Download Project Management

1
PROJECT
MANAGEMENT
Chapter 17
MIS 373: Basic Operations Management
LEARNING OBJECTIVES
• After this lecture, students will be able to
1.
2.
3.
4.
5.
6.
7.
Describe the project management constraints
Describe the project life cycle
Give a general description of the critical path method
Construct simple network diagrams
Describe the time-cost trade-offs
Explain “crashing” activities
Use the “crashing” procedure to shorten activity duration
MIS 373: Basic Operations Management
2
PROJECTS
• Project:
• Unique, one-time operations designed to accomplish a
specific set of objectives in a limited time frame
• Examples:
• Tucson Streetcar
• Producing a movie
• Product development
• Operations:
• work done to sustain the business
MIS 373: Basic Operations Management
3
THE NATURE OF PROJECTS
• Projects go through a series of stages – a life cycle
• Project Life Cycle
1.
2.
3.
4.
5.
Initiating
Planning
Executing
Monitoring and Controlling
Closing
• Projects bring together people with a diversity of knowledge
and skills, most of whom remain associated with the project
for less than its full life
• Organizational structure affects how projects are managed
MIS 373: Basic Operations Management
4
PROJECT MANAGEMENT
• Project management is “the application of knowledge, skills,
tools and techniques to project activities to meet project
requirements” (PMBOK® Guide, Fourth Edition, 2008)
• Involves continual trade-offs
• Manager’s job - manage these trade-offs.
• Project management knowledge draws on ten areas:
Integration
Scope
Time
Cost
Quality
Procurement
Human resources
Communications
Risk management
Stakeholder management
MIS 373: Basic Operations Management
5
Source: PMBOK® Guide
Integration
Scope
Time
 Develop Project Charter
 Plan Scope Management
 Plan Schedule Management
 Develop Project Management
 Collect Requirements
 Define Activities
Plan
 Define Scope
 Sequence Activities
 Direct and Manage Project Work
 Create Work Breakdown
 Estimate Activity Resources
 Monitor and Control Project Work
Structure
 Estimate Activity Durations
 Perform Integrated Change
 Verify Scope
 Develop Schedule
Control
 Control Scope
 Control Schedule
 Close Project or Phase
Cost
Quality
Human Resources
 Plan Cost Management
 Plan Quality
 Plan Human Resource
 Estimate Costs
 Perform Quality Assurance
Management
 Determine Budget
 Perform Quality Control
 Acquire Project Team
 Control Costs
 Develop Human Resource Plan
 Manage Project Team
Communication
Risk Management
Procurement
 Plan Communications
 Plan Risk Management
 Plan Procurement Management
Management
 Identify Risks
 Conduct Procurements
 Manage Communications
 Perform Qualitative Risk
 Administer Procurements
 Control Communications
Analysis
 Close Procurements
 Perform Quantitative Risk
Stakeholder Management
Analysis
 Identify Stakeholders
 Plan Risk Responses
 Plan Stakeholder Management
 Manage Stakeholder Engagement  Control Risks
 Control Stakeholder Engagement
MIS 373: Basic Operations Management
6
THE PROJECT
MANAGEMENT TRIANGLE
• Project’s Triple Constraints (Key Metrics)
Quality
Scope
MIS 373: Basic Operations Management
7
WEBQUEST
• Tucson Streetcar
• http://www.tucsonstreetcar.com/index.php?pg=24
• Other than the above webpage, you may also use other webpages or
resources to complete this exercise.
• Identify and discuss the following 10 project management knowledge
elements from the Tucson streetcar project. (10 minutes)
Integration
Scope
Time
Cost
Quality
Procurement
Human resources
Communications
Risk management
Stakeholder management
WEBQUEST
Element
Scope
Cost
Human resources
Stakeholder management
Time
Quality
Communications
Integration
Procurement
Risk management
Tucson Streetcar
PROJECT SUCCESS
• There are several ways to define project success:
• The project met scope, time, and cost goals
• The project satisfied the customer/sponsor
• The results of the project met its main objective
• e.g., making or saving a certain amount of money, providing a
good return on investment.
