Chapter 19 OPERATIONS AND VALUE CHAIN MANAGEMENT © Prentice Hall, 200219-1.
Operations Managementarchive.sau.edu.bd/public/images/upload_images/heizer03... · 2020. 6. 2. ·...
Transcript of Operations Managementarchive.sau.edu.bd/public/images/upload_images/heizer03... · 2020. 6. 2. ·...
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Operations ManagementChapter 3 – Chapter 3 – Project ManagementProject Management
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer/Render Heizer/Render Principles of Operations Management, 7ePrinciples of Operations Management, 7eOperations Management, 9e Operations Management, 9e
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OutlineOutline
Global Company Profile: Bechtel Global Company Profile: Bechtel GroupGroup
The Importance of Project The Importance of Project ManagementManagement
Project PlanningProject PlanningThe Project ManagerThe Project Manager
Work Breakdown StructureWork Breakdown Structure
Project SchedulingProject Scheduling
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Outline - ContinuedOutline - Continued
Project ControllingProject Controlling
Project Management Techniques: Project Management Techniques: PERT and CPMPERT and CPMThe Framework of PERT and CPMThe Framework of PERT and CPM
Network Diagrams and ApproachesNetwork Diagrams and Approaches
Activity-on-Node ExampleActivity-on-Node Example
Activity-on-Arrow ExampleActivity-on-Arrow Example
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Outline - ContinuedOutline - Continued
Determining the Project ScheduleDetermining the Project ScheduleForward PassForward Pass
Backward PassBackward Pass
Calculating Slack Time and Identifying Calculating Slack Time and Identifying the Critical Path(s)the Critical Path(s)
Variability in Activity TimesVariability in Activity TimesThree Time Estimates in PERTThree Time Estimates in PERT
Probability of Project CompletionProbability of Project Completion
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Outline - ContinuedOutline - Continued
Cost-Time Trade-Offs and Project Cost-Time Trade-Offs and Project CrashingCrashing
A Critique of PERT and CPMA Critique of PERT and CPM
Using Microsoft Project to Manage Using Microsoft Project to Manage ProjectsProjectsCreating a Project Schedule Using MS Creating a Project Schedule Using MS
ProjectProject
Tracking Progress and Managing Tracking Progress and Managing Costs Using MS ProjectCosts Using MS Project
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Learning ObjectivesLearning Objectives
1.1. Create a work breakdown Create a work breakdown structurestructure
2.2. Draw AOA and AON networksDraw AOA and AON networks
3.3. Complete both forward and Complete both forward and backward passes for a projectbackward passes for a project
4.4. Determine a critical pathDetermine a critical path
When you complete this chapter you When you complete this chapter you should be able to: should be able to:
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Learning ObjectivesLearning Objectives
5.5. Calculate the variance of activity Calculate the variance of activity timestimes
6.6. Crash a projectCrash a project
7.7. Use Microsoft Project software Use Microsoft Project software to create a projectto create a project
When you complete this chapter you When you complete this chapter you should be able to: should be able to:
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Bechtel ProjectsBechtel Projects
Building 26 massive distribution centers in just Building 26 massive distribution centers in just two years for the internet company Webvan two years for the internet company Webvan Group ($1 billion)Group ($1 billion)
Constructing 30 high-security data centers Constructing 30 high-security data centers worldwide for Equinix, Inc. ($1.2 billion)worldwide for Equinix, Inc. ($1.2 billion)
Building and running a rail line between London Building and running a rail line between London and the Channel Tunnel ($4.6 billion)and the Channel Tunnel ($4.6 billion)
Developing an oil pipeline from the Caspian Sea Developing an oil pipeline from the Caspian Sea region to Russia ($850 million)region to Russia ($850 million)
Expanding the Dubai Airport in the UAE ($600 Expanding the Dubai Airport in the UAE ($600 million), and the Miami Airport in Florida ($2 million), and the Miami Airport in Florida ($2 billion)billion)
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Bechtel ProjectsBechtel Projects
Building liquid natural gas plants in Yemen $2 Building liquid natural gas plants in Yemen $2 billion) and in Trinidad, West Indies ($1 billion)billion) and in Trinidad, West Indies ($1 billion)
Building a new subway for Athens, Greece ($2.6 Building a new subway for Athens, Greece ($2.6 billion)billion)
Constructing a natural gas pipeline in Thailand Constructing a natural gas pipeline in Thailand ($700 million)($700 million)
Building 30 plants for iMotors.com, a company Building 30 plants for iMotors.com, a company that sells refurbished autos online ($300 million)that sells refurbished autos online ($300 million)
