J0444J0444

OPERATION MANAGEMENTOPERATION MANAGEMENT

Project Project ManagementManagement

Pert

5

Universitas Bina Universitas Bina NusantaraNusantara

Chapter 3Chapter 3

Project ManagementProject Management

Definition of Project ManagementDefinition of Project Management Work Breakdown StructureWork Breakdown Structure Project Control ChartsProject Control Charts Structuring ProjectsStructuring Projects Critical Path SchedulingCritical Path Scheduling

– CPM with a Single TimeCPM with a Single Time– CPM with Three Activity Time CPM with Three Activity Time

EstimatesEstimates

Project Management Project Management DefinedDefined

ProjectProject – A series of related jobs usually directed A series of related jobs usually directed

toward some major output and requiring a toward some major output and requiring a significant period of time to perform. significant period of time to perform.

Project ManagementProject Management – The management activities of planning, The management activities of planning,

directing, and controlling resources directing, and controlling resources (people, equipment, material) to meet the (people, equipment, material) to meet the technical, cost, and time constraints of a technical, cost, and time constraints of a project.project.

Work Breakdown StructureWork Breakdown Structure

Program

Project 1 Project 2

Task 1.1

Subtask 1.1.1

Work Package 1.1.1.1

Level

1

2

3

4

Task 1.2

Subtask 1.1.2

Work Package 1.1.1.2

Project Control Charts: Project Control Charts: Gantt ChartGantt Chart

Activity 1Activity 2Activity 3Activity 4Activity 5Activity 6

Time

Vertical Axis: Always Activities or Jobs

Horizontal Axis: Always Time

Horizontal bars used to denote time.

Structuring ProjectsStructuring ProjectsPure Project: Pure Project: AdvantagesAdvantages

The project manager has full authority The project manager has full authority over the project.over the project.

Team members report to one boss.Team members report to one boss.

Shortened communication lines.Shortened communication lines.

Team pride, motivation, and Team pride, motivation, and commitment are high. commitment are high.

Structuring Projects Structuring Projects Pure Project: Pure Project:

DisadvantagesDisadvantages

Duplication of resources.Duplication of resources.

Organizational goals and policies are Organizational goals and policies are ignored.ignored.

Lack of technology transfer.Lack of technology transfer.

Team members have no functional area Team members have no functional area "home." "home."

Structuring Projects Structuring Projects Functional Project: Functional Project: Organization StructureOrganization Structure

President

Research andDevelopment

Engineering Manufacturing

ProjectA

ProjectB

ProjectC

ProjectA

ProjectB

ProjectC

ProjectA

ProjectB

ProjectC

Structuring Projects Structuring Projects Functional Project: Functional Project:

AdvantagesAdvantages

A team member can work on several A team member can work on several projects.projects.

Technical expertise is maintained within Technical expertise is maintained within the functional area.the functional area.

The functional area is a “home” after The functional area is a “home” after the project is completed.the project is completed.

Critical mass of specialized knowledge. Critical mass of specialized knowledge.

Structuring Projects Structuring Projects Functional Project: Functional Project:

DisadvantagesDisadvantages

Aspects of the project that are not Aspects of the project that are not directly related to the functional area directly related to the functional area get short-changed.get short-changed.

Motivation of team members is often Motivation of team members is often weak.weak.

Needs of the client are secondary and Needs of the client are secondary and are responded to slowly. are responded to slowly.

Structuring Projects Matrix Structuring Projects Matrix Project: Organization Project: Organization StructureStructure

President

Research andDevelopment

Engineering Manufacturing Marketing

ManagerProject A

ManagerProject B

ManagerProject C

Structuring Projects Structuring Projects Matrix: Matrix: AdvantagesAdvantages

Enhanced interfunctional communications.Enhanced interfunctional communications.

Pinpointed responsibility.Pinpointed responsibility.

Duplication of resources is minimized.Duplication of resources is minimized.

Functional “home” for team members.Functional “home” for team members.

Policies of the parent organization are Policies of the parent organization are followed. followed.

Structuring Projects Structuring Projects Matrix: Matrix: DisadvantagesDisadvantages

Too many bosses.Too many bosses.

Depends on project manager’s Depends on project manager’s negotiating skills.negotiating skills.

Potential for suboptimization. Potential for suboptimization.

Network-Planning ModelsNetwork-Planning Models A project is made up of a sequence of A project is made up of a sequence of

activities that form a network representing activities that form a network representing a project. a project.

The path taking longest time through this The path taking longest time through this network of activities is called the “critical network of activities is called the “critical path.” path.”

The critical path provides a wide range of The critical path provides a wide range of scheduling information useful in managing scheduling information useful in managing a project.a project.

Critical Path Method (CPM) helps to identify Critical Path Method (CPM) helps to identify the critical path(s) in the project networks.the critical path(s) in the project networks.

Prerequisites for Critical Path Prerequisites for Critical Path MethodologyMethodology

A project must have:A project must have:

well-defined jobs or tasks whose well-defined jobs or tasks whose completion marks the end of the project;completion marks the end of the project;

independent jobs or tasks;independent jobs or tasks;

and tasks that follow a given sequence.and tasks that follow a given sequence.

Types of Critical Path Types of Critical Path MethodsMethods CPM with a Single Time EstimateCPM with a Single Time Estimate

– Used when activity times are known with certainty.Used when activity times are known with certainty.– Used to determine timing estimates for the project, Used to determine timing estimates for the project,

each activity in the project, and slack time for each activity in the project, and slack time for activities. activities.

