Heizer om10 ch03

10/16/2010

Project Management Outline
3 Global Company Profile: Bechtel
Group
The Importance of Project
PowerPoint presentation to accompany Management
Heizer and Render
Operations Management, 10e Project Planning
Principles of Operations Management, 8e

PowerPoint slides by Jeff Heyl
The Project Manager
Work Breakdown Structure
Project Scheduling
© 2011 Pearson Education, Inc. publishing as Prentice Hall 3-1 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-2

Outline - Continued Outline - Continued

Project Controlling Determining the Project Schedule
Project Management Techniques: Forward Pass
PERT and CPM Backward Pass
The Framework of PERT and CPM Calculating Slack Time and
Identifying the Critical Path(s)
Network Diagrams and Approaches
Activity-on-Node Example Variability in Activity Times
Activity-on-Arrow Example Three Time Estimates in PERT
Probability of Project Completion


Outline - Continued Learning Objectives
Cost-Time Trade-Offs and Project When you complete this chapter you
Crashing should be able to:
A Critique of PERT and CPM 1. Use a Gantt chart for scheduling
Using Microsoft Project to Manage 2. Draw AOA and AON networks
2 D d t k
Projects 3. Complete forward and backward
passes for a project
4. Determine a critical path


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10/16/2010

Learning Objectives Bechtel Projects
When you complete this chapter you Building 26 massive distribution centers in just
two years for the internet company Webvan
should be able to: Group ($1 billion)
5. Calculate the variance of Constructing 30 high-security data centers
activity times worldwide for Equinix, Inc. ($1.2 billion)
Building and running a rail line between London
6. Crash a project and the Channel Tunnel ($4.6 billion)
Developing an oil pipeline from the Caspian Sea
region to Russia ($850 million)
Expanding the Dubai Airport in the UAE ($600
million), and the Miami Airport in Florida ($2
billion)

Bechtel Projects Strategic Importance of
Project Management
Building liquid natural gas plants in Yemen $2
billion) and in Trinidad, West Indies ($1 billion) Bechtel Project Management:
Building a new subway for Athens, Greece ($2.6 Iraq war aftermath
billion) International workforce, construction
Constructing a natural gas pipeline in Thailand professionals, cooks, medical personnel,
($700 million) security
Building 30 plants for iMotors.com, a company Millions of tons of supplies
that sells refurbished autos online ($300 million) Hard Rock Cafe Rockfest Project:
Building a highway to link the north and south of
100,000 + fans
Croatia ($303 million)
planning began 9 months in advance

© 2011 Pearson Education, Inc. publishing as Prentice Hall 3-9 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 10

Project Characteristics Examples of Projects

Single unit Building Construction

Many related activities
Difficult production planning and
inventory control
General purpose equipment
High labor skills
Research Project
© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 11 © 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 12

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10/16/2010

Management of Projects Project Management
Activities
1. Planning - goal setting, defining the Planning
project, team organization Objectives Scheduling
Project activities
2. Scheduling - relates people, money, Resources
Start & end times
and supplies to specific activities
pp p Work break-down
structure Network
N t k
and activities to each other Organization
3. Controlling - monitors resources,
costs, quality, and budgets; revises
plans and shifts resources to meet
time and cost demands
Controlling
Monitor, compare, revise, action

Project Planning, Project Planning,
Scheduling, and Controlling Scheduling, and Controlling

Figure 3.1 Figure 3.1
Before Start of project During Before Start of project During
project Timeline project project Timeline project

Project Planning, Project Planning,
Scheduling, and Controlling Scheduling, and Controlling

Figure 3.1 Figure 3.1
Before Start of project During Before Start of project During
project Timeline project project Timeline project

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10/16/2010

Project Time/cost estimates
Planning,
Budgets
Project Planning
Scheduling, and Controlling
Engineering diagrams
Cash flow charts
Material availability details Establishing objectives
Defining project
Budgets
Delayed activities report Creating work
Slack activities report breakdown structure
b kd t t
Determining
CPM/PERT
resources
Gantt charts
Milestone charts Forming organization
Cash flow schedules
Figure 3.1
Before Start of project During
project Timeline project

