BA 333 Operations Management Project Management PERT/CPM Spring, 1998.
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Transcript of BA 333 Operations Management Project Management PERT/CPM Spring, 1998.
BA 333Operations Management
Project Management
PERT/CPM
Spring, 1998
Project Management
Spring 1998
Lecture Outline
• Project Management Introduction– Definition & Background– Components
• event
• activity
• critical path
– PERT/CPM
Project Management
Spring 1998
Introduction to Project Management
• Definition– to plan, implement, and control the
management of large, one time projects
• Used in Construction, Shipbuilding, Weapons Systems Development, etc.– Applies to uncertain technology projects– Applies to variable cost resource allocation
• History of PERT/CPM - Navy/Booze Allen Hamilton Consultants
Project Management
Spring 1998
Introduction to Project Scheduling
Introduction to Project Scheduling
Project Management
Spring 1998
Components of Project Control Systems
• Predecessor was Gantt Charts– Horizontal Bar Charts - Time Lines– Tasks– Milestones
• Flow Charts - Relationships Among All Tasks– Activities (tasks that take time and resources)
• sequential vs. concurrent
– Events (an accomplishment occurring at a specific point in time)
Project Management
Spring 1998
Project CharacteristicsProject Characteristics
• Single unit
• Many related activities
• Difficult production planning & inventory control
• General purpose equipment
• High labor skills
Project Management
Spring 1998
Examples of ProjectsExamples of Projects
Project Management
Spring 1998
Examples of ProjectsExamples of Projects
• Building construction
© 1995 Corel Corp.
Project Management
Spring 1998
Examples of ProjectsExamples of Projects
• Building construction
• New product introduction
19 · Nude Sandalfoot19 · Nude SandalfootMedium to Tall (B)Medium to Tall (B)
No nonsenseNo nonsense
Sheer to waist pantyhose
New! Improved!
New! Improved!
© 1995 Corel Corp.
Project Management
Spring 1998
Examples of ProjectsExamples of Projects
• Building construction
• New product introduction
• Training seminar
© 1995 Corel Corp.
Project Management
Spring 1998
Examples of ProjectsExamples of Projects
• Building construction
• New product introduction
• Training seminar
• Research project
© 1995 Corel Corp.
Project Management
Spring 1998
Project Management Activities
Project Management Activities
Project Management
Spring 1998
Project Management Activities
Project Management Activities
Project Management
Spring 1998
Project Management Activities
Project Management Activities
Planning Objectives Resources Work break-
down sched. Organization
Project Management
Spring 1998
Project Management Activities
Project Management Activities
Planning Objectives Resources Work break-
down sched. Organization
Scheduling Project
activities Start &
end times Network
Project Management
Spring 1998
Project Management Activities
Project Management Activities
Planning Objectives Resources Work break-
down sched. Organization
Scheduling Project
activities Start &
end times Network
Controlling Monitor, compare,
revise, action
Project Management
Spring 1998
Project PlanningProject Planning
Project Management
Spring 1998
Project PlanningProject Planning
• Establishing objectives• Defining project• Creating work breakdown
structure • Determining resources• Forming organization
© 1995 Corel Corp.
Project Management
Spring 1998
Project OrganizationProject Organization
• Often temporary structure• Uses specialists from entire company• Headed by project manager
– Coordinates activities – Monitors schedule
& costs• Permanent
structure called ‘matrix organization’
© 1995 Corel Corp.
Acct.
Eng. Eng.Mkt.
Mgr.
Project Management
Spring 1998
Project SchedulingProject Scheduling
Project Management
Spring 1998
Project SchedulingProject Scheduling
• Sequencing activities• Identifying precedence
relationships• Determining activity times
& costs• Estimating material &
worker requirements• Determining critical
activities
© 1995 Corel Corp.
JF
MA
MJ
J
MonthActivity
Design
Build
Test
PE
RT
Project Management
Spring 1998
Project Scheduling Techniques
Project Scheduling Techniques
• Gantt chart
• Critical Path Method (CPM)
• Program Evaluation & Review Technique (PERT)
© 1984-1994 T/Maker Co.
Project Management
Spring 1998
Gantt ChartGantt Chart
Project Management
Spring 1998
Gantt ChartGantt Chart
J F M A M J J
Time PeriodActivity
Design
Build
Test
J F M A M J J
Time PeriodActivity
Design
Build
Test
Project Management
Spring 1998
PERT & CPMPERT & CPM
• Network techniques
• Developed in 1950’s– CPM by DuPont for chemical plants– PERT by U.S. Navy for Polaris missile
• Consider precedence relationships & interdependencies
• Each uses a different estimate of activity times
Project Management
Spring 1998
• Completion date?
• On schedule? Within budget?• Probability of completing by ...?
• Critical activities?
• Enough resources available?• How can the project be finished early at the
least cost?
