Operations Management (MD021) Project Management Agenda

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Operations Management(MD021)

• Project Management

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Agenda

• Projects and Project Management
• Tools and Technologies
• Network Diagrams
• Deterministic Time Estimates
• Project Crashing
• Probabilistic Time Estimates
• Risk Management

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Projects and Project Management
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Projects

• Projects are unique, one-time operations designed
  to accomplish a specific set of objectives in a
  limited time frame.

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The Life Cycle of Projects
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Project Management

• Project Management involves tasks of managing a
  project throughout its life cycle from its
  inception through to its completion
• Often a team-based approach in companies
• How is it different?
• Limited time frame
• Narrow focus, specific objectives
• Less bureaucratic
• Why is it used?
• Special needs
• Pressures for new or improved products or services

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Project Management takes place across the Project
Life Cycle
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Project Management

• What are the Key Metrics?
• Time
• Cost
• Performance objectives
• What are the Key Success Factors?
• Top-down commitment
• Having a capable project manager
• Having time to plan
• Careful tracking and control
• Good communications

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Project Management

• What are the Major Administrative Issues?
• Executive responsibilities
• Project selection
• Project manager selection
• Organizational structure
• Organizational alternatives
• Manage within functional unit
• Assign a coordinator
• Use a matrix organization with a project leader

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Key Decisions

• Deciding which projects to implement
• Selecting a project manager
• Selecting a project team
• Planning and designing the project
• Managing and controlling project resources
• Deciding if and when a project should be
  terminated

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Key Decisions

• Which project(s) to implement?
• Sometimes obvious whatever managers tell you to
  do
• Some companies have multiple, concurrent projects
  that they must decide between
• Selecting a project manager?
• Typically good to select someone with
  professional experience in managing projects
• Companies, however, often just assume that any
  manager can manage a project leading to BAD
  results

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Project Manager typically should be skilled at
managing projects

• Responsible for

Work Quality Human Resources Time Communicat
ions Costs
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Key Decisions

• Selecting the Project Team?
• Managers often allocate their MEDIOCRE employees
  to projects
• In contrast, for success, project manager needs
  to have BEST people on project
• Planning/Designing/Managing/Controlling project?
• Many, many different techniques, tools,
  strategies
• Terminate the project?
• Sometimes, no matter how much money you sink in,
  a project will never be successful.
• Managers have a horrible tendency to be
  optimistic about completion also, it is their
  butt that will get fired if project fails
• Need to kill a failing project as soon as
  possible saves the wasting of any more money

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Ethical Issues in Project Management

• Temptation to understate costs
• Temptation to withhold information
• to get project approved
• to keep project from being terminated
• Misleading status reports
• Falsifying records
• Comprising workers safety
• Approving substandard work

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Tools and Technologies for Project Management
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Tools and Technologies

• What are the tools?
• Gantt charts
• Work breakdown structure
• Network diagram
• Risk management
• Technologies?
• Software packages

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Technology for Managing Projects

• Computer aided design (CAD)
• modeling/diagramming/flowcharting
• Groupware (Lotus Notes, Groove)
• team collaboration
• Project management software
• CA Super Project
• Harvard Total Manager
• MS Project
• Sure Track Project Manager
• Time Line

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Advantages of PM Software

• Imposes a methodology
• Provides logical planning structure
• Enhances team communication
• Flag constraint violations
• Automatic report formats
• Multiple levels of reports
• Enables what-if scenarios
• Generates various chart types

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Gantt Charts are often used in project planning
and scheduling
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Gantt Chart in MS Project
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Work Breakdown Structure
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Work Breakdown Structure
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Network Diagrams
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PERT and CPM

• PERT Program Evaluation and Review Technique
• CPM Critical Path Method
• Graphically displays project activities
• Estimates how long the project will take
• Indicates most critical activities
• Show where delays will not affect project

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Advantages of PERT

• Forces managers to organize
• Provides graphic display of activities
• Identifies
• Critical activities
• Slack activities

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Limitations of PERT

• Important activities may be omitted
• Precedence relationships may not be correct
• Estimates may include a fudge factor
• May focus solelyon critical path

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The Network Diagram

• Network (precedence) diagram
• Activity-on-arrow (AOA)
• Activity-on-node (AON) WE COVER THIS ONLY
• Activities
• project steps that consumer resources and/or time
• Events
• starting and finishing of activities

