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Operations Management
MSOM 306.001
Lecture 4 – Project Management
Al Baharmast, Ph.D.
Bechtel
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Asked by Kuwait to begin rebuilding after Desert Storm
650 wells ablaze, others uncapped
No water, electricity, food or facilities
Land mines! Bombs! Grenades!
Many fires inaccessible because of oil-covered roads
Project required:
• Storage, docking, and warehousing facilities at Dubai
• 125,000 tons of equipment and supplies
• 150 kilometers of pipeline capable of delivering 20,000,000 gallons of
water per day to the fire site
• more than 200 lagoons with 1,000,000 gals of seawater
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Strategic Importance of
Project Management
Bechtel Kuwait Project:
 8,000 workers
 1,000 construction professionals
 100 medical personnel
 2 helicopter evacuation teams
 6 full-service dining halls
 27,000 meals per day
 40 bed field hospital
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Strategic Importance of
Project Management
Microsoft Windows Longhorn Project:
 hundreds of programmers
 millions of lines of code
 millions of dollars cost
Ford Redesign of Mustang Project:
 450 member project team
 Cost $700-million
 25% faster and 30% cheaper than comparable project
at Ford
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Project Characteristics
 Single unit
 Many related activities
 Difficult production planning and
inventory control
 High labor skills
 Temporary
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Management of Projects
 Planning - goal setting, defining the
project, team organization
 Scheduling - relates people, money, and
supplies to specific activities and
activities to each other
 Controlling - monitors resources, costs,
quality, and budgets; revises plans and
shifts resources to meet time and cost
demands
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Project Management Activities
 Planning
 Scheduling
 Objectives
 Project activities
 Resources
 Work break-down
 Organization
 Controlling
 Monitor, compare, revise, action
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 Start & end times
 Network
Project Organization
Works Best When
 Work can be defined with a specific goal and
deadline
 The job is unique or somewhat unfamiliar to
the existing organization
 The work contains complex interrelated tasks
requiring specialized skills
 The project is temporary but critical to the
organization
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Project Planning, Scheduling,
and Controlling
Project Planning
1. Setting goals
2. Defining the project
3. Tying needs into timed project
activities
4. Organizing the team
Time/cost estimates
Budgets
Engineering diagrams
Cash flow charts
Material availability details
Project Scheduling
1. Tying resources to specific
activities
2. Relating activities to each other
3. Updating and revising on a
regular basis
CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules
Project Controlling
1. Monitoring resources, costs, quality,
and budgets
2. Revising and changing plans
3. Shifting resources to meet demands
Before Project
During Project
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Reports
• budgets
• delayed activities
• slack activities
Management of Projects
Planning and Controlling:
Three Key Project Management Levers (also
known as the ‘Triple Constraints’) –
• Cost
• Schedule
• Performance (Quality)
• Defect-reduction
• Innovation (Scope/Requirements)
Trade-offs between Cost, Schedule and Performance
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Project Organization
 Often temporary structure
 Uses specialists from entire company
 Headed by project manager
 Coordinates activities
 Monitors schedule
and costs
 Permanent
structure called
‘matrix organization’
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The Role of
the Project Manager
Highly visible
Responsible for making sure that:
 All necessary activities are finished in order
and on time
 The project comes in within budget
 The project meets quality goals
 The people assigned to the project receive
motivation, direction, and information
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Ethical Issues
 Bid rigging – divulging confidential information
to give some bidders an unfair advantage
 “Low balling” contractors – try to “buy” the
project by bidding low and hope to renegotiate
or cut corners
 Bribery – particularly on international projects
 Expense account padding
 Use of substandard materials
 Compromising health and safety standards
 Withholding needed information
 Failure to admit project failure at close
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Project Planning
• Project Charter (Mission)
• Detailed Scope Definition
• Requirements Identification
• Project Organization
• Facilities, Tools and Resources
• Budget/Cost Analysis
• Work Breakdown Structure
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Work Breakdown Structure (WBS)
Level
1. Project
2.
3.
4.
