Project Management

3
PowerPoint presentation to accompany
Heizer, Render, Munson
Operations Management, Thirteenth Edition, Global Edition
Principles of Operations Management, Eleventh Edition

PowerPoint slides by Jeff Heyl

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 Learning Objectives
When you complete this chapter you
should be able to:
3.1 Use a Gantt chart for scheduling
3.2 Draw AOA and AON networks
3.3 Complete forward and backward
passes for a project
3.4 Determine a critical path

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 Learning Objectives
When you complete this chapter you
should be able to:
3.5 Crash a project

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 Project Characteristics

► Single unit
► Many related activities
► Difficult production planning and
inventory control
► General purpose equipment
► High labor skills

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 Examples of Projects
► Building Construction

► Research Project
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 Experiential Exercise 1
▶ Students are required to select a recent project that they were
involved in and identify some of the problems and challenges they
experienced while being part of the project.

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 Management of Projects
1. Planning - goal setting, defining the
project, team organization
2. Scheduling - relate people, money,
and supplies to specific activities and
activities to each other
3. Controlling - monitor resources, costs,
quality, and budgets; revise plans and
shift resources to meet time and cost
demands
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 Project Management Activities
► Planning
► Objectives ► Scheduling
► Resources ► Project

► Work break-
activities
► Start and end
down structure
► Organization
times
► Network

► Controlling
► Monitor, compare, revise, action
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 Project Planning
► Establishing objectives
► Defining project
► Creating work
breakdown structure
► Determining
resources
► Forming organization

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 Project Organization
► Often temporary structure
► Uses specialists from entire company
► Headed by project manager
► Coordinates activities
► Monitors schedule
and costs
► Permanent
structure called
‘matrix organization’

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 Project Organization
Most Helpful When:
1. Work can be defined with a specific goal
and deadline
2. The job is unique or somewhat unfamiliar
to the existing organization
3. The work contains complex interrelated
tasks requiring specialized skills
4. The project is temporary but critical to the
organization
5. The project cuts across organizational
lines
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 A Sample Project
Organization
President

Human Quality
Resources Marketing Finance Design Production
Mgt

Project Project Mechanical Test

Technician
No. 1 Manager Engineer Engineer

Project Project Electrical Computer

Technician
No. 2 Manager Engineer Engineer

Figure 3.2

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 Matrix Organization
Marketing Operations Engineering Finance

Project 1

Project 2

Project 3

Project 4

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

1) All necessary activities

► Goodare finished in order
communicators
and on time ► Able to organize activities

2) The project comes from a variety

in within of disciplines
budget
3) The project meets quality goals
4) The people assigned to the project receive
motivation, direction, and information
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 Ethical Issues
► Project managers face many ethical decisions
on a daily basis
► The Project Management Institute has
established an ethical code to deal with
problems such as:
1) Offers of gifts from contractors
2) Pressure to alter status reports to mask delays
3) False reports for charges of time and expenses
4) Pressure to compromise quality to meet schedules

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 Work Breakdown Structure

Level
1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or “work packages”)
to be completed

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 Work Breakdown Structure
Develop Windows 10
Level 1 1.0
Operating System

Software Cost Management System

Level 2 1.1 1.2 1.3
Design Plan Testing

Develop Design Cost Module

Level 3 1.1.1 1.2.1 1.3.1
GUIs Tracking Reports Testing

Ensure Compatibility Develop Defect

with Earlier Versions 1.1.2 Cost/Schedule 1.2.2 Testing 1.3.2
Interface

Compatible with
Level 4 1.1.2.1
Windows 8
(Work packages)
Compatible with
1.1.2.2
Windows 7

Compatible with Figure 3.3

Windows Vista 1.1.2.3

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 Project Scheduling Techniques

1) Ensure that all activities

are planned for
2) Their order of
performance is
accounted for
3) The activity time
estimates are recorded
4) The overall project time is developed

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 Purposes of Project
Scheduling
1. Shows the relationship of each activity to
others and to the whole project
2. Identifies the precedence relationships
among activities
3. Encourages the setting of realistic time and
cost estimates for each activity
4. Helps make better use of people, money,
and material resources by identifying critical
bottlenecks in the project
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 Project Scheduling
Techniques

► Gantt chart
► Critical Path Method (CPM)
► Program Evaluation and Review
Technique (PERT)