Building a highway to link the north and south of Building a highway to link the north and south of Croatia ($303 million)Croatia ($303 million)
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Strategic Importance ofStrategic Importance of Project Management Project Management
Microsoft Windows Vista ProjectMicrosoft Windows Vista Project::
hundreds of programmershundreds of programmers
millions of lines of codemillions of lines of code
hundreds of millions of dollars costhundreds of millions of dollars cost
Hard Rock CafHard Rock Cafee Rockfest Project: Rockfest Project:100,000 + fans100,000 + fans
planning began 9 months in advanceplanning began 9 months in advance
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Single unitSingle unit
Many related activitiesMany related activities
Difficult production planning and Difficult production planning and inventory controlinventory control
General purpose equipmentGeneral purpose equipment
High labor skillsHigh labor skills
Project CharacteristicsProject Characteristics
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Examples of ProjectsExamples of Projects
Building ConstructionBuilding Construction
Research ProjectResearch Project
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Management of ProjectsManagement of Projects
1.1. PlanningPlanning - goal setting, defining the - goal setting, defining the project, team organizationproject, team organization
2.2. SchedulingScheduling - relates people, money, - relates people, money, and supplies to specific activities and supplies to specific activities and activities to each otherand activities to each other
3.3. ControllingControlling - monitors resources, - monitors resources, costs, quality, and budgets; revises costs, quality, and budgets; revises plans and shifts resources to meet plans and shifts resources to meet time and cost demandstime and cost demands
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PlanningPlanning ObjectivesObjectives
ResourcesResources
Work break-down Work break-down scheduleschedule
OrganizationOrganization
SchedulingScheduling Project activitiesProject activities
Start & end timesStart & end times
NetworkNetwork
ControllingControlling Monitor, compare, revise, actionMonitor, compare, revise, action
Project Management Project Management ActivitiesActivities
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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling
Figure 3.1Figure 3.1
BeforeBefore Start of projectStart of project DuringDuringprojectproject TimelineTimeline projectproject
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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling
Figure 3.1Figure 3.1
BeforeBefore Start of projectStart of project DuringDuringprojectproject TimelineTimeline projectproject
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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling
Figure 3.1Figure 3.1
BeforeBefore Start of projectStart of project DuringDuringprojectproject TimelineTimeline projectproject
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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling
Figure 3.1Figure 3.1
BeforeBefore Start of projectStart of project DuringDuringprojectproject TimelineTimeline projectproject
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Project Planning, Project Planning, Scheduling, and ControllingScheduling, and Controlling
Figure 3.1Figure 3.1
BeforeBefore Start of projectStart of project DuringDuringprojectproject TimelineTimeline projectproject
BudgetsDelayed activities reportSlack activities report
Time/cost estimatesBudgetsEngineering diagramsCash flow chartsMaterial availability details
CPM/PERTGantt chartsMilestone chartsCash flow schedules
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Establishing objectivesEstablishing objectives Defining projectDefining project Creating work Creating work
breakdown structure breakdown structure Determining Determining
resourcesresources Forming organizationForming organization
Project PlanningProject Planning
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Often temporary structureOften temporary structure
Uses specialists from entire companyUses specialists from entire company
Headed by project managerHeaded by project manager Coordinates activities Coordinates activities
Monitors scheduleMonitors schedule and costs and costs
Permanent Permanent structure called structure called ‘matrix organization’‘matrix organization’
Project OrganizationProject Organization
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A Sample Project A Sample Project OrganizationOrganization
TestEngineer
MechanicalEngineer
Project 1Project 1 ProjectManager
Technician
Technician
Project 2Project 2 ProjectManager
ElectricalEngineer
Computer Engineer
Marketing FinanceHumanResources Design Quality
Mgt Production
President
Figure 3.2Figure 3.2
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Project OrganizationProject OrganizationWorks Best WhenWorks Best When