Project Organization Project Organization
Works Best When
Often temporary structure 1. Work can be defined with a specific
goal and deadline
Uses specialists from entire company
2. The job is unique or somewhat
Headed by project manager unfamiliar to the existing organization
Coordinates activities
C di t ti iti 3. The work contains complex
Monitors schedule interrelated tasks requiring specialized
and costs skills
Permanent 4. The project is temporary but critical to
structure called the organization
‘matrix organization’ 5. The project cuts across organizational
lines

A Sample Project Matrix Organization
Organization
Marketing Operations Engineering Finance
President
Project 1
Human Quality
Resources Marketing Finance Design Production
Mgt
Project
P j t2
Project 1 Project
Manager
Mechanical Test
Technician
Engineer Engineer Project 3

Project 2 Project
Manager
Electrical Computer Project 4
Engineer Engineer Technician
Figure 3.2


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The Role of The Role of
the Project Manager the Project Manager
Highly visible Highly visible
Responsible for making sure that: Responsible for making sure that: should be:
Project managers
1. All necessary activities are finished in order Good coaches
1. All necessary activities are finished in order
and on time and on time Good communicators
2. The project comes in within budget 2. The project comesAble to organize activities
in within budget
3. The project meets quality goals 3. The project meets from a variety of disciplines
quality goals
4. The people assigned to the project receive 4. The people assigned to the project receive
motivation, direction, and information motivation, direction, and information


Ethical Issues Work Breakdown Structure
Project managers face many ethical
decisions on a daily basis Level
The Project Management Institute has
established an ethical code to deal with 1. Project
problems such as: 2.
2 Major tasks in the project
1. Offers of gifts from contractors 3. Subtasks in the major tasks
2. Pressure to alter status reports to mask delays
4. Activities (or work packages)
3. False reports for charges of time and expenses
to be completed
4. Pressure to compromise quality to meet
schedules


Work Breakdown Structure Project Scheduling
Develop Windows 7
Level 1 1.0
Operating System
Identifying precedence
Level 2
Software
Design 1.1
Project
Management 1.2
System
Testing 1.3 relationships

Level 3
Develop
1.1.1 Planning 1.2.1
Module
1.3.1
Sequencing activities
GUIs Testing
Determining activity
Ensure Compatibility
with Earlier Versions 1.1.2
Cost/Schedule
Management 1.2.2
Defect
Testing 1.3.2 times & costs
Level 4
Compatible with
1.1.2.1
Estimating material &
(Work packages)
Windows ME
worker requirements
Compatible with
Windows Vista
1.1.2.2 Determining critical
activities
Compatible with Figure 3.3
Windows XP 1.1.2.3


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Purposes of Project Scheduling Techniques
Scheduling
1. Shows the relationship of each activity to 1. Ensure that all activities are planned
others and to the whole project for
2. Identifies the precedence relationships 2. Their order of performance is
among activities accounted for
3. Encourages the setting of realistic time 3. The activity time estimates are
and cost estimates for each activity recorded
4. Helps make better use of people, money, 4. The overall project time is developed
and material resources by identifying
critical bottlenecks in the project


Project Management A Simple Gantt Chart
Techniques
Gantt chart Time
J F M A M J J A S
Critical Path Method
(CPM) Design
es g
Prototype
Program Evaluation
Test
and Review
Technique (PERT) Revise
Production


Service For a Delta Jet Project Control Reports
Deplaning
Passengers

Baggage
Baggage claim Detailed cost breakdowns for each task
Container offload
Fueling
Pumping
Engine injection water
Total program labor curves
Cargo and mail Container offload
Galley servicing
Main cabin door Cost distribution tables
Aft cabin door
Lavatory servicing
Drinking water
Aft, center, forward
Aft center for ard
Loading
Functional cost and hour summaries
Cabin cleaning First-class section
Economy section Raw materials and expenditure forecasts
Cargo and mail Container/bulk loading
Flight services Galley/cabin check Variance reports
Receive passengers
Operating crew
Baggage
Aircraft check
Loading
Time analysis reports
Passengers Boarding
0 10 20 30 40
Work status reports
Time, Minutes
Figure 3.4