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 A Simple Gantt Chart

Time
J F M A M J J A S

Design
Prototype
Test
Revise
Production

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 Project Controlling
► Close monitoring of
resources, costs,
quality, budgets
► Feedback enables
revising the project plan
and shift resources
► Computerized tools
produce extensive
reports

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 Project Control Reports
1) Detailed cost breakdowns for each task
2) Labor requirements
3) Cost and hour summaries
4) Raw material and expenditure forecasts
5) Variance reports
6) Time analysis reports
7) Work status reports

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 Project Control
► Well-defined – Waterfall Projects
► Extensive planning
► Known constraints
► Well-defined specifications

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 Project Control
► Ill-defined – Agile Projects
► Many unknowns
► Evolving technology and specifications
► Project developed iteratively and
incrementally

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 PERT and CPM
► Network techniques
► Developed in 1950s
► CPM by DuPont for chemical plants (1957)
► PERT by Booz, Allen & Hamilton with the U.S.
Navy, for Polaris missile (1958)
► Consider precedence relationships and
interdependencies
► Each uses a different estimate of activity
times

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 Six Steps PERT and CPM
1. Define the project and prepare the
work breakdown structure
2. Develop relationships among the
activities – decide which activities must
precede and which must follow others
3. Draw the network connecting all of the
activities

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 Six Steps PERT and CPM
4. Assign time and/or cost estimates to
each activity
5. Compute the longest time path through
the network – this is called the critical
path
6. Use the network to help plan,
schedule, monitor, and control the
project

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 Questions PERT and CPM
Can Answer
1. When will the entire project be completed?
2. What are the critical activities or tasks in the
project?
3. Which are the noncritical activities?
4. What is the probability the project will be
completed by a specific date?

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 Questions PERT and CPM
Can Answer
5. Is the project on schedule, behind schedule,
or ahead of schedule?
6. Is the money spent equal to, less than, or
greater than the budget?
7. Are there enough resources available to
finish the project on time?
8. If the project must be finished in a shorter
time, what is the way to accomplish this at
least cost?
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 A Comparison of AON and
AOA Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)
A comes before
(a) A B C B, which comes
before C A B C
A A
A and B must both
(b) C be completed
before C can start C
B B
B
B and C cannot
(c) A begin until A is B
completed A
C
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C
3 - 32
 A Comparison of AON and
AOA Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

C and D cannot
A C begin until both A C
(d) A and B are
completed
B D B D

C cannot begin until

both A and B are
A C completed A C
(e) D cannot begin until Dummy activity
B is completed
B D A dummy activity is
introduced in AOA B D
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 A Comparison of AON and
AOA Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

B and C cannot
begin until A is
completed
A B D D cannot begin A B D
until both B and C
(f) are completed Dummy
A dummy activity C
C activity
is again
introduced in AOA

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 AON Example
Table 3.1 Milwaukee Paper Manufacturing’s Activities and Predecessors
IMMEDIATE
ACTIVITY DESCRIPTION PREDECESSORS
A Build internal components —
B Modify roof and floor —
C Construct collection stack A
D Pour concrete and install frame A, B
E Build high-temperature burner C
F Install pollution control system C
G Install air pollution device D, E
H Inspect and test F, G

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 AON Network for
Milwaukee Paper

Activity A
A (Build Internal Components)

Start

Activity B
Start B (Modify Roof and Floor)
Activity
Figure 3.5

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 AON Network for
Milwaukee Paper
Activity A Precedes Activity C

A C

Start

B D

Activities A and B Figure 3.6

Precede Activity D
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 AON Network for
Milwaukee Paper

F
A C

E
Start H

B D G

Arrows Show Precedence Figure 3.7

Relationships
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 AOA Network for
Milwaukee Paper
C
2 4
(Construct
Stack)
Co (Ins F
nt al
ne ern
s)

nt tal
C uil A

(Build Burner)
ro l
po Int

ls)
om d

H
(B

Dummy 7
E
1 6
Activity (Inspect/
Test)
Ro (M B
of odi G all
/F fy nst tion )
lo
or (I llu ce
i
) D Po ev
3 5 D
(Pour Figure 3.8
Concrete/
Install Frame)
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 Determining the Project Schedule

