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Managing Projects

Project Management: Why Do It?


Kuwait, After the Gulf War (1990): 650 burning oil wells No water, food, electricity or facilities Oil-covered roads, blazing Thousands of unexploded bombs, mines, artillery shells and grenades
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 2

Bechtel Construction:
Mobilized workforce of 9,000 Deployed 125,000 tons of equipment and supplies Built 150 km of pipeline delivering 20 million gallons of water per day to the fires Served 27,000 meals per day Established storage, docking, and warehouse facilities in Dubai
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 3

What Is a Project?

A series of related tasks directed toward some major output or goal Often driven by a completion deadline

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 4

Project Phases
Concept
Broad definition and feasibility analysis Budget estimates within s 30%

Project definition
Tentative schedules, budgets, organization Budget estimates refined within s 5%
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 5

Project Phases (contd)


Planning phase
Detailed tasks, timing, budgets & resources Project management tools

Performance phase
Execution and control

Post completion
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 6

Work Breakdown Structure (WBS)


Level 1 Program 2 Project 3 Task (group or organization) 4 Subtask 5 Work Assignment
(organizational unit)

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 7

Work Breakdown Structure Example


Level 1 Custom Home Builder 2 Custom Home 3 Foundation (group or organization) 4 Concrete work 5 Set-up forms
(organizational unit)

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 8

Breaking Down the Work


Allows independent operation Improves manageability Decentralizes authority Enables monitoring and measurement Provides assessment of required resources
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 9

Tools for Project Control: Gantt Charts

...But there is no detailed information about interrelationships


2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 10

Tools for Project Control


Network techniques Consider precedence relationships Capture interdependency of activities Determine critical path(s)
Sequence(s) of activities that determines overall duration of the project
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 11

Critical Path Method (CPM)


Consider the following consulting project:
Activity Assess customers needs Write and submit proposal Obtain approval Develop service vision and goals Train employees Quality improvement pilot groups Write assessment report Designation A B C D E F G Immediate Predecessor(s) None A B C C D, E F Duration (weeks) 2 1 1 2 4 5 1

Develop a critical path diagram and determine the duration of the critical path and slack times for all activities
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 12

This activity-on-node (AON) diagram shows the precedence relationships ...

. . .as well as the length of each activity. Do you see the two paths through the network?
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 13

Some Definitions
Earliest Start Time (ES)
 = Latest EF for all immediate predecessors

Earliest Finish Time (EF)


 = ES + activitys duration

Latest Start Time (LS)


 = LF activitys duration

Latest Finish Time (LF)


 = Earliest LS for all immediate successors

Slack = amount of allowable delay in an activity


 = Equal to LS ES or LF EF for an activity
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 14

Insights
A hit to a critical activity will make project late Rational time estimates needed Slack activities can start later Difference between effort-driven and time-driven activities

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 15

Some Assumptions
Project activities can be identified as entities. (There is a clear beginning and ending point for each activity.) Project activity sequence relationships can be specified and networked Project control should focus on the critical path (activities with no slack)
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 16

In First Example ...


Network-based scheduling techniques to:
Show precedence Determine project duration Identify critical paths and activities

Setting EF = LF for last activity implies that current length of project is OK


2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 17

However, there are often ...


Deadlines for finishing projects
(Olympic stadium, dormitories, etc.)

Penalty or overhead costs


(Bechtel Construction)

Competitive pressures
Product launch
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 18

Ways to Shorten (Crash) a Project


STEAL resources from noncritical activities MORE resources MORE hours MORE $$$$
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 19

Idea behind CRASHING

Duration of individual effortdriven activities can be shortened, but at a cost


Example: Following project must be completed by Week 26

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 20

Project Data
Activity
A B C D E F G H I J K L

Duration
6 11 14 2 4 5 6 7 3 4 4 3

Predecessors
None A A A B B C C D E F, G H, I

Crashable Weeks
None 4 3 None 1 1 1 2 None None 2 1

Cost per Week


$700 $2,000 $2,000 $1,000 $1,000 $2,000

$1,500 $2,500
Chapter 5, Slide 21

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Network Diagram for Project

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 22

1. Write Down All Possible Paths and Lengths of Time


Path ABEJ ABFK ACGK ACHL ADIL Length 25 26 30 30 14
Chapter 5, Slide 23

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

2. Identify All Paths to be Shortened


Path ABEJ ABFK ACGK ACHL ADIL Length 25 26 30 30 14

Critical Path Critical Path

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 24

3. Find Lowest-Cost Way to Shorten Critical Path(s)


Path ABEJ ABFK ACGK ACHL ADIL Length 25 26 30 30 14 To CRASH, either: 1. Shorten C or 2. Shorten {G or K} and {H or L}

Shorten C by 3 weeks
Cost = 3$2,000 = $6,000

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 25

Update Lengths in Table


Path ABEJ ABFK ACGK ACHL ADIL Length 25 26 30 27 30 27 14

Are we done? What are our next cheapest alternatives?

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 26

To Crash Further
1. Shorten C, or 2. Shorten {G or K} and {H or L}

Shorten Both G and H by 1 Week: Cost = $1,000 + $2,000 = $3,000

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 27

Update Lengths in Table


Path ABEJ ABFK ACGK ACHL ADIL Length 25 26 30 27 26 30 27 26 14

Total Cost to Crash = $6,000 + $3,000 = $9,000

2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 28

If overhead per week is $4000


How many more weeks should the company try to crash the project?
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 29

Observations
Cost of crashing becomes more and more expensive as cheapest options are used up There is a limit to how far a project can be crashed. Crashing non-critical activities is pointless
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 30

Controlling Projects
CPM used primarily to Plan and Schedule, BUT ... Things rarely go as planned Additional activities arise Better time and resource estimates are made as project progresses
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 31

Computer-Based Package Advantages


Regular updates Change analysis, tracking, and exception reports High level of detail Scheduling around resource constraints
2006 Pearson Prentice Hall Introduction to Operations and Supply Chain Management Bozarth & Handfield

Chapter 5, Slide 32

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