1.1. Work can be defined with a specific Work can be defined with a specific goal and deadlinegoal and deadline
2.2. The job is unique or somewhat The job is unique or somewhat unfamiliar to the existing organizationunfamiliar to the existing organization
3.3. The work contains complex The work contains complex interrelated tasks requiring specialized interrelated tasks requiring specialized skillsskills
4.4. The project is temporary but critical to The project is temporary but critical to the organizationthe organization
5.5. The project cuts across organizational The project cuts across organizational lineslines
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Matrix OrganizationMatrix Organization
MarketingMarketing OperationsOperations EngineeringEngineering FinanceFinance
Project 1Project 1
Project 2Project 2
Project 3Project 3
Project 4Project 4
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The Role ofThe Role of the Project Manager the Project Manager
Highly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:
All necessary activities are finished in order All necessary activities are finished in order and on timeand on time
The project comes in within budgetThe project comes in within budget
The project meets quality goalsThe project meets quality goals
The people assigned to the project receive The people assigned to the project receive motivation, direction, and informationmotivation, direction, and information
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The Role ofThe Role of the Project Manager the Project Manager
Highly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:
All necessary activities are finished in order All necessary activities are finished in order and on timeand on time
The project comes in within budgetThe project comes in within budget
The project meets quality goalsThe project meets quality goals
The people assigned to the project receive The people assigned to the project receive motivation, direction, and informationmotivation, direction, and information
Project managers should be:
Good coaches
Good communicators
Able to organize activities from a variety of disciplines
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Ethical IssuesEthical Issues
Bid rigging – divulging confidential information Bid rigging – divulging confidential information to give some bidders an unfair advantageto give some bidders an unfair advantage
““Low balling” contractors – try to “buy” the Low balling” contractors – try to “buy” the project by bidding low and hope to renegotiate project by bidding low and hope to renegotiate or cut cornersor cut corners
Bribery – particularly on international projectsBribery – particularly on international projects
Expense account paddingExpense account padding
Use of substandard materialsUse of substandard materials
Compromising health and safety standardsCompromising health and safety standards
Withholding needed informationWithholding needed information
Failure to admit project failure at closeFailure to admit project failure at close
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Work Breakdown StructureWork Breakdown Structure
LevelLevel
1.1. ProjectProject
2.2. Major tasks in the projectMajor tasks in the project
3.3. Subtasks in the major tasksSubtasks in the major tasks
4.4. Activities (or work packages)Activities (or work packages)to be completedto be completed
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Work Breakdown StructureWork Breakdown Structure
Figure 3.3Figure 3.3
Level IDLevel IDLevelLevel NumberNumber ActivityActivity
11 1.01.0 Develop/launch Windows Vista OSDevelop/launch Windows Vista OS
22 1.11.1 Develop of GUIsDevelop of GUIs
22 1.21.2 Ensure compatibility with earlier Ensure compatibility with earlier Windows versionsWindows versions
33 1.211.21 Compatibility with Windows MECompatibility with Windows ME
33 1.221.22 Compatibility with Windows XPCompatibility with Windows XP
33 1.231.23 Compatibility with Windows 2000Compatibility with Windows 2000
44 1.2311.231 Ensure ability to import filesEnsure ability to import files
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Project SchedulingProject Scheduling
Identifying precedence Identifying precedence relationships relationships
Sequencing activitiesSequencing activities Determining activity Determining activity
times & coststimes & costs Estimating material & Estimating material &
worker requirementsworker requirements Determining critical Determining critical
activitiesactivities
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Purposes of Project Purposes of Project SchedulingScheduling
1.1. Shows the relationship of each activity to Shows the relationship of each activity to others and to the whole projectothers and to the whole project
2.2. Identifies the precedence relationships Identifies the precedence relationships among activitiesamong activities
3.3. Encourages the setting of realistic time Encourages the setting of realistic time and cost estimates for each activityand cost estimates for each activity
