OM Project Management 18 COLLIER/EVANS 5 Copyright ©2016 Cengage Learning. All Rights Reserved. May...

OMProject Management

18

COLLIER/EVANS

5

Copyright ©2016 Cengage Learning. Al l Rights Reserved. May not be scanned, copied or dupl icated, or posted to a publ icly accessible website, in whole or in part.

LEARNING OUTCOMES

2Copyright ©2016 Cengage Learning. Al l Rights Reserved. May not be scanned, copied or dupl icated, or posted to a publ icly accessible website, in whole or in part. OM5 | CH18

1 Explain the key issues associated with project management

2 Describe how to apply the Critical Path Method (CPM)

3 Explain how to make time/cost tradeoff decisions in projects

4 Describe how to calculate probabilities for project completion time using PERT


Project

• Temporary and customized initiative that consists of many smaller tasks and activities that must be coordinated and completed • To finish the entire initiative on time and within

budget• Project management: Involves all activities

associated with planning, scheduling, and controlling projects


The Scope of Project Management

Define• Understand the goal of the project, responsibilities, deliverables, and what

must be accomplished

Plan• Determine the steps needed to execute the project, delegate tasks, and

identify start and completion dates

Organize

• Coordinate the resources to execute the plan cost-effectively

Control

• Collect and assess status reports and changes to baselines

Close

• Compile statistics, reassign people, and a lessons learned list


Principles for Project Managers

• Manage people individually and as a project team

• Reinforce the commitment and excitement of the project team

• Keep everyone informed• Build agreements and consensus among the

team• Empower the project team


Organizational Structure

• Pure project structure with team members assigned exclusively to projects and report to a project manager• Results in duplication of resources

• Pure functional structure charters projects exclusively within functional departments• Ignores cross-functional issues


Organizational Structure

• Matrix structure lends resources to projects while still maintaining functional control• Minimizes duplication of resources and

facilitates communication

8Copyright ©2016 Cengage Learning. Al l Rights Reserved. May not be scanned, copied or dupl icated, or posted to a publ icly accessible website, in whole or in part. OM5| CH18

Exhibit

18.2 Contributors and Impediments to Project Success


Techniques for Planning, Scheduling, and Controlling Projects

• Factors that affect all project management decisions• Time• Resources• Cost


Techniques for Planning, Scheduling, and Controlling Projects

Project definition

• Identifying the activities that must be completed and the sequence to perform them

Resource planning

• Determining resource needs for each activity

Project scheduling

• Specifying a time schedule for the completion of each activity

Project control

• Establishing controls for determining progress and responding to problems


Project Definition

• Activities: Discrete tasks that consume resources and time

• Immediate predecessors: Activities that must be completed immediately before an activity may start• Precedence relationships ensure that activities

are performed in the proper sequence when they are scheduled


Exhibit

18.3 Project Activities and Precedence Relationships


Project Definition

• Work breakdown structure: Hierarchical tree of end items that will be accomplished by the project team during the project

• Project network: Consists of nodes and arcs, which define the precedence relationships between activities• Nodes: Set of circles or boxes, which represent

activities• Arcs: Set of arrows• This is called an activity-on-node (AON) network

representation


Exhibit

18.4 Project Network for the Software Integration Project


Resource Planning

• Developing time estimates for each activity and allocating resources that will be required

• Cost control is a vital part of project management, and resource planning aids in good budgeting


Project Scheduling With the Critical Path Method

• Critical path: Sequence of activities that takes the longest time and defines the total project completion time• Assumptions

- Project network defines a correct sequence of work in terms of technology and workflow

- Activities are to be independent of one another with clearly defined start and finish dates



• Assumptions- Activity time estimates are accurate and

stable- Once an activity is started it continues

uninterrupted until it is completed



• Earliest start (ES) and earliest finish (EF) times are computed by moving through the project network in a forward fashion

• Rules for calculating activity times• Rule 1 - EF = ES + T• Rule 2 - ES time for an activity equals the largest

EF time of all immediate predecessors• Rule 3 - LS = LF - T• Rule 4 - LF time for an activity is the smallest LS

of all immediate successors


Exhibit

18.6 Activity-on-Node Format and Definitions


Project Control

• Schedule: Specifies when activities are to be performed• Due to uncertainty of task times, unavoidable

delays, or other problems, projects rarely progress on schedule

• Gantt charts graphically depict the project schedule

• Project management software can assist in allocating limited resources, that are shared among all the activities


Figure

18.1 Gantt Chart Symbols


Time/Cost Trade-Offs

• Crashing a project: Reducing the total time to complete the project to meet a revised due date• Crash time: Shortest possible time the activity

can realistically be completed• Crash cost: Total additional cost associated with

completing an activity in its crash time rather than in its normal time


Time/Cost Trade-Offs

• Crash cost per unit of time = Crash cost - normal cost/normal time -

crash time• Crashing an activity: Reducing its normal

time, possibly up to its limit, the crash time


Exhibit

18.12 Normal Versus Crash Activity Analysis


Uncertainty in Project Management

• Project evaluation and review technique (PERT) is another approach to project management

• PERT was developed to handle uncertainties in activity completion times

• In contrast, CPM assumes that activity times are constant



• PERT estimates are obtained for each activity• Optimistic time - Activity time under ideal

conditions• Most probable time - Most likely activity time

under normal conditions• Pessimistic time - Activity time if breakdowns or

serious delays occur



• Expected Time = (a + 4m + b)/6• Variance = (b – a)2/36• Where,

- a is the optimistic time estimate- m is most likely or probable- b is the pessimistic time estimate

• PERT assumes a beta probability distribution



• Critical path is found using the expected times in the same fashion as in the critical path method

• PERT allows us to investigate the effects of uncertainty of activity times on the project completion time

SUMMARY


• Project is temporary and customized initiative that consists of many smaller tasks and activities that must be coordinated and completed • To finish the entire initiative on time and within

budget• Project management which involves all

activities associated with planning, scheduling, and controlling projects

KEY TERMS


• Activities• Arcs• Crash cost• Crash time• Crashing a project• Crashing an activity• Critical path• Immediate predecessors• Nodes

KEY TERMS


• Project• Project management• Project network• Schedule• Work breakdown structure

OM Project Management 18 COLLIER/EVANS 5 Copyright ©2016 Cengage Learning. All Rights Reserved. May...

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