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Chapter 11: Project Management

Chapter 11: Project Management

Introduction

Chapter 11: Project Management

Previous Examples of Projects


Transporting Olympic Flame (Chapter 1) Mercedes-Benz facility location (Chapter 5)

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Viper Development Project

Project team given 3 years to go from concept to roadster.

Needed to develop new 8.0-litter V-10 aluminum engine and new high performance six-speed transmission. Comparable projects usually require five years at Chrysler.

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Viper Development Project cont


Project team members hand-picked. Artemis Prestige selected to help manage project

ability to track several projects concurrently interactive use provide broad picture of entire project help identify the impact of each activity on the ultimate completion of the project
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Viper Development Project: An Overwhelming Success

First test engine required less than a year to develop. Transmission developed in 1.5 years compared to the usual 5 to 6 years. Many important innovations in the frame, body, and brakes were incorporated .
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Zeneca Pharmaceuticals

Mission is the development of new drugs for the medical community. The development of a new drug is a complex project with typical durations of 10 years.

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Zeneca Pharmaceuticals: Major Steps in Drug Development


Preclinical Testing Investigational New Drug Human Clinical Testing

three separate phases

New Drug Application Approval


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Differences Between Pharmaceutical R&D Projects and Other Industries

Final product is information rather than a physical product. Long duration, extreme costs, and high chances for failure.

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Background

Project management concerned with managing organizational activities. Often used to integrate and coordinate diverse activities. Projects are special types of processes.

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Defining a Project

Projects are processes that are performed infrequently and ad hoc, with a clear specification of the desired objective.

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Examples of Projects

Constructing highways, bridges, tunnels and dams Erecting skyscrapers, steel mills, and homes Organizing conferences and conventions Managing R&D projects Running political campaigns, war operations, and advertising campaigns
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Reasons for Growth in Project Operations


More Sophisticated Technology Better-Educated Citizens More Leisure Time Increased Accountability Higher Productivity Faster Response to Customers Greater customization for customers
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Planning the Project

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Life Cycle of a Project (Stretched-S) & (Exponential)

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Organizing the Project Team


Ad Hoc Project Form Weak Functional Matrix Strong Project Matrix

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Types of Project Team Members

Those having a long-term relationship with the project. Those that the PM will need to communicate with closely. Those with rare skills necessary to project success.

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Project Plans

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Work Breakdown Structure

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Project Master Schedule

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Complexity of Scheduling Project Activities


Large number of activities Precedence relationships Limited time of the project

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Planning and Scheduling Projects

Planning. Determining what must be done and which tasks must precede others. Scheduling. Determining when the tasks must be completed; when they can and when they must be started; which tasks are critical to the timely completion of the project; and which tasks have slack and how much.
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Scheduling the Project: PERT and CPM

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Terminology

Activity Event Network Path Critical Path Critical Activities


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Project Planning When Activity Times are Known

Inputs

list of the activities that must be completed activity completion times activity precedence relationships

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Project Planning When Activity Times are Known continued

Outputs graphical representation of project time to complete project identification of critical path(s) and activities activity and path slack earliest and latest time each activity can be started earliest and latest time each activity can be completed

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Example
Activity Time Preceded By A 10 -B 7 -C 5 A D 13 A E 4 B,C F 12 D G 14 E
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Network Diagram

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Early Start and Finish Times

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Latest Start and Finish Times

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Activity Slack Time


TES = earliest start time for activity TLS = latest start time for activity TEF = earliest finish time for activity TLF = latest finish time for activity Activity Slack = TLS - TES = TLF - TEF
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Path Slack

Duration of Critical Path - Path Duration Path Slack

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Activity Slack Times


Activity A B C D E F G ES EF LS LF Slack 0 0 10 10 15 23 19 10 7 15 23 19 35 33 0 10 12 10 17 23 21 10 17 17 23 21 35 35 0 10 2 0 2 0 2
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Chapter 11: Project Management

Project Planning When Activity Times are Uncertain

Inputs

Optimistic (to), most likely (tm), and pessimistic (tp) time estimate for each activity activity precedence relationships graphical representation of project expected activity and path completion times variance of activity and path completion times probability that project completed by specified time Chapter 11: Project Management

