Chapter 17.pptx of operations management

17-1
Project
Management
Chapter 17
Copyright ©2021 McGraw-Hill Higher Education. All rights reserved. No
reproduction or distribution without the prior written consent of McGraw-Hill
Education

17-2
You should be able to:
LO 17.1 Describe the project life cycle
LO 17.2 Discuss the behavioral aspects of projects in terms of project
personnel and the project manager
LO 17.3 Explain the nature and importance of a work breakdown
structure in project management
LO 17.4 Name the six key decisions in project management
LO 17.5 Give a general description of PERT/CPM techniques
LO 17.6 Construct simple network diagrams
LO 17.7 Analyze networks with deterministic times
LO 17.8 Analyze networks with probabilistic times
LO 17.9 Describe activity ‘crashing’ and solve typical problems
LO 17.10 Discuss the advantages of using PERT and potential sources
of error
LO 17.11 Discuss the key steps in risk management
Chapter 17: Learning Objectives
Copyright ©2021 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education

17-3
 Projects
 Unique, one-time operations designed to
accomplish a specific set of objectives in a limited
time frame
 Examples:
 The Olympic Games
 Producing a movie
 Software development
 Product development
 ERP implementation
Projects
LO 17.1
Copyright ©2021 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution
without the prior written consent of McGraw-Hill Education

17-4
 Projects go through a series of stages – a life cycle
 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
The Nature of Projects
LO 17.1

17-5
1. Initiating
2. Planning
3. Executing
4. Monitoring and Controlling
5. Closing
Project Life Cycle
LO 17.1

17-6
 The project manager is ultimately responsible for the
success or failure of the project
 The project manager must effectively manage:
 The work
 The human resources
 Communications
 Quality
 Time
 Costs
Project Manager
LO 17.2

17-7
The Project Management Triangle
Quality
Performance Objectives
S
c
h
e
d
u
l
e
C
o
s
t
LO 17.2
Copyright ©2021 McGraw-Hill Higher Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education

17-8
 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
Behavioral Issues
LO 17.2

17-9
 Many problems can be avoided or mitigated by:
 Effective team selection
 Leadership
 Motivation
 Maintaining an environment of
 Integrity
 Trust
 Professionalism
 Being supportive of team efforts
Avoiding Problems
LO 17.2

17-10
 Project champion
 A person who promotes and supports a project
 Usually resides within the organization
 Facilitate the work of the project by ‘talking up’ the
project to other managers who might be asked to share
resources with the project team as well as employees
who might be asked to work on parts of the project
 The project champion can be critical to the success of a
project
Project Champion
LO 17.2

17-11
 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. Identify the major elements of the project
2. Identify the major supporting activities for each of
the major elements
3. Break down each major supporting activity into a list
of the activities that will be needed to accomplish it
Work Breakdown Structure (WBS)
LO 17.3

17-12
WBS
LO 17.3

17-13
 Project success depends upon making key
managerial decisions over a sequence of
steps:
 Deciding which projects to implement
 Selecting the project manager
 Selecting the project team
 Planning and designing the project
 Managing and controlling project resources
 Deciding if and when a project should be
terminated
Project Management Decisions
LO 17.4

17-14
 PERT (program evaluation and review technique)
and CPM (critical path method) are two
techniques used to manage large-scale projects
 By using PERT or CPM Managers can obtain:
1. A graphical display of project activities
2. An estimate of how long the project will take
3. An indication of which activities are most critical to timely
project completion
4. An indication of how long any activity can be delayed
without delaying the project
PERT and CPM
LO 17.5

17-15
 Network diagram
 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
 Activities
 Project steps that consume resources and/or time
 Events
 The starting and finishing of activities
Network Diagram
LO 17.6

17-16
Network Conventions
LO 17.6

17-17
Deterministic Time Estimates
 Deterministic
 Time estimates that are fairly certain
 Probabilistic
 Time estimates that allow for variation
LO 17.7

17-18
 Finding ES and EF involves a forward pass
through the network diagram
 Early start (ES)
 The earliest time an activity can start
 Assumes all preceding activities start as early as possible
 For nodes with one entering arrow
 ES = EF of the entering arrow
 For activities leaving nodes with multiple entering arrows
 ES = the largest of the largest entering EF
 Early finish (EF)
 The earliest time an activity can finish
 EF = ES + t
Early Start, Early Finish
LO 17.7

17-19
 Finding LS and LF involves a backward pass
through the network diagram
 Late Start (LS)
 The latest time the activity can start and not delay the project
 The latest starting time for each activity is equal to its latest finishing
time minus its expected duration:
 LS = LF - t
 Late Finish (LF)
 The latest time the activity can finish and not delay the project
 For nodes with one leaving arrow, LF for nodes entering that node
equals the LS of the leaving arrow
 For nodes with multiple leaving arrows, LF for arrows entering node
equals the smallest of the leaving arrows
Late Start, Late Finish
LO 17.7