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The Network Diagram (contd)

• Path
• Sequence of activities that leads from the
  starting node to the finishing node
• Critical path
• The longest path determines expected project
  duration
• Critical activities
• Activities on the critical path
• Slack
• Allowable slippage for path the difference the
  length of path and the length of critical path

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Project Network Activity on Node
AON
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Deterministic Time Estimates
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Time Estimates

• Deterministic
• Time estimates that are fairly certain
• Probabilistic
• Estimates of times that allow for variation

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Example of Deterministic Task Times (AON)
Completion Time? Critical Path? Slack Times
along Non-Critical Path(s)?
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Example of Solution for Deterministic Times
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Algorithm for identifying project completion
time, critical path, slack time

• Network activities
• ES Early Start earliest time an activity can
  start
• EF Early Finish earliest time an activity can
  finish
• LS Late Start latest time an activity can
  start
• LF Late Finish latest time an activity can
  finish
• Used to determine
• Expected project duration
• Slack time
• Critical path

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Forward/Backward Method

• Forward Pass
• Start at left side of diagram
• For each beginning activity, ES 0
• For each activity, ES activity time EF
• For the following activity, ES EF of preceding
  activity
• Or, if multiple preceding activities, ES
  maximum(EFs of all preceding activities)

• Backward Pass
• Start at right side of diagram
• Use the largest EF as the LF for all ending
  activities
• For each activity, LS LF activity time
• For the preceding activity, LF LS of following
  activity
• Or, if multiple immediately following
  activities,LF minimum(LSs of all following
  activities)

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Solving an AON project network
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Project Crashing
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Project Crashing

• Crashing a project involves paying more money to
  complete a project more quickly.
• Since the critical path determines the length of
  a project, it makes sense to reduce the length of
  activities on the critical path.
• CP activities should be reduced until the project
  is reduced to the desired length or you are
  paying more per day than you save.
• If you have multiple CPs, they should be
  shortened simultaneously.

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Time-cost Trade-offs Crashing

• Crash shortening activity duration
• Procedure for crashing
• Crash the project one period at a time
• Only an activity on the critical path
• Crash the least expensive activity
• Multiple critical paths find the sum of crashing
  the least expensive activity on each critical
  path

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Example of Crashing
13 b
6 a
S
F
5 c
Activity Normal Time Crash Time
Cost/Day to Crash
a 6
5 100 b
13 5
400 c
5 4
300
Critical Path (a,b) Normal completion time
19 Cost(18 days) 100 Cost(17 days)
500 Cost(16 days) 900 Cost(10 days) 3300
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Probabilistic Time Estimates
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Probabilistic Time Estimates Involve a
Distribution of Times
Typically, we assume that times follow a Beta
probability distribution function
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Probabilistic Time Estimates

• Optimistic time
• Time required under optimal conditions
• Pessimistic time
• Time required under worst conditions
• Most likely time
• Most probable length of time that will be required

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Expected Time
te expected time to optimistic time tm most
likely time tp pessimistic time
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Variance of Time
?2 variance to optimistic time tp
pessimistic time
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Example Using Probabilistic Time Estimates (AON)
Optimistic time
Most likely time
Pessimistic time
2-4-6 b
2-3-5 c
1-3-4 a
3-5-7 e
5-7-9 f
3-4-5 d
S
F
4-6-8 h
3-4-6 i
2-3-6 g
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Path Probabilities
Z indicates how many standard deviations of the
path distribution the specified tine is beyond
the expected path duration.
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Example Using Probabilistic Time Estimates (AON)
2-3-4 b
3-4-5 a
S
F
Task a te (3 4(4) 5)/6 24/6 4
Length of Path (a,b) 4 3 7
Task b te (2 4(3) 4)/6 18/6 3
Task a s2act (5-3)2/36 4/36
s2Path (a,b) 4/36 4/36 8/36
Task b s2act (4-2)2/36 4/36
sPath (a,b) sqrt(8/36) 0.471
Question Can we complete this project by Period
8?
ProbComplete by period 8 0.983
Z (8 7)/0.471 2.12
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Risk Management
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Project Risk Management

• Risk occurrence of events that have undesirable
  consequences
• Delays
• Increased costs
• Inability to meet specifications
• Project termination

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Risk Management

• Identify potential risks
• Analyze and assess risks
• Work to minimize occurrence of risk
• Establish contingency plans