Outputs

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Expected Activity Time and Variance of Activity Time

te =

t o + 4t m + t p 6
2

t p to = 6
2

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Example
Activity Preceded By
A B C D E F G --A A B,C D E

to
2 5 3 10 3 8 2

tm
6 7 5 10 4 12 4

tp
7 9 6 10 5 13 8

te
5.50 7.00 4.83 10.0 4.0 11.5 4.33

2
.694 .444 .250 0.000 .111 .694 1.000

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Network Diagram with Expected Activity Times and Variances

[5.5, 0.694]

2 [10, 0.0]
D C [4.83, 0.250]

4
F [11.5, 0.913]

1
[7.0, 0.444]

A B

6
E

G [4.33, 1.0]

[4.0, 0.111]

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Expected Completion Time and Variance of Path A-D-F


Expected completion time = 5.5 + 10 + 11.5=27

Path Variance = 0.694 + 0 + 0.913 = 1.607

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Path Expected Times and Variances


Expected Standard Time Variance Deviation 27 14.66 15.33 1.607 2.055 1.555 1.27 1.43 1.25

Path A-D-F A-C-E-G B-E-G

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Probabilities of Completion

desired completion time - expected completion time z= V

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Probability of Project Being Completed on or Before Time 25 Only path A-D-F has reasonable chance of taking 25 or more:

25 27 z= = 157 . 1.27
From standard normal table in Appendix A, there is a 5.82% chance of completing project on or before time 25.
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Probability of Path A-D-F being Completed on or Before Time 25

5.82%

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Plan E Project Operations Network

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Proper Use of Dummy Activities

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Activity Expected Times and Variances

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Simulating Project Completion Times with Spreadsheets

C A D E F

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Simulating Project Completion Times


Standard Deviation 1.2 3.1 2.2 5.2 6.2 4.1
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Activity A B C D E F

Mean (days) 32.1 24.6 22.2 26.1 34.4 34.5


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Activity Activity Activity Activity Activity A B C D E

Activity F

Minimum Maximum

Path1 Path 2 (A-C-F) (B-D-F) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Path 3 (B-E) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Project Finish Time 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

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Project Management Software Capabilities

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Microsoft Projects Gantt Chart

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Pert Chart Generated by Microsoft Project

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Calendar of Activities Created by Microsoft Project

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Controlling the Project: Cost and Performance

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Variance Report

Cost standard determined using engineering estimates or analysis of past performance Actual cost monitored and compared with cost standard Project manager can exert control if difference between standard and actual (called a variance) is considered significant.

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Cost-Schedule Reconciliation Charts

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Earned Value Chart

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Goldratts Critical Chain

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Introduction

Similar issues that trouble people about working on projects regardless of type of project

unrealistic due dates too many changes resources and data not available unrealistic budget

These issues/problems related to need to make trade-offs To what extent are these problems caused by human decisions and practices?
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Three Project Scenarios

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Project Completion Time Statistics

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Observations

Average Completion Times Implications of Assuming Known Activity Times Shape of the Distribution Worker Time Estimates Impact of Inflated Time Estimates Student Syndrome
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Multitasking

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Alternative Gantt Charts for Projects A and B

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Common Chain of Events

Underestimate time needed to complete project

assumption of known activity times and independent paths

Project team members inflate time estimates Work fills available time

student syndrome early completions not reported


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Common Chain of Events continued


Safety time misused Misused safety time results in missed deadlines Hidden safety time complicates task of prioritizing project activities Lack of clear priorities results in poor multitasking
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Common Chain of Events concluded

Poor multitasking increases task durations Uneven demand on resources also results due to poor multitasking More projects undertaken to ensure all resources fully utilized More projects further increases poor multitasking
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Reversing the Cycle

Reduce number of projects assigned to each individual Schedule start of new projects based on availability of bottleneck resources Reduce amount of safety time added to individual tasks and then add some fraction back as project buffer

activity durations set so that there is a high probability the task will not be finished on time
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The Critical Chain

Longest chain of consecutively dependent events

considers both precedence relationships and resource dependencies

Project Buffer Feeding Buffer

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Sample Network Diagram

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Project and Feeder Buffers

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Copyright
Copyright 2006 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

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