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Chapter 9
Project Management
Operations Management - 5th Edition
Roberta Russell & Bernard W. Taylor, III
Copyright 2006 John Wiley & Sons, Inc.
Beni Asllani
University of Tennessee at Chattanooga
Characteristics of Projects
 A unique, one-time activity or effort
 Defined end product or result, with
specific performance requirements,
budget, and completion date
 Usually require cross-functional teams,
composed of people with different skills
 Often involve uncertainty and risk
Copyright 2006 John Wiley & Sons, Inc.
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Examples of Projects
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Construction or major renovations
Creating new computer software
Starting a new business
Designing and launching a new product or model
Evaluating a merger or acquisition
Designing new equipment
Selecting and installing new equipment or software
Writing a new human resources manual
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Project Elements
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Objective
Scope
Contract requirements
Schedules
Resources: equipment, materials, people
Managing people
Control
Risk and problem analysis
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Project Manager
 Leader of project team
 Responsible for satisfactory completion
of project
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Goals accomplished
Completed on time
Completed within budget
Conformance quality
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Project Team Organizations
 Matrix organization: each team member
reports to functional manager and to project
manager. Team members work part-time on
the project and spend the remaining time on
their regular job.
 Project management organization: Each team
member works full-time on the project and
reports to the project manager.
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Project Planning
 Scope statement: specifies project
objectives and expected results
 Statement of work: describes the project
in enough detail so that suppliers and
contractors can submit bids
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May be divided into work packages for
different project tasks
Statements of work can also be prepared for
team members or company departments
Copyright 2006 John Wiley & Sons, Inc.
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Project Planning (2)
 Work breakdown structure (WBS)

breaks down a project into components,
subcomponents, activities, and tasks
 Responsibility assignment matrix: shows
who is responsible for various tasks in a
project
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Work Breakdown Structure for Computer Order
Processing System Project
Copyright 2006 John Wiley & Sons, Inc.
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Work Breakdown Structure Details
 Lowest level component for any branch is
called a work package.
 A work package should be defined so that it
can be accomplished by an individual,
department, team, contractor, supplier
 Clear criteria for completion of each work
package.
Copyright 2006 John Wiley & Sons, Inc.
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 Organizational Breakdown Structure

a chart that shows which organizational units are
responsible for work items
 Responsibility Assignment Matrix

shows who is responsible for work in a project
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Project Scheduling Details
1.
2.
3.
Determine what tasks (activities) must be done.
Determine the time for each activity
Determine the order in which the tasks must be
done
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4.
For a given activity X, it is enough to know what activities
come immediately before activity X (called immediate
predecessors or immediately preceding activities)
Set up a precedence table with activity times and
immediate predecessors.
Draw a network diagram for the project.
5.

We will use activity on node (AON) diagrams.
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Activity on Node Diagrams
 Use a node (circle or box) to represent each activity
 Draw an arrow from each immediate predecessor to
the activities that it precedes
 The diagram must have a unique first activity and a
unique last activity.
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Project Network
 Activity-on-node (AON)