MIS 373: Basic Operations Management
10
PROJECT MANAGER
• Project managers work with the project team and other people
involved in a project to meet project goals
• The project manager is ultimately responsible for the success or
failure of the project
• The project manager skills and competencies:
•
•
•
•
•
•
•
•
•
•
People skills
Leadership
Listening
Integrity, ethical behavior, consistent
Strong at building trust
Verbal communication
Strong at building teams
Conflict resolution, conflict management
Critical thinking, problem solving
Understands, balances priorities
MIS 373: Basic Operations Management
11
BEHAVIORAL ISSUES
• Behavioral problems can be created or exacerbated by
• Decentralized decision making
• Stress of achieving project milestones on time and within budget
• Surprises
• The team must be able to function as a unit
• Interpersonal and coping skills are very important
• Conflict resolution and negotiation can be an important part of a
project manager’s job
MIS 373: Basic Operations Management
12
A VIDEO SUMMARY
• [YouTube] Introduction to Project Management
TOOLS IN PROJECT
MANAGEMENT
• Key tools:
• Work Breakdown Structure
• Network diagram
• Critical path method
• Gantt charts
• Crashing
MIS 373: Basic Operations Management
14
WORK BREAKDOWN
STRUCTURE (WBS)
• WBS
• A hierarchical listing of what must be done during a project
• Establishes a logical framework for identifying the required activities for
the project
1.
2.
3.
Identify the major elements of the project
Identify the major supporting activities for each of the major elements
Break down each major supporting activity into a list of the activities that
will be needed to accomplish it
Level 1
Project
Level 2
Level 3
Level 4
MIS 373: Basic Operations Management
15
NETWORK DIAGRAM
• Network diagram
• (precedence) Diagram of project activities that
shows sequential relationships by use of arrows
and nodes
• Activity on arrow (AOA)
• Network diagram convention in which arrows designate
activities
• Activity on node (AON)
• Network convention in which nodes designate activities
MIS 373: Basic Operations Management
16
NETWORK CONVENTIONS
(AON)
b
a
a
c
b
c
a
c
a
c
b
dummy
Node
MIS 373: Basic Operations Management
d
(dummy)
Start
Node
b
17
NETWORK CONVENTIONS
(AOA)
a
c
a
c
b
a
a
c
b
b
b
d
MIS 373: Basic Operations Management
c
dummy
Activity
18
PRECEDENCE DIAGRAM
#
Task
Duration
(weeks)
Immediate
Predecessor
1
Locate facility
8
-
2
Order furniture
6
1
3
Interview
4
-
4
Hire & Train
9
3
5
Remodel
11
1
6
Furniture setup
3
2
7
Move in
1
4,5,6
MIS 373: Basic Operations Management
19
PROJECT NETWORK –
ACTIVITY ON NODE (AON)
#
Task
Duration
(weeks)
Immediate
Predecessor
1 Locate facility
8
-
2 Order furniture
6
1
3
Interview
4
-
4
Hire & Train
9
3
5
Remodel
11
1
6 Furniture setup
3
2
7
1
4,5,6
Move in
Order
furniture
Locate
facilities
Furniture
setup
2
6
1
Remodel
5
Move
in
7
S
Interview
3
MIS 373: Basic Operations Management
Hire &
train
4
20
PROJECT NETWORK –
ACTIVITY ON ARROW (AOA)
#
Task
Duration
(weeks)
Immediate
Predecessor
1 Locate facility
8
-
2 Order furniture
6
1
3
Interview
4
-
4
Hire & Train
9
3
5
Remodel
11
1
6 Furniture setup
3
2
7
1
4,5,6
Move in
Order
furniture
Furniture
setup
Locate
facilities
Interview
MIS 373: Basic Operations Management
Remodel
Move
in
Hire and
train
21
GANTT CHART
start
#
Task
Duration
(weeks)
Immediate
Predecessor
1
Locate facility
8
-
3
Interview
4
-
4
Hire & Train
9
3
2
Order furniture
6
1
5
Remodel
11
1
6
Furniture setup
3
2
7
Move in
1
4,5,6
MIS 373: Basic Operations Management
Weeks after start
2
4
6
8 10 12 14 16 18 20
22
CRITICAL PATH METHOD
(CPM)
• An analytical tool that provides a schedule that
completes the project in minimum time subject to the
precedence constraints.
• In addition, CPM provides:
• Starting and ending times for each activity
• Identification of the critical activities (i.e., the ones whose
delay necessarily delay the project).