CPM with Three Activity Time EstimatesCPM with Three Activity Time Estimates– Used when activity times are uncertain. Used when activity times are uncertain. – Used to obtain the same information as the Single Used to obtain the same information as the Single

Time Estimate model and probability information.Time Estimate model and probability information. Time-Cost ModelsTime-Cost Models

– Used when cost trade-off information is a major Used when cost trade-off information is a major consideration in planning.consideration in planning.

– Used to determine the least cost in reducing total Used to determine the least cost in reducing total project time. project time.

Steps in the CPM with Single Steps in the CPM with Single Time EstimateTime Estimate

1. Activity Identification.1. Activity Identification. 2. Activity Sequencing and Network 2. Activity Sequencing and Network

Construction.Construction. 3. Determine the critical path.3. Determine the critical path.

– From the critical path all of the project From the critical path all of the project and activity timing information can be and activity timing information can be obtained.obtained.

Example 1. CPM with Single Example 1. CPM with Single Time EstimateTime Estimate

Consider the following consulting project:

Develop a critical path diagram and determine the duration of the critical path and slack times for all activities

Activity Designation Immed. Pred. Time (Weeks)Assess customer's needs A None 2Write and submit proposal B A 1Obtain approval C B 1Develop service vision and goals D C 2Train employees E C 5Quality improvement pilot groups F D, E 5Write assessment report G F 1

Example 1: First draw the Example 1: First draw the networknetwork

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

A None 1

B A 1

C B 1

D C 2

E C 5

F D,E 5

G F 1

Act. Imed. Pred. Time

Example 1: Determine early Example 1: Determine early starts and early finish timesstarts and early finish times

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

Example 1: Determine late Example 1: Determine late starts and late finish timesstarts and late finish times

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

LS=14LF=15

LS=9LF=14

LS=4LF=9

LS=7LF=9

LS=3LF=4

LS=2LF=3

LS=0LF=2

Example 1: Critical Path & Example 1: Critical Path & SlackSlack

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

LS=14LF=15

LS=9LF=14

LS=4LF=9

LS=7LF=9

LS=3LF=4

LS=2LF=3

LS=0LF=2

Duration = 15 weeks

Slack=(7-4)=(9-6)= 3 Wks

Example 2. CPM with Three Example 2. CPM with Three Activity Time EstimatesActivity Time Estimates

TaskImmediate

Predecesors Optimistic Most Likely PessimisticA None 3 6 15B None 2 4 14C A 6 12 30D A 2 5 8E C 5 11 17F D 3 6 15G B 3 9 27H E,F 1 4 7I G,H 4 19 28

Example 2. Expected Example 2. Expected Time CalculationsTime Calculations

TaskImmediate

PredecesorsExpected

TimeA None 7B None 5.333C A 14D A 5E C 11F D 7G B 11H E,F 4I G,H 18

Expected Time = Opt. Time + 4(Most Likely Time) + Pess. Time

6

ET(A)= 3+4(6)+15

6

ET(A)=42/6=7

Example 2. NetworkExample 2. Network

A(7)

B(5.333)

C(14)

D(5)

E(11)

F(7)

H(4)

G(11)

I(18)

Duration = 54 Days

Example 2. Probability Example 2. Probability ExerciseExerciseWhat is the probability of finishing this project in

less than 53 days?

p(t < D)

TE = 54

Z = D - TE

cp2

tD=53

Activity variance, = (Pessim. - Optim.

6)2 2

Task Optimistic Most Likely Pessimistic VarianceA 3 6 15 4B 2 4 14C 6 12 30 16D 2 5 8E 5 11 17 4F 3 6 15G 3 9 27H 1 4 7 1I 4 19 28 16

(Sum the variance along the critical path.)

2 = 41

There is a 43.6% probability that this project will be completed in less than 53 weeks.

p(Z < -.156) = .5 - .0636 = .436, or 43.6 % (Appendix E)

Z = D - T

=53- 54

41= -.156E

cp2

TE = 54

p(t < D)

t

D=53

Example 2. Additional Example 2. Additional Probability ExerciseProbability Exercise

What is the probability that the What is the probability that the project duration will exceed 56 project duration will exceed 56 weeks? weeks?

Example 2. Additional Example 2. Additional Exercise SolutionExercise Solution

tTE = 54

p(t < D)

D=56

Z = D - T

=56 - 54

41= .312E

cp2

p(Z < -.156) = .5 - .1217 = .378, or 37.8 % (Appendix E)

Time-Cost ModelsTime-Cost Models Basic Assumption: Basic Assumption: Relationship Relationship

between activity completion time and between activity completion time and project cost.project cost.

Time Cost Models: Determine the Time Cost Models: Determine the optimum point in time-cost tradeoffs.optimum point in time-cost tradeoffs.– Activity direct costs.Activity direct costs.– Project indirect costs.Project indirect costs.– Activity completion times. Activity completion times.

CPM CPM Assumptions/LimitationsAssumptions/Limitations Project activities can be identified as entities. Project activities can be identified as entities.

(There is a clear beginning and ending point for (There is a clear beginning and ending point for each activity.)each activity.)

Project activity sequence relationships can be Project activity sequence relationships can be specified and networked. specified and networked.

Project control should focus on the critical path.Project control should focus on the critical path. The activity times follow the beta distribution, The activity times follow the beta distribution,

with the variance of the project assumed to with the variance of the project assumed to equal the sum of the variances along the equal the sum of the variances along the critical path. Project control should focus on critical path. Project control should focus on the critical path.the critical path.