Operations Management Contemporary Concepts and Cases Chapter Fourteen Project Planning and...

Operations ManagementOperations ManagementContemporary Concepts and CasesContemporary Concepts and Cases

Chapter FourteenChapter FourteenProject Planning and SchedulingProject Planning and Scheduling

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Chapter 14 OutlineChapter 14 Outline

What is a “Project”?What is a “Project”?

Objectives and TradeoffsObjectives and Tradeoffs

Planning and Control in ProjectsPlanning and Control in Projects

Scheduling MethodsScheduling Methods

Constant-Time NetworksConstant-Time Networks

PERT MethodPERT Method

CPM MethodCPM Method

Use of Project Management ConceptsUse of Project Management Concepts

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Unique item or event - often a single unit.Unique item or event - often a single unit.

Often located on one place. The unit does not Often located on one place. The unit does not move during production.move during production.

Resources are brought to the project.Resources are brought to the project.

May be of any size, although we focus on May be of any size, although we focus on large projects.large projects.

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Examples of ProjectsExamples of Projects

A wedding A wedding A divorce A divorce Building constructionBuilding construction

Bridge constructionBridge construction

Aircraft carrierAircraft carrier

R&D projectR&D project

AuditAudit

New product New product introductionintroduction

Open or close a facilityOpen or close a facility

Make a movieMake a movie

Fund-raising campaignFund-raising campaign

Ad campaignAd campaign

Software installationSoftware installation

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Meet thespecifications

Meet thedeadline--schedule

Due Date!

Stay withinthe budget

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Project Management Activities & DecisionsProject Management Activities & Decisions

Planning

Scheduling

Closing

Control

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Planning Activities & DecisionsPlanning Activities & Decisions

Identify the project customerIdentify the project customer

Establish the end product or serviceEstablish the end product or service

Set project objectivesSet project objectives

Estimate total resources and time requiredEstimate total resources and time required

Decide on the form of project organizationDecide on the form of project organization

Make key personnel appointmentsMake key personnel appointments

Define major tasks requiredDefine major tasks required

Establish a budgetEstablish a budget

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Scheduling Activities & DecisionsScheduling Activities & Decisions

Develop a detailed work-breakdown Develop a detailed work-breakdown structurestructure

Estimated time required for each taskEstimated time required for each task

Sequence tasks in proper orderSequence tasks in proper order

Develop a start/stop time for each taskDevelop a start/stop time for each task

Develop detailed budget for each taskDevelop detailed budget for each task

Assign people to tasksAssign people to tasks

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ControlControl

Monitor actual time, cost, and performanceMonitor actual time, cost, and performance

Compare planned to actual figuresCompare planned to actual figures

Determine whether corrective action is neededDetermine whether corrective action is needed

Evaluate alternative corrective actionsEvaluate alternative corrective actions

Take appropriate Take appropriate corrective actionscorrective actions

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ClosingClosing

Finish all workFinish all work

Close contractsClose contracts

Pay all accounts payablePay all accounts payable

Turn the project over to the ownersTurn the project over to the owners

Reassign personnel and equipmentReassign personnel and equipment

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PMI Body of KnowledgePMI Body of Knowledge

IntegrationIntegration

Scope Scope

Time managementTime management

Costs Costs

Quality managementQuality management

Human resourcesHuman resources

CommunicationsCommunications

RiskRisk

Procurement Procurement

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Gantt ChartsGantt Charts– Shown as a bar chartsShown as a bar charts– Do not show precedence relationsDo not show precedence relations– Visual & easy to understandVisual & easy to understand

Network MethodsNetwork Methods– Shown as a graphs or networksShown as a graphs or networks– Show precedence relationsShow precedence relations– More complex, difficult to understand, and costly More complex, difficult to understand, and costly

than Gantt chartsthan Gantt charts

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Gantt Chart Project Example (Figure 14.2)Gantt Chart Project Example (Figure 14.2)Week

No. 1 2 3 4 5 6 7 8

1 Lease the site

2 Hire the workers

3Arrange for the Furnishings

4 Install the furnishings

5 Arrange for the phones

6 Install the phones

7 Move into the office

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Activity times are assumed to be constantActivity times are assumed to be constant

Activities are represented by nodes in the networkActivities are represented by nodes in the network

Arrows show the precedence relationshipsArrows show the precedence relationships

Notations used in calculating start and finish times:Notations used in calculating start and finish times:– ES(a) =ES(a) = Early Start of activity aEarly Start of activity a

– EF(a) =EF(a) = Early Finish of activity aEarly Finish of activity a

– LS(a) =LS(a) = Late Start of activity aLate Start of activity a

– LF(a) =LF(a) = Late Finish of activity aLate Finish of activity a

‘‘Write a Business Report’Write a Business Report’(Table 14.4)(Table 14.4)

Immediate Duration

Activity Description Predecessors Days

A Decide on Topic None 1

B Collect Data A 2

C Search the Internet A 3

D Write the Report B and C 5

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Network Diagram for ‘Write a Business Plan’ Network Diagram for ‘Write a Business Plan’ (Figure 14.3)(Figure 14.3)