4.4. Helps make better use of people, money, Helps make better use of people, money, and material resources by identifying and material resources by identifying critical bottlenecks in the projectcritical bottlenecks in the project
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Scheduling TechniquesScheduling Techniques
1.1. Ensure that all activities are Ensure that all activities are planned forplanned for
2.2. Their order of performance is Their order of performance is accounted foraccounted for
3.3. The activity time estimates are The activity time estimates are recordedrecorded
4.4. The overall project time is The overall project time is developeddeveloped
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Gantt chartGantt chart Critical Path Method Critical Path Method
(CPM)(CPM) Program Evaluation Program Evaluation
and Review and Review Technique (PERT)Technique (PERT)
Project Management Project Management TechniquesTechniques
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A Simple Gantt ChartA Simple Gantt Chart
TimeJ F M A M J J A S
Design
Prototype
Test
Revise
Production
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Passengers
Baggage
Fueling
Cargo and mail
Galley servicing
Lavatory servicingDrinking water
Cabin cleaning
Cargo and mail
Flight services
Operating crewBaggagePassengers
DeplaningBaggage claimContainer offloadPumpingEngine injection waterContainer offloadMain cabin doorAft cabin doorAft, center, forwardLoadingFirst-class sectionEconomy sectionContainer/bulk loadingGalley/cabin checkReceive passengersAircraft checkLoadingBoarding
00 1010 2020 3030 4040Time, MinutesTime, Minutes
Service For A Delta JetService For A Delta Jet
Figure 3.4Figure 3.4
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Project Control ReportsProject Control Reports
Detailed cost breakdowns for each taskDetailed cost breakdowns for each task
Total program labor curvesTotal program labor curves
Cost distribution tablesCost distribution tables
Functional cost and hour summariesFunctional cost and hour summaries
Raw materials and expenditure forecastsRaw materials and expenditure forecasts
Variance reportsVariance reports
Time analysis reportsTime analysis reports
Work status reportsWork status reports
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Network techniquesNetwork techniques
Developed in 1950’sDeveloped in 1950’s CPM by DuPont for chemical plants (1957)CPM by DuPont for chemical plants (1957)
PERT by Booz, Allen & Hamilton with the PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)U.S. Navy, for Polaris missile (1958)
Consider precedence relationships and Consider precedence relationships and interdependenciesinterdependencies
Each uses a different estimate of Each uses a different estimate of activity timesactivity times
PERT and CPMPERT and CPM
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Six Steps PERT & CPMSix Steps PERT & CPM
1.1. Define the project and prepare the Define the project and prepare the work breakdown structurework breakdown structure
2.2. Develop relationships among the Develop relationships among the activities - decide which activities activities - decide which activities must precede and which must follow must precede and which must follow othersothers
3.3. Draw the network connecting all of Draw the network connecting all of the activitiesthe activities
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Six Steps PERT & CPMSix Steps PERT & CPM
4.4. Assign time and/or cost estimates Assign time and/or cost estimates to each activityto each activity
5.5. Compute the longest time path Compute the longest time path through the network through the network –– this is called this is called the critical paththe critical path
6.6. Use the network to help plan, Use the network to help plan, schedule, monitor, and control the schedule, monitor, and control the projectproject
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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?
Questions PERT & CPM Questions PERT & CPM Can AnswerCan Answer
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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?
Questions PERT & CPM Questions PERT & CPM Can AnswerCan Answer
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A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)
A comes before B, which comes before C
(a) A B CBA C
A and B must both be completed before C can start
(b)
A
CC
B
A
B
B and C cannot begin until A is completed
(c)
B
A
CA
B
CFigure 3.5Figure 3.5
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A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)
C and D cannot begin until both A and B are completed
(d)A
B
C
D B
A C
D
C cannot begin until both A and B are completed; D cannot begin until B is completed. A dummy activity is introduced in AOA
(e)CA
B D
Dummy activityA
B
C
D
Figure 3.5Figure 3.5
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A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)
B and C cannot begin until A is completed. D cannot begin until both B and C are completed. A dummy activity is again introduced in AOA.