Questions Answered by PERT & CPM
Questions Answered by PERT & CPM
Project Management
Spring 1998
PERT & CPM StepsPERT & CPM Steps
• Identify activities
• Determine sequence
• Create network
• Determine activity times
• Find critical path– Earliest & latest start times – Earliest & latest finish times – Slack
Project Management
Spring 1998
Constructing NetworksConstructing Networks
Project Management
Spring 1998
Graphical Representation of Events and Activities
• Flow Charting - Uses Nodes and Arrows
• Arrows– An arrow leads from tail to head directionally
• Nodes– A node is represented by a circle
ArrowNode
Project Management
Spring 1998
Activity On Node
• Task is Represented by Node as the Completion of an Activity
• Arrows Represent the Sequential Linkages Between Activities
• For Example, Node 1 is Begin, Node 2 is Complete Task 1, Node 3 is Complete Task 2
1 2 3
Project Management
Spring 1998
Activity On Arrow
• Task is Represented by an Arrow Bounded on Either End by a Node (Event)
• Each Event is Identified by a Number
• The Activity is Designated by the Leading Event Number and the Following Event Number - i.e. Activity 1 - 2
1 2
Project Management
Spring 1998
Designating Task Relationships
• Sequential vs. Concurrent Activities
1 2 3
Sequential Task Relationship
1
2
3
4
Concurrent Task Relationships
Project Management
Spring 1998
Designating “DUMMY” Activities
• Represented by Dashed Arrows
• Show Sequential Relationships Among Tasks, but Take No time or Resources
1
2
3
4Dummy Activity 2-3indicates that bothActivities 1-2 and 2-3 mustbe Completed before beginning Activity 3-4
Project Management
Spring 1998
Network TermsNetwork Terms
Project Management
Spring 1998
Network TermsNetwork Terms
Project: Obtain a college degree (B.S.)
Project Management
Spring 1998
Network TermsNetwork Terms
Register
Project: Obtain a college degree (B.S.)
11
Project Management
Spring 1998
Network TermsNetwork Terms
Register
Project: Obtain a college degree (B.S.)
11
Event (Node)
Project Management
Spring 1998
Network TermsNetwork Terms
4 Years
Register
Project: Obtain a college degree (B.S.)
Event (Node)
Attend class, study etc.
11
Project Management
Spring 1998
Network TermsNetwork Terms
4 Years
Activity (Arrow)
Register
Project: Obtain a college degree (B.S.)
Event (Node)
Attend class, study etc.
11
Project Management
Spring 1998
Network TermsNetwork Terms
224 Years
Activity (Arrow)
RegisterReceive diploma
Project: Obtain a college degree (B.S.)
Event (Node)
Attend class, study etc.
11
Event (Node)
Project Management
Spring 1998
Activity RelationshipsActivity Relationships
Project Management
Spring 1998
Activity RelationshipsActivity Relationships
11
Project Management
Spring 1998
Activity RelationshipsActivity Relationships
11A
B
A & B can occur concurrently
22
33
Project Management
Spring 1998
Activity RelationshipsActivity Relationships
11 44
22
33
A
B
C
A must be done before C & D can begin
D
Project Management
Spring 1998
Activity RelationshipsActivity Relationships
11 44
22
33
A
B E
C
B & C must be done before E can begin
D
Project Management
Spring 1998
Dummy ActivitiesDummy Activities
• Activities are defined often by beginning & ending events– Example: Activity 2-3
• Every activity must have unique pair of beginning & ending events– Computer programs get confused
• Dummy activities maintain precedence– Consume no time or resources
Project Management
Spring 1998
Dummy Activities ExampleDummy Activities Example
Project Management
Spring 1998
Dummy Activities ExampleDummy Activities Example
1111 444433331-2
2-3Incorrect
22222-3
3-4
Project Management
Spring 1998
Dummy Activities ExampleDummy Activities Example
Different activities; same designation
1111 444433331-2
2-3Incorrect
22222-3
3-4
Project Management
Spring 1998
Dummy Activities ExampleDummy Activities Example
Incorrect
1111 44442222
3333
55551-2
2-3
2-4 4-5
3-4: Dummy activity
Correct
1111 444433331-2
2-3
22222-3
3-4
Project Management
Spring 1998
Network Diagramming
• First Step in Project Management
• Begins with a Work Breakdown– Lists the “WHAT’ of a Project– Begins with Finished Project– Consists of Tree Chart, with Each Branch
Listing the “WHAT’s” at that Level
• Then List Each Task that Must Be Completed to Accomplish the “WHAT”
Project Management
Spring 1998
Example Work Breakdown
House
Site Prep Masonry Carpentry Finishing
Footings Piers ExteriorWalls
Chimney
MixedConcrete
Forms LaidConcretePoured
FormsRemoved
Project Management
Spring 1998
Listing Of Activities