• Identification of the non-critical activities, and the amount
of slack time available when scheduling these activities.
MIS 373: Basic Operations Management
23
CRITICAL PATH METHOD
(CPM)
• 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
MIS 373: Basic Operations Management
24
CRITICAL PATH METHOD
(CPM)
• CPM can assist in:
1. Estimating project length
2. Identifying which activities are most critical to timely
project completion
3. Indicating of how long any activity can be delayed
without delaying the project
MIS 373: Basic Operations Management
25
PROJECT NETWORK –
ACTIVITY ON NODE (AON)
#
Task
Duration
(weeks)
Immediate
Predecessor
1 Locate facility
8
-
2 Order furniture
6
1
3
Interview
4
-
4
Hire & Train
9
3
5
Remodel
11
1
6 Furniture setup
3
2
7
1
4,5,6
Move in
Critical Path ?
Order
furniture
Locate
facilities
Furniture
setup
2
6
1
Remodel
5
Move
in
7
S
Interview
3
MIS 373: Basic Operations Management
Hire &
train
4
26
CRITICAL PATH
• Critical path: the longest path
#
Task
Duration
(weeks)
Immediate
Predecessor
1 Locate facility
8
-
2 Order furniture
6
1
3
Interview
4
-
4
Hire & Train
9
3
5
Remodel
11
1
6 Furniture setup
3
2
7
1
4,5,6
Move in
6
8
Locate
facilities
Order
furniture
Length of
S
Path (1, 2, 6, 7) = 8+6+3+1 = 18
4
Interview
Path (1, 5, 7) = 8+11+1 = 20
Path (3, 4, 7) = 4+9+1 = 14
3
Critical path &
MIS 373: Basic Operations Management
expected finish time
Furniture
setup
2
1
3
11
Remodel
5
1
6
Move
in
7
9
Hire &
train
4
27
GANTT CHART
Critical Path
#
Task
start
Duration
(weeks)
Immediate
Predecessor
1
Locate facility
8
-
3
Interview
4
-
4
Hire & Train
9
3
2
Order furniture
6
1
5
Remodel
11
1
6
Furniture setup
3
2
7
Move in
1
4,5,6
MIS 373: Basic Operations Management
Weeks after start
2
4
6
8 10 12 14 16 18 20
28
CRITICAL PATH METHOD
(CPM)
• Advantages:
• Forces managers to organize
• Provides graphic display of
activities
• Identifies
• Critical activities
• Slack activities
MIS 373: Basic Operations Management
• Disadvantages/ Problems
• Important activities may be
omitted
• Precedence relationships may
not be correct
• Time estimates may be
inaccurate
• May focus solely
on critical path
29
EXERCISE PROBLEMS
• The following table contains information related to the major
activities of a research project. Use the information to do the
following:
a) Draw a precedence diagram using AOA.
b) Find the critical path.
c) Determine the expected length of the project.
Here are some additional hints for constructing a
precedence diagram.
1) Use pencil.
2) Start and end with a single node.
3) Avoid having paths cross each other.
4) Have activities go from left to right.
5) Use only one arrow between any pair of nodes.
EXERCISE SOLUTIONS
• The following table contains information related to the major
activities of a research project. Use the information to do the
following:
a) Draw a precedence diagram using AOA.
EXERCISE SOLUTIONS
• The following table contains information related to the major
activities of a research project. Use the information to do the
following:
b) Find the critical path.
c) Determine the expected length of the project.
TIME-COST TRADE-OFFS
• Activity time estimates are made for some given
level of resources
• It may be possible to reduce the duration of a
project by injecting additional resources
• Motivations:
• To avoid late penalties
• Monetary incentives
• Free resources for use on other projects
MIS 373: Basic Operations Management
33
CASE
• I-10 Widening: Prince Road to
29th Street
• Started on January 2007. Originally
expected to be complete in three
years, but completed by August
2009, approximately eight months
ahead of schedule.
• The contractor (Kiewit/Sundt Joint
Venture) got a $920,000 bonus for
finishing early. The bonus was based
on a $23,000-per-day incentive (for
finishing up to 40 days early).