A

B

D

C

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Forward Pass for ‘Write a Business Plan’ Forward Pass for ‘Write a Business Plan’ (Figure 14.4)(Figure 14.4)

A

B

D

C

0 1

1 3

4 9

1 4ES EF

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Calculating ES, EF, LS, LF, and Completion Calculating ES, EF, LS, LF, and Completion TimeTime

ES (a) = 0 for the starting activity

EF (a) = ES (a) + t (a)*

ES (a) = max [EF (all predecessors of a)]Project completion time = max [EF(all ending activities)]

* t (a) denotes the duration of activity a

LF (a) = min [LS (all successors of a)]

LS (a) = LF - t(a)*

Forward Pass:

Backward pass:

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Backward Pass for ‘Write a Business Plan’ Backward Pass for ‘Write a Business Plan’ (Figure 14.5)(Figure 14.5)

A

B

D

C

0 1

1 3

4 9

1 4ES EF

LS LF

0 1

2 4

4 9

1 4

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Critical PathCritical Path

Critical Path = longest path in the networkCritical Path = longest path in the network– All activities for which ES=LS and EF=LFAll activities for which ES=LS and EF=LF– Length of critical path is equal to the project Length of critical path is equal to the project

completion timecompletion time– If there is any delay on the critical path, the project If there is any delay on the critical path, the project

will be delayed (unless one takes ‘corrective actions’)will be delayed (unless one takes ‘corrective actions’)– Critical path in example is A-C-DCritical path in example is A-C-D

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Slack TimesSlack Times

Slack time equals amount of time a path may be Slack time equals amount of time a path may be delayed without delaying the projectdelayed without delaying the project– Paths not on the critical path have slackPaths not on the critical path have slack– Slack = LS-ES or LF-EFSlack = LS-ES or LF-EF

Precedence and Times for Opening a New OfficePrecedence and Times for Opening a New Office (Table 14.5)(Table 14.5)

Immediate Activity Computed

Activity Description Predecessors Time Slack

1 Lease the site None 1 0

2 Hire the workers 1 5 0

3 Arrange for the furnishings 1 1 1

4 Install the furnishings 3 2 1

5 Arrange for the phones 1 1 3

6 Install the phones 4,5 1 1

7 Move into the office 2,6,4 2 0

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Network for ‘Open a New Office’Network for ‘Open a New Office’ (Figure 14.6)(Figure 14.6)

1

2

43ES EF

LS LF

765

1 6

1 6

0 1

0 1

1 2

4 5

1 2

2 3

6 8

6 8

3 5

4 5

5 6

2 4

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PERTPERTPProgram rogram EEvaluation valuation RReview eview TTechniqueechnique

Developed in 1950’s for missile firing nuclear Developed in 1950’s for missile firing nuclear submarine projectsubmarine project

Used under conditions of uncertainty in activity Used under conditions of uncertainty in activity timestimes

Requires three time estimates for each activityRequires three time estimates for each activity– OptimisticOptimistic– Most likelyMost likely– PessimisticPessimistic

Time estimates have beta distributionTime estimates have beta distribution

PERT Activity TimesPERT Activity Times

Estimate three times for each activityEstimate three times for each activity

Compute mean completion time for each activity:Compute mean completion time for each activity:

6

4 pmoe

TTTT

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Compute the variance for each activity:Compute the variance for each activity:

Assumes pessimistic and optimistic times cover six Assumes pessimistic and optimistic times cover six standard deviationsstandard deviations

2

6var

op

i

TT

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If If TT = total completion time of the project, then = total completion time of the project, then

andand

pathcritical

eTTE

pathcritical

iT varvar

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CPMCPMCCriticalritical P Pathath M Methodethod

Developed in 1950’s in private sectorDeveloped in 1950’s in private sector

Used under conditions of certainty in activity Used under conditions of certainty in activity timestimes

Requires one time estimate for each activityRequires one time estimate for each activity

Looks at time/cost trade-offsLooks at time/cost trade-offs– Normal activity timeNormal activity time– Normal costNormal cost– Crash timeCrash time– Crash costCrash cost

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Time-Cost Relationship in CPM Time-Cost Relationship in CPM (Fig. 14.9)(Fig. 14.9)

Crash Cost

Cost

Normal Cost

Crash

Time

Normal

TimeTime

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Scheduling is only part of a Scheduling is only part of a completecomplete approach approach to project managementto project management

Trade-off between sophistication and cost of Trade-off between sophistication and cost of methodsmethods

Choice between constant time, PERT, CPM or Choice between constant time, PERT, CPM or more advanced techniquesmore advanced techniques

Choice of project management software Choice of project management software packages, packages, e.ge.g., Microsoft Project., Microsoft Project

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SummarySummary



Planning and Control in ProjectsPlanning and Control in Projects



PERT MethodPERT Method

CPM MethodCPM Method


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End of Chapter Fourteen

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