(f)
A
C
DB A B
C
D
Dummy activity
Figure 3.5Figure 3.5
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AON Example AON Example
ActivityActivity DescriptionDescriptionImmediate Immediate
PredecessorsPredecessors
AA Build internal componentsBuild internal components ——
BB Modify roof and floorModify roof and floor ——
CC Construct collection stackConstruct collection stack AA
DD Pour concrete and install framePour concrete and install frame A, BA, B
EE Build high-temperature burnerBuild high-temperature burner CC
FF Install pollution control systemInstall pollution control system CC
GG Install air pollution deviceInstall air pollution device D, ED, E
HH Inspect and testInspect and test F, GF, G
Milwaukee Paper Manufacturing'sMilwaukee Paper Manufacturing'sActivities and PredecessorsActivities and Predecessors
Table 3.1Table 3.1
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AON Network for AON Network for Milwaukee PaperMilwaukee Paper
A
Start
BStart Activity
Activity A(Build Internal Components)
Activity B(Modify Roof and Floor)
Figure 3.6Figure 3.6
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AON Network for AON Network for Milwaukee PaperMilwaukee Paper
Figure 3.7Figure 3.7
C
D
A
Start
B
Activity A Precedes Activity C
Activities A and B Precede Activity D
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AON Network for AON Network for Milwaukee PaperMilwaukee Paper
G
E
F
H
CA
Start
DB
Arrows Show Precedence Relationships
Figure 3.8Figure 3.8
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HH
(Inspect/ (Inspect/ Test)Test)
77Dummy Dummy ActivityActivity
AOA Network for AOA Network for Milwaukee PaperMilwaukee Paper
66
FF(Install
(Install
Controls)
Controls)EE
(Bu
ild B
ur n
e r )(B
uild
Bu
r ne r )
GG
(Insta
ll
(Insta
ll
Pollutio
n
Pollutio
n
Device)
Device)
55DD
(Pour (Pour Concrete/ Concrete/
Install Frame)Install Frame)
44CC
(Construct (Construct Stack)Stack)
11
33
22
BB(Modify
(Modify
Roof/Floor)
Roof/Floor)
AA(B
uild In
tern
al
(Build
Inte
rnal
Componen
ts)
Componen
ts)
Figure 3.9Figure 3.9
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Determining the Project Determining the Project ScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
The critical path is the longest path The critical path is the longest path through the networkthrough the network
The critical path is the shortest time in The critical path is the shortest time in which the project can be completedwhich the project can be completed
Any delay in critical path activities Any delay in critical path activities delays the projectdelays the project
Critical path activities have no slack Critical path activities have no slack timetime
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Determining the Project Determining the Project ScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path AnalysisActivity Description Time (weeks)
A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2
Total Time (weeks) 25Table 3.2Table 3.2
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Determining the Project Determining the Project ScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
Table 3.2Table 3.2
Activity Description Time (weeks)A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2
Total Time (weeks) 25
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 Determining the Project ScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
Figure 3.10Figure 3.10
A
Activity Name or Symbol
Earliest Start ES
Earliest FinishEF
Latest Start
LS Latest Finish
LF
Activity Duration
2
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Forward PassForward Pass
Begin at starting event and work forwardBegin 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 PassForward Pass
Begin at starting event and work forwardBegin 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 ES/EF Network for Milwaukee PaperMilwaukee Paper
Start
0
0
ES
0
EF = ES + Activity time
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ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper
Start0
0
0
A
2
2
EF of A = ES of A + 2
0
ESof A
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B
3
ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper
Start0
0
0
A
2
20
3
EF of B = ES of B + 3
0
ESof B
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C
2
2 4
ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper
B
3
0 3
Start0
0
0
A
2
20
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C
2
2 4
ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper
B
3
0 3
Start0
0
0
A
2
20
D
4
73= Max (2, 3)
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D
4
3 7
C
2
2 4
ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper
B
3
0 3
Start0
0
0
A
2
20
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E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
D
4
3 7
C
2
2 4
ES/EF Network for ES/EF Network for Milwaukee PaperMilwaukee Paper
B
3
0 3
Start0
0
0
A
2
20
Figure 3.11Figure 3.11
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Backward PassBackward Pass
Begin with the last event and work backwardsBegin 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 PassBackward Pass
Begin with the last event and work backwardsBegin 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 LS/LF Times for Milwaukee PaperMilwaukee Paper
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
D
4
3 7
C
2
2 4
B
3
0 3
Start0
0
0
A
2
20
LF = EF of Project
1513
LS = LF – Activity time
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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
13 15
D
4
3 7
C
2
2 4
B
3
0 3
Start0
0
0
A
2
20
LF = Min(LS of following activity)
10 13
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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
13 15
10 13
8 13
4 8
D
4
3 7
C
2
2 4
B
3
0 3
Start0
0
0
A
2
20
LF = Min(4, 10)
42
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LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