Perform a Critical Path Analysis

► The critical path is the longest path
through the network
► The critical path is the shortest time in
which the project can be completed
► Any delay in critical path activities delays
the project
► Critical path activities have no slack time

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 Determining the Project Schedule
Table 3.2 Time Estimates for Milwaukee Paper Manufacturing
ACTIVITY DESCRIPTION TIME (WEEKS)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total time (weeks) 25

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 Determining the Project Schedule
Perform a Critical Path Analysis
Earliest start (ES) = earliest time at
which an activity can start, assuming all
predecessors have been completed
Earliest finish (EF) = earliest time at
which an activity can be finished
Latest start (LS) = latest time at
which an activity can start so as to not
delay the completion time of the entire
project
Latest finish (LF) = latest time by
which an activity has to be finished so as
to not delay the completion time of the
entire project
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 Determining the Project Schedule
Activity Format Figure 3.9

Activity Name
or Symbol
A Earliest
Earliest ES EF
Start Finish

Latest LS LF Latest
Start 2 Finish

Activity Duration
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 Forward Pass
Begin at starting event and work forward

Earliest Start Time Rule:

► If an activity has only a single immediate
predecessor, its ES equals the EF of the
predecessor
► If an activity has multiple immediate
predecessors, its ES is the maximum of all
the EF values of its predecessors

ES = Max {EF of all immediate predecessors}

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 Forward Pass
Begin at starting event and work forward

Earliest Finish Time Rule:

► The earliest finish time (EF) of an activity is
the sum of its earliest start time (ES) and its
activity time

EF = ES + Activity time

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 ES/EF Network for Milwaukee
Paper
ES EF = ES + Activity time
Start
0 0

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 ES/EF Network for Milwaukee
Paper
EF of A =
ES ES of A + 2
of A
A
Start 0 2
0 0

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 ES/EF Network for Milwaukee
Paper
A
0 2

2 EF of B =
ES ES of B + 3
0
Start
0 of B
B
0 0 3

3
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 ES/EF Network for Milwaukee
Paper
A C
0 2 2 4

2 2
Start
0 0

B
0 3

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 ES/EF Network for Milwaukee
Paper
A C
0 2 2 4

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

3
4
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 ES/EF Network for Milwaukee
Paper
A C
0 2 2 4

2 2
Start
0 0

B D
0 3 3 7

3 4

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 ES/EF Network for Milwaukee
Paper
A C F
0 2 2 4 4 7

2 2 3
Start E H
0 0 4 8 13 15

0 4 2

B D G
0 3 3 7 8 13

3 4 5
Figure 3.10
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 Backward Pass
Begin with the last event and work backwards
Latest Finish Time Rule:
► If an activity is an immediate predecessor for
just a single activity, its LF equals the LS of the
activity that immediately follows it
► If an activity is an immediate predecessor to
more than one activity, its LF is the minimum
of all LS values of all activities that
immediately follow it
LF = Min {LS of all immediate following activities}
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 Backward Pass
Begin with the last event and work backwards
Latest Start Time Rule:
► The latest start time (LS) of an activity is the
difference of its latest finish time (LF) and its
activity time

LS = LF – Activity time

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

2 2 3
Start E H
0 0 4 8 13 15
13 15
0 4 2

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

3 4 5 LF = EF
of Project
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 LS/LF Times for
Milwaukee Paper
A C F
0 2 2 4 4 7

10 13
2 2 3
Start E H
0 0
LF 4= Min(LS
8 of 13 15
following activity) 13 15
0 4 2

B D G
0 3 3 7 8 13

3 4 5

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

2 4 10 13
2 2 3
Start E H
0 0 4 8 13 15

4 8 13 15
0 4 2

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

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

0 2 2 4 10 13
2 2 3
Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

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

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 Computing Slack Time
After computing the ES, EF, LS, and LF times for
all activities, compute the slack or free time for
each activity

► Slack is the length of time an activity can be

delayed without delaying the entire project

Slack = LS – ES or Slack = LF – EF

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 Computing Slack Time
TABLE 3.3 Milwaukee Paper’s Schedule and Slack Times
EARLIEST EARLIEST LATEST LATEST ON
START FINISH START FINISH SLACK CRITICAL
ACTIVITY ES EF LS LF LS – ES PATH
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes

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 Activities with zero slack are on the critical path. It:
Computing Slack Time
► Starts at the first activity in the project

► Terminates at the last activity in the project

► Includes only critical activities

TABLE 3.3 Milwaukee Paper’s Schedule and Slack Times
EARLIEST EARLIEST LATEST LATEST ON
START FINISH START FINISH SLACK CRITICAL
ACTIVITY ES EF LS LF LS – ES PATH
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes

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 Critical Path for
Milwaukee Paper
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3
Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

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

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 ES – EF Gantt Chart
for Milwaukee Paper
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-temperature
burner
F Install pollution control
system
G Install air pollution
device
H Inspect and test

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 LS – LF Gantt Chart
for Milwaukee Paper
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-temperature
burner
F Install pollution control
system
G Install air pollution
device
H Inspect and test

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 Cost–Time Trade-Offs and
Project Crashing
It is not uncommon to face the
following situations:
► The project is behind schedule
► The completion time has been
moved forward

Shortening the duration of the

project is called project crashing
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 Factors to Consider When
Crashing a Project
► The amount by which an activity is
crashed is, in fact, permissible
► Taken together, the shortened activity
durations will enable us to finish the
project by the due date
► The total cost of crashing is as small as
possible

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 Steps in Project Crashing
Step 1: Compute the crash cost per time
period. If crash costs are linear over
time:
Crash cost (Crash cost – Normal cost)
per period = (Normal time – Crash time)

Step 2: Using current activity times, find the

critical path(s) and identify the critical
activities

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 Steps in Project Crashing
Step 3: If there is only one critical path, then
select the activity on this critical path
that (a) can still be crashed, and (b) has
the smallest crash cost per period. If
there is more than one critical path,
then select one activity from each
critical path such that (a) each selected
activity can still be crashed, and (b) the
total crash cost of all selected activities
is the smallest. Crash each selected
activity by one period.

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 Steps in Project Crashing
Step 4: Update all activity times. If the desired
due date has been reached, stop. If not,
return to Step 2.

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 Crashing The Project
TABLE 3.5 Normal and Crash Data for Milwaukee Paper Manufacturing

TIME (WEEKS) COST ($)

CRASH COST CRITICAL
ACTIVITY NORMAL CRASH NORMAL CRASH PER WEEK ($) PATH ?
A 2 1 22,000 22,750 750 Yes

B 3 1 30,000 34,000 2,000 No

C 2 1 26,000 27,000 1,000 Yes

D 4 3 48,000 49,000 1,000 No

E 4 2 56,000 58,000 1,000 Yes

F 3 2 30,000 30,500 500 No

G 5 2 80,000 84,500 1,500 Yes

H 2 1 16,000 19,000 3,000 Yes

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 Crash and Normal Times
and Costs for Activity B
Activity
Cost
Crash

Crash Cost – Normal Cost

$34,000 — Crash Cost/Wk =
Normal Time – Crash Time
Crash $33,000 — $34,000 – $30,000
Cost =
3–1
$32,000 — $4,000
= = $2,000/Week
2 Wks
$31,000 —

$30,000 —
Normal
Normal —
Cost
| | |
1 2 3 Time (Weeks)
Figure 3.15
Crash Time Normal Time
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 Advantages of PERT/CPM
1. Especially useful when scheduling and
controlling large projects
2. Straightforward concept and not
mathematically complex
3. Graphical networks help highlight
relationships among project activities
4. Critical path and slack time analyses help
pinpoint activities that need to be closely
watched

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 Advantages of PERT/CPM
5. Project documentation and graphics point
out who is responsible for various activities
6. Applicable to a wide variety of projects
7. Useful in monitoring not only schedules but
costs as well

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 Limitations of PERT/CPM
1. Project activities have to be clearly defined,
independent, and stable in their
relationships
2. Precedence relationships must be specified
and networked together
3. Time estimates tend to be subjective and
are subject to fudging by managers
4. There is an inherent danger of too much
emphasis being placed on the longest, or
critical, path

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 Using Microsoft Project

Program 3.1

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 Using Microsoft Project

Program 3.2
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 Using Microsoft Project

Pollution Project Percentage Completed on April 9

ACTIVITY COMPLETED ACTIVITY COMPLETED Program 3.3
A 100 E 20
B 100 F 20
C 100 G 0
D 10 H 0

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