nodes represent activities,
and arrows show
precedence relationships
Node
1
2
3
Branch
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AON Network for House
Building Project
Lay foundations
Build house
4
3
2
2
Start
Finish work
7
1
1
3
Design house
and obtain
financing
3
1
Order and receive
materials
Copyright 2006 John Wiley & Sons, Inc.
5
1
6
1
Select carpet
Select paint
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Determining Project Duration
& Critical Path – Method 1
 The duration of a project is the minimum time required to
complete the project, based on the activity times determined
earlier.
 A network diagram must have a unique first activity and a
unique last activity.
 A path is a connected sequence of activities that begins with the
first activity and ends with the last activity.
 The length of a path is the sum of the activity times for the
activities on the path.
 The path with the greatest length is called the critical path. No
other path requires more time than the critical path.
 The project duration is the length of the critical path.
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Critical Path
4
3
2
2
Start
7
1
1
3
3
1
A:
B:
C:
D:
1-2-4-7
3 + 2 + 3 + 1 = 9 months
1-2-5-6-7
3 + 2 + 1 + 1 + 1 = 8 months
1-3-4-7
3 + 1 + 3 + 1 = 8 months
1-3-5-6-7
3 + 1 + 1 + 1 + 1 = 7 months
Copyright 2006 John Wiley & Sons, Inc.
6
1
5
1
 Critical path
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Longest path
through a network
Minimum project
completion time
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Gantt Chart
 Graph or bar chart with a bar for each
project activity that shows passage of
time
 Provides visual display of project
schedule
 Early start (ES) schedule: Each activity is
started as soon as possible, considering
preceding activities
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Gantt Chart – ES Schedule
0
|
2
|
Month
4
|
6
|
8
|
10
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials
Build house
Select paint
Select carpet
Finish work
1
3
5
7
9
Month
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Critical Path Method (CPM)
 Critical path method (CPM) - inputs
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Activities from work breakdown structure
Precedence relationships among activities
(what activities must be completed before other
activities can be started)
One time estimate for each activity (how long does it
take to do the activity?)
 Use CPM when activity times can be estimated
accurately
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Critical Path Method (2)
 Critical path method (CPM) – outputs
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Project completion time
Start and end times for each activity
Critical path: activities that must be finished
on time so that the project will be completed
on time
The greatest amount of management attention
is focused on the critical path.
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Objectives of
Scheduling Computations
 To determine the acceptable start and
end dates for each activity.
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These computations can also be used to
determine project duration and the critical
path.
 To provide a basis for developing a
project schedule
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Scheduling Terms
 For each activity in a project:
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The early start (ES) is the earliest time that an
activity can be started.
The early finish (EF) is the earliest time that an
activity can be finished.
The late finish (LF) is the latest time that an activity
can be finished.
The late start is the latest time that an activity can
be started.
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Node Configuration
Activity number
Earliest start
Earliest finish
1
0
3
3
0
3
Latest finish
Activity duration
Copyright 2006 John Wiley & Sons, Inc.
Latest start
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Steps in Scheduling Computations
1.
2.
3.
4.
5.
6.
Set up a network diagram
Working from left to right (LR), compute ES and
EF for each activity.
Project duration = EF for last activity.
Working from right to left (RL), compute LF and LS
in that order for each activity.
For each activity, compute
slack = LF – EF = LS – ES
The critical path is the set of activities with zero
slack.
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Computing ES and EF
 Work from left to right (LR)
 For first activity, ES = 0
 For all other activities,
ES = Largest {EF for immediately preceding activities}
 For all activities,
EF = ES + activity time (inside the circle or box)
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Earliest Activity Start and
Finish Times
Lay foundations
Build house
2
Start
3
5
4
2
5
8
3
1
0
3
7
1
Design house
and obtain
financing
8
9
1
6
3
3
4
1
Order and receive
materials
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6
7
Finish work
1
5
5
6
1
Select carpet
Select paint
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Computing LF and LS
 Work from right to left (RL)
 For last activity, LF = EF
 For all other activities,
LF = smallest {LS for immediately following activities}
 For all activities, LS = LF – activity time
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Latest Activity Start and
Finish Times
Lay foundations
Build house
Start
2
3
5
2
3
5
4
5
8
3
5
8
1
0
3
7
8
9
1
0
3
1
8
9
Design house
and obtain
financing
3
3
4
1
4
5
Order and receive
materials
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5
1
5
6
6
6
7
1
7
8
Finish work
6
7
Select carpet
Select paint
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Slack and the Critical Path
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Slack tells us how much flexibility we have in
scheduling each activity
slack = LF – EF = LS – ES
The critical path is the set of activities with zero
slack.
Scheduling for non-critical activities may depend on
when resources are needed for other projects
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Activity Slack
Activity
LS
ES
LF
EF
Slack S
*1
0
0
3
3
0
*2
3
3
5
5
0
3
4
3
5
4
1
*4
5
5
8
8
0
5
6
5
7
6
1
6
7
6
8
7
1
*7
8
8
9
9
0
* Critical Path
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ES and LS Schedules
 In an early start (ES) schedule, each activity
begins at time ES and ends at time EF
 In a late start (LS) schedule, each activity
begins at time LS and ends at time LF
 Other schedules may be possible. For all
activities, we must have ES < start time < LS

The activity must start between ES and LS
(inclusive)
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Project Crashing
 Crashing: reducing project time by expending
additional resources
 Crash time: the maximum amount of time an
activity can be reduced
 Crash cost: cost of reducing activity time by
one time unit
 Goal: reduce project duration at minimum cost
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Project Crashing (2)
 Activities to be crashed must be on the
critical path.
 If there is more than one critical path, all
critical paths must be reduced at the
same time.
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