost Time Cost Models: Determine the optimum point in time-cost tradeoffs Activity direct costs Project indirect costs Activity completion times McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All 35 CPM Assumptions/Limitations Project activities can be identified as entities (There is a clear beginning and ending point for each activity.) Project activity sequence relationships can be specified and networked Project control should focus on the critical path The activity times follow the beta distribution, with the variance of the project assumed to equal the sum of the variances along the critical path Project control should focus on the critical path

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All

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