13 15
10 13
8 13
4 8
D
4
3 7
C
2
2 4
B
3
0 3
Start0
0
0
A
2
20
42
84
20
41
00
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Computing Slack TimeComputing Slack Time
After computing the ES, EF, LS, and LF times After computing the ES, EF, LS, and LF times for all activities, compute the slack or free for all activities, compute the slack or free time for each activitytime 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 TimeComputing Slack Time
Earliest Earliest Latest Latest OnStart Finish Start Finish Slack Critical
Activity ES EF LS LF LS – ES Path
A 0 2 0 2 0 YesB 0 3 1 4 1 NoC 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesF 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes
Table 3.3Table 3.3
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Critical Path for Critical Path for Milwaukee PaperMilwaukee Paper
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
13 15
10 13
8 13
4 8
D
4
3 7
C
2
2 4
B
3
0 3
Start0
0
0
A
2
20
42
84
20
41
00
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ES – EF Gantt ChartES – EF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper
AA Build internal Build internal componentscomponents
BB Modify roof and floorModify roof and floor
CC Construct collection Construct collection stackstack
DD Pour concrete and Pour concrete and install frameinstall frame
EE Build high-Build high-temperature burnertemperature burner
FF Install pollution Install pollution control systemcontrol system
GG Install air pollution Install air pollution devicedevice
HH Inspect and testInspect and test
11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616
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LS – LF Gantt ChartLS – LF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper
AA Build internal Build internal componentscomponents
BB Modify roof and floorModify roof and floor
CC Construct collection Construct collection stackstack
DD Pour concrete and Pour concrete and install frameinstall frame
EE Build high-Build high-temperature burnertemperature burner
FF Install pollution Install pollution control systemcontrol system
GG Install air pollution Install air pollution devicedevice
HH Inspect and testInspect and test
11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616
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CPM assumes we know a fixed time CPM assumes we know a fixed time estimate for each activity and there estimate for each activity and there is no variability in activity timesis no variability in activity times
PERT uses a probability distribution PERT uses a probability distribution for activity times to allow for for activity times to allow for variabilityvariability
Variability in Activity TimesVariability in Activity Times
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Three time estimates are requiredThree time estimates are requiredOptimistic time (a) – if everything goes Optimistic time (a) – if everything goes
according to planaccording to plan
Pessimistic time (b) – assuming very Pessimistic time (b) – assuming very unfavorable conditionsunfavorable conditions
MostMost likely time (m) – most realistic likely time (m) – most realistic estimateestimate
Variability in Activity TimesVariability in Activity Times
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Estimate follows beta distributionEstimate follows beta distribution
Variability in Activity TimesVariability in Activity Times
Expected time: Expected time:
Variance of times: Variance of times: t = t = ((a + a + 44mm + + bb)/6)/6
v = v = [([(b b – – aa)/6])/6]22
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Estimate follows beta distributionEstimate follows beta distribution
Variability in Activity TimesVariability in Activity Times
Expected time: Expected time:
Variance of times: Variance of times: t = t = ((a + a + 44mm + + bb)/6)/6
v = v = [([(b b − − aa)/6]2)/6]2Probability of 1 in 100 of > b occurring
Probability of 1 in 100 of < a occurring
Pro
bab
ility
Optimistic Time (a)
Most Likely Time (m)
Pessimistic Time (b)
Activity Time
Figure 3.12
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Computing VarianceComputing Variance
Most ExpectedOptimistic Likely Pessimistic Time Variance
Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2
A 1 2 3 2 .11B 2 3 4 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11
Table 3.4Table 3.4
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Probability of Project Probability of Project CompletionCompletion
Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivities
σσ 22 = Project variance = Project variance
= = ∑∑ ((variances of activities variances of activities on critical pathon critical path))
p
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Probability of Project Probability of Project CompletionCompletion
Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivitiesProject variance
σ2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11
Project standard deviation
σp = Project variance
= 3.11 = 1.76 weeks
p
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Probability of Project Probability of Project CompletionCompletion
PERT makes two more assumptions:PERT makes two more assumptions:
Total project completion times follow a Total project completion times follow a normal probability distributionnormal probability distribution
Activity times are statistically Activity times are statistically independentindependent
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Probability of Project Probability of Project CompletionCompletion
Standard deviation = 1.76 weeks
15 Weeks
(Expected Completion Time)Figure 3.13
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Probability of Project Probability of Project CompletionCompletion
What is the probability this project can What is the probability this project can be completed on or before the be completed on or before the 1616 week week deadline?deadline?
