Project Management

Chapter 13

OPS 370

Projects

Project Management

• Five Phases1. Initiation

2. Planning

3. Execution

4. Control

5. Closure

Project Initiation

Project Planning

• A. Creation of a Number of Planning Documents:– Project Plan

• Activities, Interdependencies, Time Estimates

– Resource Plan• What Resources Are Required

– Financial Plan• Estimated Costs

– Quality Plans• Quality Targets, Control and Improvement Techniques

– Communications Plan• Updates to Stakeholders

– Risk Plan• Assessment of Risks and Uncertainties

Project Execution

Project Control

Project Closure

Project Management Tools and Techniques

• Project Management has a Number of Tools Available:– Precedence Relationship and Time Estimates– Network Diagram– Critical Path Method (CPM)– Cost and Time Tradeoff Analysis– Program Evaluation and Review Technique

(PERT)

Precedence Relationships and Time Estimates

• A. Precedence Relationship Analysis:– a. Identification of Relationships and Sequences of

Activities Within a Project

• B. Take Great Care to Estimate the Completion Time for Each Activity.

• C. Project Schedule, Cost, and Resource Requirements Depend on the Precedence Relationships and Time Estimates

Network Diagrams

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 DescriptionImmediate

PredecessorDuration (weeks)

A Develop product specifications None 4B Design manufacturing process A 6C Source & purchase materials A 3D Source & purchase tooling & equipment B 6E Receive & install tooling & equipment D 14F Receive materials C 5G Pilot production run E & F 2H Evaluate product design G 2I Evaluate process performance G 3J Write documentation report H & I 4K Transition to manufacturing J 2

Diagram the Network for Cables By Us

Construct a Network

• Project Information (Different project)– Activity Immediate Predecessor

A -- B -- C A D A E B F C, D, E G C, D, E H F, G I F, G J H, I

Construct a Network

Critical Path Method

Identifying the Critical Path

Calculate the Path Completion Times

Paths Path durationABDEGHJK 40ABDEGIJK 41ACFGHJK 22ACFGIJK 23

Some Network Definitions

Project Network

ES, EF Network

LS, LF Network

LF = 41LS = 39

LF = 39LS = 35

LF = 35LS = 32

LF = 35LS = 33

LF = 32LS = 30

LF = 30LS = 16

LF = 30LS = 25

LF = 25LS = 22

LF = 16LS = 10

LF = 10LS = 4

LF = 4LS = 0

Completed Network Diagram

Calculating Slack

Activity Late EarlyFinish Finish

A 4 4 B 10 10 C 25 7 D 16 16 E 30 30 F 30 12 G 32 32 H 35 34 I 35 35 J 39 39 K 41 41

Slack[weeks] 0 0 18 0 0 18 0 1 0 0 0

Reducing the Time of a Project (Crashing)

Activity

Normal Time (wk)

Normal Cost ($)

Crash Time

Crash Cost ($)

Max. weeks of reduction

Reduce cost per

week

A 4 8,000 3 11,000 1 3,000

B 6 30,000 5 35,000 1 5,000

C 3 6,000 3 6,000 0 0

D 6 24,000 4 28,000 2 2,000

E 14 60,000 12 72,000 2 6,000

F 5 5,000 4 6,500 1 1500

G 2 6,000 2 6,000 0 0

H 2 4,000 2 4,000 0 0

I 3 4,000 2 5,000 1 1,000

J 4 4,000 2 6,400 2 1,200

K 2 5,000 2 5,000 0 0

Reducing the Time of a Project (crashing)

Activity

Normal Time (wk)

Normal Cost ($)

Crash Time

Crash Cost ($)

Max. weeks of reduction

Reduce cost per

week

A 4 8,000 3 11,000 1 3,000

B 6 30,000 5 35,000 1 5,000

C 3 6,000 3 6,000 0 0

D 6 24,000 4 28,000 2 2,000

E 14 60,000 12 72,000 2 6,000

F 5 5,000 4 6,500 1 1500

G 2 6,000 2 6,000 0 0

H 2 4,000 2 4,000 0 0

I 3 4,000 2 5,000 1 1,000

J 4 4,000 2 6,400 2 1,200

K 2 5,000 2 5,000 0 0

Crash costs are assumed to be linear …

Crashing Example: Suppose the Cables By Us project manager wants to reduce the new product project from 41

to 36 weeks.

Crashed Network Diagram

PERT• A. Program Evaluation and Review Technique: Addresses

the Impact of Uncertainties in Activity Time Estimates on the Duration of the Entire Project

• B. Different Estimates for Activity Times are Developed:

PERT

PERT

ExampleActivity t o tm t p t e s 2

A 1 2 6B 2 3 3C 1 2 4D 3 4 6E 2 2 4F 12 16 25G 4 8 10H 3 5 6I 2 3 4J 3 4 4K 2 2 6

ExampleActivity t o tm t p t e s 2

A 1 2 6 2.50 0.69B 2 3 3 2.83 0.03C 1 2 4 2.17 0.25D 3 4 6 4.17 0.25E 2 2 4 2.33 0.11F 12 16 25 16.83 4.69G 4 8 10 7.67 1.00H 3 5 6 4.83 0.25I 2 3 4 3.00 0.11J 3 4 4 3.83 0.03K 2 2 6 2.67 0.44

26 1

6

1 4*2 6

6

Example• 1. Longest Path (Using Expected Activity

Times)– A. BCDFGK Length of 36.3 (Variance of 6.67)– B. Standard Deviation = Sqrt(6.67) = 2.58

• 2. Can Now Answer Questions

Example

• 1. Continued– A. With 95% Probability, What Is the Date the

Project Can Be Expected to Be Completed?