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PERT and CPM Six Steps PERT & CPM
Network techniques
1. Define the project and prepare the
Developed in 1950’s work breakdown structure
CPM by DuPont for chemical plants (1957)
2. Develop relationships among the
PERT by Booz, Allen & Hamilton with the
Booz
U.S. Navy, for Polaris missile (1958)
activities - d id which activities
ti iti decide hi h ti iti
must precede and which must
Consider precedence relationships and
interdependencies
follow others
Each uses a different estimate of 3. Draw the network connecting all of
activity times the activities


Six Steps PERT & CPM Questions PERT & CPM
Can Answer
4. Assign time and/or cost estimates
to each activity 1. When will the entire project be
completed?
5. Compute the longest time path
through the network – thi is called
th h th t k this i ll d 2.
2 What are the critical activities or tasks in
the project?
the critical path
3. Which are the noncritical activities?
6. Use the network to help plan,
4. What is the probability the project will be
schedule, monitor, and control the completed by a specific date?
project


Questions PERT & CPM A Comparison of AON and
Can Answer AOA Network Conventions
Activity on Activity Activity on
5. Is the project on schedule, behind Node (AON) Meaning Arrow (AOA)
schedule, or ahead of schedule?
A comes before
6. Is the money spent equal to, less than, or
y p q (a) A B C B, which comes
greater than the budget? before C.
b f C A B C
A A
7. Are there enough resources available to A and B must both
finish the project on time? (b) C be completed
before C can start. C
B B
8. If the project must be finished in a shorter
B
time, what is the way to accomplish this B and C cannot
at least cost? (c) A begin until A is B
completed. A
C C
© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 - 41 © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 3.5 3 - 42

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10/16/2010

A Comparison of AON and A Comparison of AON and
AOA Network Conventions AOA Network Conventions
Activity on Activity Activity on Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA) Node (AON) Meaning Arrow (AOA)

C and D cannot
A C begin until both
g A C B and C cannot
begin until A is
(d) A and B are completed. D
B D
completed. A B D cannot begin A B D
B D
until both B and
(f) C are completed. Dummy
C cannot begin A dummy C
C activity
until both A and B activity is again
A C are completed; D A C introduced in
(e) cannot begin until Dummy activity AOA.
B is completed. A
B D dummy activity is
introduced in AOA.
B D
© 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 3.5 3 - 43 © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 3.5 3 - 44

AON Example AON Network for
Milwaukee Paper Manufacturing's Milwaukee Paper
Activities and Predecessors
Immediate
Activity Description Predecessors
A Build internal components — Activity A
A
B Modify roof and floor
y — (Build Internal Components)
C Construct collection stack A
D Pour concrete and install frame A, B Start
E Build high-temperature burner C
F Install pollution control system C Activity B
Start B
G Install air pollution device D, E (Modify Roof and Floor)
Activity
H Inspect and test F, G
Table 3.1 Figure 3.6

AON Network for AON Network for
Milwaukee Paper Milwaukee Paper
Activity A Precedes Activity C
F
A C A C

E
Start Start H

B D B D G

Activities A and B Arrows Show Precedence
Precede Activity D Figure 3.7 Relationships Figure 3.8

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AOA Network for Determining the Project
Milwaukee Paper Schedule
Perform a Critical Path Analysis
C
2 4
(Construct The critical path is the longest path
Stack)
through the network
The critical path is the shortest time in
1 Dummy 6
H
7 which the project can be completed
Activity (Inspect/
Test) Any delay in critical path activities
delays the project
3
D
5 Critical path activities have no slack
(Pour
Concrete/ time
Install Frame) Figure 3.9

