OPSM 301 Operations Management

Class 18:Project Management:Introduction and CPM

Koç University

Zeynep Aksinzaksin@ku.edu.tr

Announcements

New Module: Project Management Chapter 7 Next class on Tuesday December 14 will

be in SOS 180-quiz 3 Third group assignment will be about

project scheduling, to be assigned next week.

Why project management?

Competition through new product development

Information-intensive products: costly to produce, cheap to reproduce

Flatter organizations Systems approach Project approach

Project

A single “product” is obtained from the completion of a project

The differentiating characteristic of projects from processes is the intense uncertainty in projects

Two types of project– With absolute deadline: olympic stadium– With relative deadline : new product development project

Successful project management: To finish on time without going over budget and without sacrificing from the scope of the project

Project Management

Examples– Construction– R & D– Computer system implementation– Product development– Advertising campaign– Business Plan

Project Management

Resources

BudgetScope

Schedule

Projects are Balancing Acts

Precedence Structure

Statistical Variation

HumanBehavior

Quality andScope

Timing andSchedule

BudgetedCosts

Some observations

Most projects – Either go over time– or over budget– or the promised content cannot be delivered

Little’s law: more projects in the system (WIP), longer completion times

Modern Project Management

The process of project management has two dimensions: the “science” and the “art” of project management– Technical: defining, planning and controlling– Socio-Cultural:

• stimulating teamwork and personal motivation• identifying and resolving problems• shaping customer expectations• sustaining political support of top management• monitoring subcontractors• negotiating with functional managers

10

Planning Objectives Resources Work break-

down schedule Organization

Scheduling Project

activities Start & end

times Network

Controlling Monitor, compare,

revise, action

Project Management Activities

Project Planning, Scheduling, and Controlling

Work Breakdown Structure

1. Project 2. Major tasks in the project 3. Subtasks in the major tasks 4. Activities (or work packages)

to be completed

The Work Breakdown Structure

1. House

1.2 Heating System

WP-F1WP-F2

WP-P1WP-P2WP-P3

1.2.3 Fuel Tank

1.2.2 Furnace

1.2.1 Piping

1.3 Interior Design

1.1 Building/Structure

1.4 Garden/Parking

1.2.4 Solar Panels

WP-FT1WP-FT2WP-FT3

WP-SP1 WP-SP4 WP-SP2 WP-SP5WP-SP3

14

Gantt chart Critical Path Method (CPM) Program Evaluation &

Review Technique (PERT)

Project Scheduling and Controlling

15

Network techniques Developed in 1950’s

– 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

PERT and CPM

16

Is the project on schedule, ahead of schedule, or behind schedule?

Is the project over or under cost budget?

Are there enough resources available to finish the project on time?

If the project must be finished in less than the scheduled amount of time, what is the way to accomplish this at least cost?

Questions Which May Be Addressed by PERT & CPM

17

The Six Steps Common to PERT & 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

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

18

Precedence Relations

Activity Immediate Predecessor Duration (days)

A (Start) 4B A 3C A 5D B,C 2

19

Simple Project Network

A

B

C

D

Activity “A”precedes Activity “B”

precedence relations as “arcs”

20

Provides activity information– Earliest (ES) & latest (LS) start– Earliest (EF) & latest (LF) finish– Slack (S): Allowable delay

Identifies critical path– Longest path in network– Shortest time project can be completed– Any delay on critical path activities delays

project– Critical path activities have 0 slack

Critical Path Analysis

21

Begin at starting event and work forward ES = 0 for starting activities

– ES is earliest start EF = ES + Activity time

– EF is earliest finish ES = Maximum EF of all predecessors for

non-starting activities

Earliest Start and Finish Steps

22

Begin at ending event and work backward

LF = Maximum EF for ending activities– LF is latest finish; EF is earliest finish

LS = LF - Activity time– LS is latest start

LF = Minimum LS of all successors for non-ending activities

Latest Start and Finish Steps

Latest Start and Finish Steps

Latest Finish

ES

LS

EF

LF

Earliest Finish

Latest Start

Earliest Start

Activity Nam

eActivity Duration

Finding the Critical Path

A D

C

B

4

3

5

20 4

4

4

7

9

9 11119

9

9

6

4

40Activity Slack:S = LS-ES, orS = LF-EF

Start attime t=0

ESLS

EFLF

Finding the Critical Path

A D

C

B

4

3

5

20 4

4

4

7

9

9 11119

9

9

6

4

40

S=0S=0

S=0

S=2

Critical Path: Path with zero activity slacks

Activity Slack:S = LS-ES, orS = LF-EF

26

Yozgat Paper Manufacturing Activities

Activity Description Immediate Predecessors

Time(weeks)

A Build internal components - 2

B Modify roof and floor - 3

C Construct collection stack A 2

D Pour concrete and install frame

A, B 4

E Build high-temperature burner

C 4

F Install pollution control system

C 3

G Install air pollution device D, E 5

H Inspect and test F, G 2

27

AON Network for Yozgat Paper Manufacturing

Start

A

B

C

D

F

F

G

H

28

Critical Path for Yozgat Paper Manufacturing

Start

A

B

C

D

F

F

G

H

29

AON Network for Yozgat Paper Manufacturing

Slack=0

Start

A

B

C

D

F

F

G

HH

1313

2

1515

HG

88

5

1313

HF

410

3

713

HC

22

2

44

HE

44

4

88

HD

34

4

78

HB

01

3

34

HA

00

2

22

H00

0

00

Slack=0 Slack=0

Slack=0

Slack=0

Slack=6

Slack=1Slack=1

Start

30

Gantt ChartEarliest Start and Finish

Yozgat Paper Manufacturing

A Build internal componentsB Modify roof and floorC Construct collection stackD Pour concrete and install frameE Build high-temperature burnerF Install pollution control systemG Install air pollution deviceH Inspect and test

1 2 3 4 5 6 7 8 9 10 1112 13 1415 16