ZZ == –– //σσ pp
= = (16 (16 wkswks –– 15 15 wkswks)/1.76)/1.76
= = 0.570.57
duedue expected dateexpected datedatedate of completionof completion
Where Z is the number of standard deviations the due date or target date lies from the mean or expected date
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Probability of Project Probability of Project CompletionCompletion
What is the probability this project can What is the probability this project can be completed on or before the 16 week be completed on or before the 16 week deadline?deadline?
ZZ == −− //σσ pp
= = (16 (16 wkswks −− 15 15 wkswks)/1.76)/1.76
= = 0.570.57
due expected datedate of completion
Where Z is the number of standard deviations the due date or target date lies from the mean or expected date
.00 .01 .07 .08
.1 .50000 .50399 .52790 .53188
.2 .53983 .54380 .56749 .57142
.5 .69146 .69497 .71566 .71904
.6 .72575 .72907 .74857 .75175
From Appendix I
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Probability of Project Probability of Project CompletionCompletion
Time
Probability(T ≤ 16 weeks)is 71.57%
Figure 3.14
0.57 Standard deviations
15 16Weeks Weeks
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Determining Project Determining Project Completion TimeCompletion Time
Probability of 0.01
Z
Figure 3.15
From Appendix I
Probability of 0.99
2.33 Standard deviations
0 2.33
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Variability of Completion Variability of Completion Time for Noncritical PathsTime for Noncritical Paths
Variability of times for activities on Variability of times for activities on noncritical paths must be noncritical paths must be considered when finding the considered when finding the probability of finishing in a probability of finishing in a specified timespecified time
Variation in noncritical activity Variation in noncritical activity may cause change in critical pathmay cause change in critical path
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What Project Management What Project Management Has Provided So FarHas Provided So Far
The project’s expected completion time The project’s expected completion time is is 1515 weeks weeks
There is a There is a 71.57%71.57% chance the equipment chance the equipment will be in place by the will be in place by the 16 16 week deadlineweek deadline
Five activities Five activities ((A, C, E, G, and HA, C, E, G, and H)) are on are on the critical paththe critical path
Three activities Three activities ((B, D, FB, D, F)) are not on the are not on the critical path and have slack time critical path and have slack time
A detailed schedule is availableA detailed schedule is available
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Trade-Offs And Project Trade-Offs And Project CrashingCrashing
The project is behind scheduleThe project is behind schedule
The completion time has been The completion time has been moved forwardmoved forward
It is not uncommon to face the It is not uncommon to face the following situations:following situations:
Shortening the duration of the project is called project crashing
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Factors to Consider When Factors to Consider When Crashing A ProjectCrashing A Project
The amount by which an activity is The amount by which an activity is crashed is, in fact, permissiblecrashed is, in fact, permissible
Taken together, the shortened Taken together, the shortened activity durations will enable us to activity durations will enable us to finish the project by the due datefinish the project by the due date
The total cost of crashing is as small The total cost of crashing is as small as possibleas possible
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Steps in Project CrashingSteps in Project Crashing
1.1. Compute the crash cost per time period. Compute the crash cost per time period. If crash costs are linear over time:If crash costs are linear over time:
Crash costCrash costper periodper period ==
(Crash cost – Normal cost)(Crash cost – Normal cost)
(Normal time – Crash time)(Normal time – Crash time)
2.2. Using current activity times, find the Using current activity times, find the critical path and identify the critical critical path and identify the critical activitiesactivities
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Steps in Project CrashingSteps in Project Crashing
3.3. If there is only one critical path, then If there is only one critical path, then select the activity on this critical path select the activity on this critical path that (a) can still be crashed, and (b) has that (a) can still be crashed, and (b) has the smallest crash cost per period. If the smallest crash cost per period. If there is more than one critical path, then there is more than one critical path, then select one activity from each critical path select one activity from each critical path such that (a) each selected activity can such that (a) each selected activity can still be crashed, and (b) the total crash still be crashed, and (b) the total crash cost of all selected activities is the cost of all selected activities is the smallest. Note that the same activity may smallest. Note that the same activity may be common to more than one critical be common to more than one critical path.path.