Determining the Project Determining the Project
Schedule Schedule
Perform a Critical Path Analysis Perform a Critical Path Analysis
Activity Description Time (weeks)
Earliest start (ES) = earliest time at which an activity can
A Build internal components 2 Activity Description assuming all predecessors(weeks)
start, Time have
B Modify roof and floor 3 A Build internal components
p
been completed 2
C Construct collection stack 2 EarliestB Modify roof and floor 3
finish (EF) = earliest time at which an activity can
D Pour concrete and install frame 4 C be finished
Construct collection stack 2
E Build high-temperature burner 4 Latest start (LS) =concrete and install frame
D Pour latest time at which an activity can 4
F Install pollution control system 3 E Build high-temperature delay the completion
start so as to not burner 4
G Install air pollution device 5 F Install time of the entire project
pollution control system 3
H Inspect and test 2 Latest finish (LF) = latest time bydevice an activity has to
G Install air pollution which 5
be finished so as to not delay the
Total Time (weeks) 25 H Inspect and test 2
completion time of the entire project
Total Time (weeks) 25
Table 3.2 Table 3.2

Determining the Project Forward Pass
Schedule
Begin at starting event and work forward
Perform a Critical Path Analysis
Activity Name Earliest Start Time Rule:
or Symbol
If an activity has only a single immediate
A Earliest predecessor, its ES equals the EF of the
d it l th f th
Earliest ES EF Finish predecessor
Start
If an activity has multiple immediate
predecessors, its ES is the maximum of
Latest LS LF Latest all the EF values of its predecessors
Start 2 Finish
ES = Max {EF of all immediate predecessors}
Figure 3.10 Activity Duration

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10/16/2010

Forward Pass ES/EF Network for
Milwaukee Paper
Begin at starting event and work forward
Earliest Finish Time Rule: ES EF = ES + Activity time
The earliest finish time (EF) of an activity Start
is th
i the sum of its earliest start ti
f it li t t t time (ES) 0 0
and its activity time

0
EF = ES + Activity time


ES/EF Network for ES/EF Network for
EF of A = A
ES ES of A + 2 0 2
of A
A 2 EF of B =
0 2 ES ES of B + 3
0
Start
0 0
Start
0 of B
B
0 0 0 3
2

3

A C A C
0 2 2 4 0 2 2 4

2 2 2 2

Start Start
0 0 0 0
= Max (2, 3) D
0 0
3 7
B B
0 3 0 3

3 3
4

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10/16/2010

A C A C F
0 2 2 4 0 2 2 4 4 7

2 2 2 2 3

Start Start E H
0 0 0 0 4 8 13 15

0 0 4 2

B D B D G
0 3 3 7 0 3 3 7 8 13

3 4 3 4 5
Figure 3.11

Backward Pass Backward Pass
Begin with the last event and work backwards Begin with the last event and work backwards

Latest Finish Time Rule: Latest Start Time Rule:

If an activity is an immediate predecessor The latest start time (LS) of an activity is
for just
f j t a single activity, its LF equals the
i l ti it it l th the diff
th difference of it l t t finish time (LF)
f its latest fi i h ti
LS of the activity that immediately follows it and its activity time
If an activity is an immediate predecessor
to more than one activity, its LF is the
minimum of all LS values of all activities LS = LF – Activity time
that immediately follow it
LF = Min {LS of all immediate following activities}


LS/LF Times for LS/LF Times for
A C F A C F
0 2 2 4 4 7 0 2 2 4 4 7

10 13
2 2 3 2 2 3

Start E H Start E H
0 0 0 0
4 8 13 15 LF = Min(LS of
4 8 13 15
13 15 following activity) 13 15
0 4 2 0 4 2

B LS = LF – Activity time
D G B D G
0 3 3 7 8 13 0 3 3 7 8 13

3 4 5 LF = EF 3 4 5
of Project

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LS/LF Times for LS/LF Times for
Milwaukee Paper
LF = Min(4, 10)
Milwaukee Paper
A C F A C F
0 2 2 4 4 7 0 2 2 4 4 7

2 4 10 13 0 2 2 4 10 13
2 2 3 2 2 3

Start E H Start E H
0 0 4 8 13 15 0 0 4 8 13 15
4 8 13 15 0 0 4 8 13 15
0 4 2 0 4 2