• Follows the “WHAT” with List of “HOW”
• Each “WHAT” Results in Detailed List of the “Specific” Tasks Necessary to Accomplish the “WHAT”
• Followed by Specification of Sequential and Concurrent Relationships Among Tasks
• Results in Network Flow Diagram Representing the Tasks and Their Relationships
Project Management
Spring 1998
Activity Time Estimates
• CPM - One Time Estimate per Activity
• PERT - Three Time Estimates per Activity– a = Optimistic Time Estimate– m = Most Likely Time Estimate– b = Pessimistic Time Estimate
• Can Calculate Activity Mean Time Estimate and Variance
Project Management
Spring 1998
PERT Time Estimates
• Activity Mean Time Estimate = te
• Activity Variance Estimate = Sigmae
•te = (a + 4m + b)/6
•Sigmae = (b - a)/6
Can Use Central Limit Theorem to Estimate Project Time
Project Management
Spring 1998
Example Network Flow Diagram
7
6
5
4
3
2
1
B
A
E
C
D
G
F
H
I
J
Project Management
Spring 1998
Example Activity Characteristics
• A 1-2 10 12 14 12 2/3
• B 1-3 9 11 13 11 2/3
• C 2-4 1 3 11 4 5/3
• D 2-5 1 8 9 7 4/3
• E 3-4 1 7 13 7 6/3
• F 3-6 5 10 15 10 5/3
• G 4-5 8 13 18 13 5/3
• H 4-6 1 7 19 8 9/3
• I 5-6 6 10 20 11 7/3
• J 6-7 6 10 14 10 4/3
Activity a m b te Sigmae
Project Management
Spring 1998
Example Network Flow Diagram
7
6
5
4
3
2
1
te =11
te =12
te =7
te =7
te =13
te =10
te =8
te =11
te =10
te =4
Project Management
Spring 1998
Early Start & Early Finish
• The Early Start Time for an Activity Emanating from an Event is the Earliest Point in Time that an Activity can Begin– Determined by the Latest Early Finish of All
Activities Terminating in an Event
• The Early Finish for an Activity is the Sum of its Early Start Time and its te
Project Management
Spring 1998
Example Network Flow Diagram
7
6
5
4
3
2
1
te =11
te =12
te =7
te =7
te =13
te =10
te =8
te =11
te =10
te =4
ES=12
ES=52
ES=42
ES=31
ES=18
ES=11
ES=0
Project Management
Spring 1998
Late Start & Late Finish
• The Late Finish Time for an Activity Terminating in an Event is the Point in Time that it can be Completed Without Delaying the Completion of the Project– Determined by Assigning to the LF the Value of the
Earliest LS of all Activities Emanating from the Event
• The Late Start for an Activity is it Late Finish minus its te
Project Management
Spring 1998
Example Activity Characteristics
• 1-2 10 12 14 12 2/3 0 2 12 14
• 1-3 9 11 13 11 2/3 0 0 11 11
• 2-4 1 3 11 4 5/3 12 14 16 18
• 2-5 1 8 9 7 4/3 12 24 19 31
• 3-4 1 7 13 7 6/3 11 11 18 18
• 3-6 5 10 15 10 5/3 11 32 21 42
• 4-5 8 13 18 13 5/3 18 18 31 31
• 4-6 1 7 19 8 9/3 18 34 26 42
• 5-6 6 10 20 11 7/3 31 31 42 42
• 6-7 6 10 14 10 4/3 42 42 52 52
a m b te Sigmae ES EF LFLS
Project Management
Spring 1998
Example Network Flow DiagramWith Critical Path
7
6
5
4
3
2
1
t1-3=110|0|11|11
t1-2=120|2|12|14
t3-4=711|11|18|18
t2-5=712|24|19|31
t4-5=1318|18|31|31
t3-6=1011|32|21|42
t4-6=818|34 |26|42
t5-6=1131|31|42|42
t6-7=1042|42|52|52
t2-4=412|14|16|18
ES|LS|EF|LF
Project Management
Spring 1998
SLACK
• Total Slack– The Length of Delay in an Activity that Won’t Delay
the Completion of the Project - LF- EF or LS-ES
• Free Slack– The Length of Delay in an Activity that Won’t Delay
the Beginning of Another Activity
• Critical Path – Activities with the Minimum Total Slack - Often
Total Slack on Critical Path Activities = 0
Project Management
Spring 1998
Probabilistic Estimates
• Use of te and Sigmae Allows One to Make Probabilistic Estimates of Completion Dates
• By Summing the te‘s of the Activities on the Critical Path You Can Estimate the Duration of the Entire Project
• By Summing the Variance (Sigmae2) of the Activities
on the Critical Path, You Can estimate the Total Variance of the Critical Path and Make One-Sided Interval Estimates of Project Completion Times
Project Management
Spring 1998
Probabilistic Estimates Example
• 1-3 9 11 13 11 2/3 4/9
• 3-4 1 7 13 7 6/3 36/9
• 4-5 8 13 18 13 5/3 25/9
• 5-6 6 10 20 11 7/3 49/9
• 6-7 6 10 14 10 4/3 16/9
a m b te Sigmae (Sigmae)2
Variance = 130/9 = 14.4Std Dev = 3.8
Probability that the Project Duration is Less than 60 days = Pr(T<60)Same as the Probability that Z < (60-52)/3.8 = 2.1
Therefore: Pr(T<60) = Pr(Z<2.1) = 0.98214 (see App. A, H&R, p. 842)
Project Management
Spring 1998
PERT Probability ExamplePERT Probability Example
You’re a project planner for General Dynamics. A submarine project has an expected completion time of 40 weeks, with a standard deviation of 5 weeks. What is the probability of finishing the sub in 50 weeks or less?