TIME-COST TRADE-OFFS:
CRASHING
• Crashing
• Shortening activity durations
• Typically, involves the use of additional funds to support
additional personnel or more efficient equipment (and the relaxing
of some work specifications)
• The project duration may be shortened by increasing
direct expenses (e.g., additional personnel, more
efficient equipment), thereby realizing savings in indirect
project costs (e.g., facilities, supervision)
MIS 373: Basic Operations Management
35
CRASHING ACTIVITIES
MIS 373: Basic Operations Management
36
CRASHING DECISIONS
• To make decisions concerning crashing requires
information about:
• Time:
• Regular time and crash time estimates for each activity
• Cost:
• Regular cost and crash cost estimates for each activity
• A list of activities that are on the critical path
• Critical path activities are potential candidates for crashing
• Crashing non-critical path activities would not have an impact on
overall project duration
MIS 373: Basic Operations Management
37
CRASHING: PROCEDURE
• General procedure:
1. Crash the project one period at a time
2. Crash only activities on the critical path/s
3. Crash the least expensive activity (that is on the critical
path)
4. When there are multiple critical paths, find the sum of
crashing the least expensive activity on each critical path
•
If two or more critical paths share common activities, compare the
least expensive cost of crashing a common activity shared by
critical paths with the sum for the separate critical paths
MIS 373: Basic Operations Management
38
2
f
Indirect costs: $1,000 / day
(that is, the entire project saves
$1000 if it finishes one day earlier,
4
d
$2000 if it finishes two day earlier,
and so on.)
Activity
Normal
time
[days]
Crash (min)
time
[days]
Available time
(crash-normal)
[days]
Cost to Crash
[$/day]
a
6
6
-
-
b
10
8
2
500
c
5
4
1
300
d
4
1
3
700
e
9
7
2
600
f
2
1
1
800
MIS 373: Basic Operations Management
39
2
f
1. Determine Critical Path
Path
a-b-f
c-d-e-f
Length
18
20 (critical path)
2. Rank activities on CP in
order of lowest crashing cost
Activity
c
e
d
f
Cost per day to crash Available days
300
1
600
2
700
3
800
1
MIS 373: Basic Operations Management
4
d
Activity
Normal
time
[days]
Crash
(min)
time
[days]
Available
time
(crashnormal)
[days]
Cost to
Crash
[$/day]
a
6
6
-
-
b
10
8
2
500
c
5
4
1
300
d
4
1
3
700
e
9
7
2
600
f
2
1
1
800
40
Crash activity c by 1 day:
cost $300 < $1,000 (CP=19
days)
2. Rank activities on CP in
order of lowest crashing cost
Activity
c
e
d
f
(cannot crash c anymore)
Cost per day to crash Available days
300
1
600
2
700
3
800
1
2
f
4
4
d
MIS 373: Basic Operations Management
41
Crash activity e by 1 day:
cost $600 < $1,000 (CP=18
days)
(may crash activity e by 1 more day)
2. Rank activities on CP in
order of lowest crashing
cost
Activity
Cost per day to crash
Available days
300
600
700
800
c
e
d
f
1
2
3
1
2
f
4
4
d
MIS 373: Basic Operations Management
• Both paths are now critical.
• Have to crash both in order to
shorten project.
42
2
f
Both paths are now critical.
Have to crash both in order to
shorten project.
4
d
Remaining activities
Path
a-b-f
c-d-e-f
Activity
a
b
f
c
e
d
f
Cost per day to crash
500
800
Available days
2
1
600
700
800
1
3
1
Crash activity f (is on both paths) by 1 day:
cost = $800 < $1,000 (CP=17 days)
MIS 373: Basic Operations Management
43
Crash activity f (is on
both paths) by 1 day:
cost $800 < $1,000
(CP=17 days)
Remaining activities
Path
a-b-f
c-d-e-f
Activity Cost per day to crash
Available days
a
b
500
f
800
2
1
c
e
d
f
1
3
1
600
700
800
2
1
f
4
d
MIS 373: Basic Operations Management
44
1
f
Both paths are still critical.
Have to crash both in order to
shorten project.
4
d
Remaining activities
Path
a-b-f
c-d-e-f
Activity
a
b
f
c
e
d
f
Cost per day to crash
500
600
700
-
Available days
2
1
3
-
Crash activity b by 1 day: cost $500 AND
Crash activity e by 1 day: cost $600
Total cost: $1,100>$1,000 (indirect costs) =>DONE!