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Steps in Project CrashingSteps in Project Crashing
4.4. Update all activity times. If the desired Update all activity times. If the desired due date has been reached, stop. If not, due date has been reached, stop. If not, return to Step 2.return to Step 2.
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Crashing The ProjectCrashing The Project
Time (Wks) Cost ($) Crash Cost CriticalActivity Normal Crash Normal Crash Per Wk ($) Path?
A 2 1 22,000 22,750 750 YesB 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes
Table 3.5Table 3.5
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Crash and Normal Times Crash and Normal Times and Costs for Activity Band Costs for Activity B
| | |11 22 33 Time (Weeks)Time (Weeks)
$34,000 $34,000 —
$33,000 $33,000 —
$32,000 $32,000 —
$31,000 $31,000 —
$30,000 $30,000 —
—
Activity Activity CostCost
CrashCrash
NormalNormal
Crash TimeCrash Time Normal TimeNormal Time
Crash Crash CostCost
Normal Normal CostCost
Crash Cost/WkCrash Cost/Wk = = Crash Cost – Normal CostCrash Cost – Normal CostNormal Time – Crash TimeNormal Time – Crash Time
==$34,000 $34,000 –– $30,000 $30,000
3 3 –– 1 1
= = $2,000/Wk= = $2,000/Wk$4,000$4,0002 Wks2 Wks
Figure 3.16Figure 3.16
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Critical Path And Slack Critical Path And Slack Times For Milwaukee PaperTimes For Milwaukee Paper
Figure 3.17Figure 3.17
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
13 15
10 13
8 13
4 8
D
4
3 7
C
2
2 4
B
3
0 3
Start0
0
0
A
2
20
42
84
20
41
00
SlackSlack = 1 = 1 SlackSlack = 1 = 1
SlackSlack = 0 = 0 SlackSlack = 6 = 6
SlackSlack = 0 = 0
SlackSlack = 0 = 0
SlackSlack = 0 = 0
SlackSlack = 0 = 0
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Advantages of PERT/CPMAdvantages of PERT/CPM
1.1. Especially useful when scheduling and Especially useful when scheduling and controlling large projectscontrolling large projects
2.2. Straightforward concept and not Straightforward concept and not mathematically complexmathematically complex
3.3. Graphical networks help highlight Graphical networks help highlight relationships among project activitiesrelationships among project activities
4.4. Critical path and slack time analyses help Critical path and slack time analyses help pinpoint activities that need to be closely pinpoint activities that need to be closely watchedwatched
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Advantages of PERT/CPMAdvantages of PERT/CPM
5.5. Project documentation and graphics Project documentation and graphics point out who is responsible for various point out who is responsible for various activitiesactivities
6.6. Applicable to a wide variety of projectsApplicable to a wide variety of projects
7.7. Useful in monitoring not only schedules Useful in monitoring not only schedules but costs as wellbut costs as well
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1.1. Project activities have to be clearly Project activities have to be clearly defined, independent, and stable in their defined, independent, and stable in their relationshipsrelationships
2.2. Precedence relationships must be Precedence relationships must be specified and networked togetherspecified and networked together
3.3. Time estimates tend to be subjective and Time estimates tend to be subjective and are subject to fudging by managersare subject to fudging by managers
4.4. There is an inherent danger of too much There is an inherent danger of too much emphasis being placed on the longest, or emphasis being placed on the longest, or critical, pathcritical, path
Limitations of PERT/CPMLimitations of PERT/CPM
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Project Management SoftwareProject Management Software
There are several popular packages There are several popular packages for managing projectsfor managing projects Primavera Primavera
MacProjectMacProject
PertmasterPertmaster
VisiScheduleVisiSchedule
Time LineTime Line
Microsoft ProjectMicrosoft Project
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Using Microsoft ProjectUsing Microsoft Project
Program 3.1
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Using Microsoft ProjectUsing Microsoft Project
Program 3.2
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Using Microsoft ProjectUsing Microsoft Project
Program 3.3
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Using Microsoft ProjectUsing Microsoft Project
Program 3.4
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Using Microsoft ProjectUsing Microsoft Project
Program 3.5
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Using Microsoft ProjectUsing Microsoft Project
Program 3.6
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Using Microsoft ProjectUsing Microsoft Project
Program 3.7