B D G B D G
0 3 3 7 8 13 0 3 3 7 8 13
8 13 1 4 4 8 8 13
3 4 5 3 4 5


Computing Slack Time Computing Slack Time
After computing the ES, EF, LS, and LF times Earliest Earliest
Start Finish
Latest
Start
Latest
Finish Slack
On
Critical
for all activities, compute the slack or free Activity ES EF LS LF LS – ES Path
time for each activity
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
Slack is the length of time an activity can C 2 4 2 4 0 Yes
be delayed without delaying the entire D 3 7 4 8 1 No
project
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
Slack = LS – ES or Slack = LF – EF G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes

Table 3.3

Critical Path for ES – EF Gantt Chart
Milwaukee Paper for Milwaukee Paper
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
A C F
0 2 2 4 4 7 A Build internal
components
0 2 2 4 10 13
2 2 3 B Modify roof and floor
C Construct collection
Start E H stack
0 0 4 8 13 15
D Pour concrete and
13 15 install frame
0 0 4 8
0 4 2 E Build high-
temperature burner
B D G F Install pollution
0 3 3 7 8 13 control system
1 4 4 8 8 13 G Install air pollution
3 4 5 device
H Inspect and test


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10/16/2010

LS – LF Gantt Chart Variability in Activity Times
for Milwaukee Paper
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
CPM assumes we know a fixed time
A Build internal
components estimate for each activity and there
B Modify roof and floor
C Construct collection
is no variability in activity times
stack
D Pour concrete and PERT uses a probability distribution
install frame
E Build high-
for activity times to allow for
temperature burner variability
F Install pollution
control system
G Install air pollution
device
H Inspect and test


Variability in Activity Times Variability in Activity Times
Estimate follows beta distribution
Three time estimates are required
Expected time:
Optimistic time (a) – if everything t = (a + 4m + b)/6
g
goes according to plan
g p
Variance of times:
V i f ti
Pessimistic time (b) – assuming very
unfavorable conditions v = [(b – a)/6]2
Most likely time (m) – most realistic
estimate


Variability in Activity Times Computing Variance
Most Expected
Estimate follows beta distribution Optimistic Likely Pessimistic Time Variance
Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2
Expected time: Figure 3.12
A 1 2 3 2 .11
t = (a + 4m + b)/6 B 2 3 4 3 .11
Variance of ti
V i Probabilityfoftimes:
1 in 100
of Probability
C 1 2 3 2 .11
Probability

< a occurring v = [(b − a)/6]2 of 1 in 100 of
[(b D 2 4 6 4 .44
> b occurring
E 1 4 7 4 1.00
F 1 2 9 3 1.78
Activity G 3 4 11 5 1.78
Time
H 1 2 3 2 .11
Optimistic Most Likely Pessimistic
Time (a) Time (m) Time (b) Table 3.4

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10/16/2010

Probability of Project Probability of Project
Completion Completion
Project variance is computed by Project variance is computed by
summing the variances of critical summing the variances of critical
activities Project variance
activities
σ2 = .11 + .11 + 1.00 + 1.78 + .11 = 3 11
11 11 1 00 1 78 11 3.11
σp = Project variance
2 p

= ∑(variances of activities
on critical path) Project standard deviation
σp = Project variance
= 3.11 = 1.76 weeks


PERT makes two more assumptions: Standard deviation = 1.76 weeks

Total project completion times follow a
normal probability distribution
Activity times are statistically
independent

15 Weeks
(Expected Completion Time)
Figure 3.13


From Appendix I
What is the probability this project can What is the probability this project can
.00 .01 .07 .08
be completed on or before the 16 week be completed on or before the 16 week
.1 .50000 .50399 .52790 .53188
deadline? deadline? .53983 .54380
.2 .56749 .57142

Z = due – expected date /σp .5 = due − expected date /σp
Z.69146 .69497 .71566 .71904
date of completion date of completion
.6 .72575 .72907 .74857 .75175
= (16 wks – 15 wks)/1.76 = (16 wks − 15 wks)/1.76

= 0.57 Where Z is the number of = 0.57 Where Z is the number of
standard deviations the due standard deviations the due
date or target date lies from date or target date lies from
the mean or expected date the mean or expected date

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