MIS 373: Basic Operations Management
45
Length after crashing
Path\crash
a-b-f
c-d-e-f
Activity Crashed
Cost
Savings
Total
MIS 373: Basic Operations Management
n=0
18
20
1
18
19
2
18
18
3
17
17
0
0
0
c
e
f
($300) ($600) ($800)
$1,000 $1,000 $1,000
$700 +$400 +$200 = $1,300
46
EXERCISE PROBLEMS
• Costs for a project are $12,000 per week for as long as the
project lasts. The project manager has supplied the cost and
time information shown. Use the information to
a) Determine an optimum crashing plan.
b) Summarize the total costs for the plan.
EXERCISE SOLUTIONS
a) Determine an optimum crashing plan.
Step 1: Compute path lengths and identify the critical path:
Step 2: Rank critical activities according to crash costs:
Activity b should be shortened one week since it has the lower
crashing cost. This would reduce indirect costs by $12,000 at a cost
of $3,000, for a net savings of $9,000.
13
2
EXERCISE SOLUTIONS
a) Determine an optimum crashing plan.
Step 3: Rank activities by crashing costs on the two critical paths:
At this point, paths a-b and e-f would both have a length of 23
weeks, so both would be critical.
Choose one activity (the least costly) on each path to crash: b
on a-b and f on e-f, for a total cost of $4,000 + $2,000 = $6,000
and a net savings of $12,000 − $6,000 = $6,000.
13 12
2 1
7
0
SOLUTIONS
a) Determine an optimum crashing plan.
Step 4: Check to see which path(s) might be critical:
a-b and e-f would be 22 weeks in length, and c-d would still be 19 weeks.
Step 5: Rank activities on the critical paths:
Crash b on path a-b and e on e-f for a cost of $4,000 + $6,000
= $10,000, for a net savings of $12,000 − $10,000 = $2,000.
13 12 11
2 1 0
14
2
0
7
SOLUTIONS
a) Determine an optimum crashing plan.
Step 6: Check to see which path(s) might be critical:
Paths a-b and e-f would be 21 weeks in length, and c-d would still be 19 weeks.
Step 7: At this point, no further improvement is possible:
Paths a-b and e-f would be 21 weeks in length, and one activity from each path
would have to be shortened. This would mean activity a at $11,000 and e at $6,000
for a total of $17,000, which exceeds the $12,000 potential savings in costs.
13 12 11
2 1 0
14
2
0
7
EXERCISE SOLUTIONS
b) Summarize the total costs for the plan.
The following table summarizes the results, showing the length of the
project after crashing n weeks:
A summary of costs for the preceding schedule would look like this:
* Total Cost = Cumulative Crashing Cost + Indirect Cost
No crash
Crash: b
Crash: b, f
Crash: b, e
PROJECT MANAGEMENT
SOFTWARE
• Project management software
• Specialized software used to help manage projects
• Assign resources
• Evaluate changes
• Track performance/schedule
• Advantages
•
•
•
•
•
•
•
Imposes a methodology
Provides logical planning structure
Enhances team communication
Flag constraint violations
Generates reports
Enables what-if scenarios
Generates various chart types
MIS 373: Basic Operations Management
53
So far over 150 software are
listed on Wikipedia
“Comparison of project
management software” page.
RISK MANAGEMENT
• Risks are an inherent part of project management
• Risks relate to occurrence of events that have undesirable
consequences such as
• Delays
• Increased costs
• Inability to meet technical specifications
• Good risk management involves
• Identifying as many risks as possible
• Analyzing and assessing those risks
• Working to minimize the probability of their occurrence
• Establishing contingency plans and budgets for dealing with
any that do occur
MIS 373: Basic Operations Management
55
KEY POINTS
• Projects are unique, limited duration sets of tasks designed to
accomplish a set of objectives.
• The key project metrics are cost, time, and performance.
• The project manager and the project team can be major
factors in achieving project goals.
• Work breakdown structures, Gantt charts, and network
diagrams are useful tools for managing projects.
• We may consider crashing activities to optimize the time-cost
trade-offs: increase direct cost but decrease indirect cost as a
result of shorter project time.
MIS 373: Basic Operations Management
56