© 1995 Corel Corp.
Project Management
Spring 1998
Converting to Standardized Variable
Converting to Standardized Variable
Project Management
Spring 1998
Converting to Standardized Variable
Converting to Standardized Variable
Assume project completion time Assume project completion time follows a normal distribution.follows a normal distribution.
Project Management
Spring 1998
Converting to Standardized Variable
Converting to Standardized Variable
T = 40
= 5
50 XT = 40
= 5
50 X
Normal Normal DistributionDistribution
Assume project completion time Assume project completion time follows a normal distribution.follows a normal distribution.
Project Management
Spring 1998
Converting to Standardized Variable
Converting to Standardized Variable
T = 40
= 5
50 XT = 40
= 5
50 X
Normal Normal DistributionDistribution
z = 0
Z = 1
Z2.0z = 0
Z = 1
Z2.0
Standardized Standardized Normal DistributionNormal Distribution
Project Management
Spring 1998
Converting to Standardized Variable
Converting to Standardized Variable
T = 40
= 5
50 XT = 40
= 5
50 X
Normal Normal DistributionDistribution
ZX T
50 405
2 0.ZX T
50 405
2 0.
z = 0
Z = 1
Z2.0z = 0
Z = 1
Z2.0
Standardized Standardized Normal DistributionNormal Distribution
Project Management
Spring 1998
Obtaining the ProbabilityObtaining the Probability
Project Management
Spring 1998
Z .00 .01 .02
0.0 .50000 .50399 .50798
: : : :
2.0 .97725 .97784 .97831
2.1 .98214 .98257 .98300
Z .00 .01 .02
0.0 .50000 .50399 .50798
: : : :
2.0 .97725 .97784 .97831
2.1 .98214 .98257 .98300
Obtaining the ProbabilityObtaining the Probability
Standardized Normal Standardized Normal Probability Table (Portion)Probability Table (Portion)
Probabilities in bodyProbabilities in body
Project Management
Spring 1998
z = 0
Z = 1
Z2.0z = 0
Z = 1
Z2.0
Z .00 .01 .02
0.0 .50000 .50399 .50798
: : : :
2.0 .97725 .97784 .97831
2.1 .98214 .98257 .98300
Z .00 .01 .02
0.0 .50000 .50399 .50798
: : : :
2.0 .97725 .97784 .97831
2.1 .98214 .98257 .98300
Obtaining the ProbabilityObtaining the Probability
.97725
Standardized Normal Standardized Normal Probability Table (Portion)Probability Table (Portion)
Probabilities in bodyProbabilities in body
Project Management
Spring 1998
Critical Path Method
• Uses Deterministic Time Estimates for Activities
• Also Estimates Cost of Resources Levels for Each Activity
• Generally You Can increase the Resource Commitment and Reduce the Time Estimate for and Activity
• Use CPM to Analyze How To Reduce the Critical Path Most Efficiently
Project Management
Spring 1998
Benefits & Limitations of PERT/CPM
Benefits & Limitations of PERT/CPM
Project Management
Spring 1998
Benefits of PERT/CPM
Benefits of PERT/CPM
• Useful at many stages of project management
• Mathematically simple
• Use graphical displays
• Give critical path & slack time
• Provide project documentation
• Useful in monitoring costs
Project Management
Spring 1998
Limitations of PERT/CPMLimitations
of PERT/CPM
• Clearly defined, independent, & stable activities
• Specified precedence relationships
• Activity times (PERT) follow beta distribution
• Subjective time estimates
• Over emphasis on critical path
Project Management
Spring 1998
ConclusionConclusion
• Explained what a project is
• Summarized the 3 main project management activities
• Drew project networks
• Compared PERT & CPM
• Determined slack & critical path
• Computed project probabilities
BA 333Operations Management
Project Management
PERT/CPM
Spring, 1998
THE END