Major tasks in the project
Subtasks in the major tasks
Activities (or work packages)
to be completed
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Work Breakdown Structure (WBS)
Level ID
Number
Activity
1
1.0
Develop/launch Windows Longhorn OS
2
1.1
Development of GUIs
2
1.2
Ensure compatibility with earlier
Windows versions
3
1.21
Compatibility with Windows ME
3
1.22
Compatibility with Windows XP
3
1.23
Compatibility with Windows 2000
4
1.231
Level
Ability to import files
Figure 3.3
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From WBS to Project Plan –
Planning a Dinner Party (Task Dependencies)
Task
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
WBS Task
1 Dinner Party Planning
1.1 Plan Menu
1.1.1 Look Up Recipes Online
1.1.2 Look Up Recipes in Cookbooks
1.1.3 Identify Ingredients
1.1.4 Buy Ingredients
1.2 Plan Guest List
1.2.1 Recall Who Invited you to Parties
1.2.2 Assess Guest Compatibility
1.3 Send Invitations
1.3.1 Find Invitations on Evites
1.3.2 Load Guest Email Addresses
1.3.3 Email Evites
1.3.4 Get Responses
1.3.5 Monitor RSVPs
1.4 Cook Food
1.4.1 Follow Recipe to Cook
1.4.2 Place in Serving Dishes
1.5 Hold Party
1.6 Clean up
Duration
11.38 days
0.63 days
1 hr
1 hr
0.13 days
3 hrs
0.25 days
2 hrs
1 hr
5.63 days
2 hrs
1 hr
1 hr
5 days
1 hr
1.13 days
1 day
1 hr
6 hrs
5 days
Start Date
End Date
Dependency
Fri 2/9/07
Mon 2/26/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
3,4
Fri 2/9/07
Fri 2/9/07
5
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/16/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
Fri 2/9/07
11,12
Fri 2/9/07
Fri 2/16/07
13
Fri 2/16/07
Fri 2/16/07
Fri 2/16/07
Mon 2/19/07
Fri 2/16/07
Mon 2/19/07
2
Mon 2/19/07
Mon 2/19/07
20
Fri 2/16/07
Mon 2/19/07
2,10,16
Mon 2/19/07
Mon 2/26/07
19
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Work Breakdown Structure (WBS)
Craft
Newspaper
Article
Level 1
Select Specific
Topic
Review Topic
Assignments
Propose Topic
Variants
Level 2
Obtain Editor
Approval
Review
Background
Sources
Research Article
Conduct
Interviews
Write Article
Conduct
Additional
Source Research
Level 3
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Write Initial
Draft
Obtain Editor
Reviews
Write Final
Draft
WBS – Key Concepts
•A Work Breakdown Structure is a decomposition of those project tasks that will
consume resources or time that needs to be tracked/measured or those that impose
risk on the project or those tasks that need to be tracked/measured.
•A WBS should outline the project’s scope (breadth) at such a level detail (depth)
required to manage resources and risk. Determination of appropriate depth requires
practice.
•A WBS is not intended to be an exhaustive list of all the tasks within a project.
•Development of a WBS is necessary prior to scheduling. The WBS lays the
foundation upon which scheduling and resource allocation can be accomplished.
•A WBS should not built around organizational constructs. Work/tasks should be
unconstrained by organization, but tasks will be assigned to organizational elements.
•Once finalized, resourced and scheduled against, the WBS should be subjected to
configuration control.
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Individual Practice Exercise
Practice Exercise (15 minutes) –
- Sit with your project team
- Open up MS Excel or MS Word on your desktops
- Create a three level WBS with task dependencies & save
- Here are some project options:
Buying a House
• Agents
• House location/budget
• Loans
• House selection
• Negotiation
• Inspection
• Closing
Building a Boat Dock
• Design concept
• Budget
• Contractors
• Detailed design
• Permits
•Build
• Inspection
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Project Scheduling
• Key Steps
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Identifying precedence relationships
Sequencing activities
Determining activity times & costs
Estimating material & worker requirements
Determining critical activities
• Purpose of Scheduling Steps
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Shows the relationships between activities and whole project.
Identifies the precedence relationships among activities.
Encourages setting realistic time and cost estimates.
Helps make better use of people, money, and material resources by
identifying critical bottlenecks in the project.
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Project Management Techniques
 Gantt chart
 Critical Path Method
(CPM)
 Program Evaluation and
Review Technique
(PERT)
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A Simple Gantt Chart
J
F
M
Time
A M J
Design
Prototype
Test
Revise
Production
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J
A
S
From WBS to Project Plan –
Planning a Dinner Party (GANTT Chart)
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Individual Practice Exercise
Practice Exercise (10 minutes) –
- Continue with previous WBS
- Open WBS and enter start and end dates on each task
- For tasks with dependencies, please make sure your start
dates take into account the end dates of the prerequisite
activities
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Project Control Reports
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


Detailed cost breakdowns for each task
Total program labor curves
Cost distribution tables
Functional cost and hour summaries
Raw materials and expenditure forecasts
Variance reports
Time analysis reports
Work status reports
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PERT and CPM
 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
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The Six Steps Common to PERT & CPM
 Define the project and prepare the work breakdown structure,
 Develop relationships among the activities. (Decide which activities
must precede and which must follow others.)
 Draw the network connecting all of the activities
 Assign time and/or cost estimates to each activity
 Compute the longest time path through the network. This is called
the critical path
 Use the network to help plan, schedule, monitor, and control the
project
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Determining the Project Schedule
Perform a Critical Path Analysis
 The critical path is the longest path
through the network
 The critical path is the shortest time in
which the project can be completed
 Any delay in critical path activities
delays the project
 Critical path activities have no slack
time
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Task
Duration
Predecessor
A
B
2
3
A
C
D
2
4
A
B
Question - What is the duration of this project and what is the critical path?
B-3
D-4
A-2
C-2
Answer – Duration is 9, and the critical path is A-B-D
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