17-20
 Slack can be computed one of two ways:
 Slack = LS – ES
 Slack = LF – EF
 Critical path
 The critical path is indicated by the activities with
zero slack
Slack and the Critical Path
LO 17.7

17-21
 Knowledge of slack times provides managers with
information for planning allocation of scarce
resources
 Control efforts will be directed toward those activities that
might be most susceptible to delaying the project
 Activity slack times are based on the assumption that all of
the activities on the same path will be started as early as
possible and not exceed their expected time
 If two activities are on the same path and have the same
slack, this will be the total slack available to both
Using Slack Times
LO 17.7

17-22
Probabilistic Time Estimates
 The beta distribution is generally used to describe
the inherent variability in time estimates
 The probabilistic approach involves three time
estimates:
 Optimistic time, (to)
 The length of time required under optimal conditions
 Pessimistic time, (tp)
 The length of time required under the worst conditions
 Most likely time, (tm)
 The most probable length of time required
LO 17.8

17-23
The Beta Distribution
LO 17.8

17-24
 The expected time, te ,for an activity is a
weighted average of the three time estimates:
 The expected duration of a path is equal to the
sum of the expected times of the activities on
that path:
Probabilistic Time Estimates
6
4 p
m
o
e
t
t
t
t




 path
on the
activities
of
times
expected
of
mean
Path
LO 17.8

17-25
 The standard deviation of each activity’s time is
estimated as one-sixth of the difference between the
pessimistic and optimistic time estimates. The
variance is the square of the standard deviation:
 Standard deviation of the expected time for the path
Probabilistic Time Estimates (cont.)
  2
2
6





 

o
p t
t

 

 path
on
activities
of
Variances
path

LO 17.8

17-26
 Knowledge of expected path times and their
standard deviations enables managers to
compute probabilistic estimates about project
completion such as:
 The probability that the project will be completed
by a certain time
 The probability that the project will take longer
than its expected completion time
Knowledge of Path Statistics
LO 17.8

17-27
Path Probabilities
 Calculating path probabilities involves the use of the normal
distribution
 Although path activities are represented by the beta
distribution, the path distribution can be represented by a
normal distribution
LO 17.8

17-28
Determining Path Probabilities
deviation
standard
Path
mean
Path
-
time
Specified

z
LO 17.8

17-29
 A project is not complete until all project activities are
complete
 It is risky to only consider the critical path when assessing
the probability of completing a project within a specified
time
 To determine the probability of completing the project within a
particular time frame
 Calculate the probability that each path in the project will be
completed within the specified time
 Multiply these probabilities
 The result is the probability that the project will be
completed within the specified time
Project Completion Time
LO 17.8

17-30
 Independence
 Assumption that path duration times are
independent of each other
 Requires that
1. Activity times are independent
2. Each activity is on only one path
 The assumption of independence is usually considered
to be met if only a few activities in a large project are
on multiple paths
Assumption: Independence
LO 17.8

17-31
 When activity times cannot be assumed to be
independent, simulation is often used
 Repeated sampling is used
 Many passes are made through the project network
 In each pass, a random value for each activity time is
selected based on the activity time’s probability
distribution
 After each pass, the project’s duration is determined
 After a large number of passes, there are enough data
points to prepare a frequency distribution of the project
duration
 Probabilistic estimates of completion times are made
based on this frequency distribution
Simulation
LO 17.8

17-32
 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
Time-Cost Trade-Offs
LO 17.9

17-33
 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, thereby realizing savings in indirect project costs
Time-Cost Trade-Offs: Crashing
LO 17.9

17-34
 To make decisions concerning crashing
requires information about:
1. Regular time and crash time estimates for each
activity
2. Regular cost and crash cost estimates for each
activity
3. 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
Crashing Decisions
LO 17.9

17-35
 General procedure:
1. Crash the project one period at a time
2. Crash the least expensive activity that is on the critical path
3. 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
Crashing: Procedure
LO 17.9

17-36
Crashing Activities
LO 17.9

17-37
 Among the most useful features of PERT:
1.It forces the manager to organize and quantify
available information and to identify where
additional information is needed
2.It provides the a graphic display of the project and
its major activities
3.It identifies
a. Activities that should be closely watched
b. Activities that have slack time
PERT: Advantages
LO
17.10

17-38
Sources of Error
 Potential sources of error:
1. The project network may be incomplete
2. Precedence relationships may not be correctly expressed
3. Time estimates may be inaccurate
4. There may be a tendency to focus on critical path activities
to the exclusion of other important project activities
5. Major risk events may not be on the critical path
LO
17.10

17-39
 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
Risk Management
LO
17.11

17-40
 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
Risk Management (cont.)
LO
17.11

Chapter 17.pptx of operations management

More Related Content

Similar to Chapter 17.pptx of operations management (20)

More from SajidaHafeez4 (15)

Recently uploaded (20)

Chapter 17.pptx of operations management