Ghapter Outline {199AL OONPARY PROFMLE: BECHTEL GROUP ‘The Importance of Project Management @0 Project Planning 90 Project Scheduling 83 Project Controlling 94 Project Management Techniques: ‘PERT and CPM 98 Determining the Project Schedule 100 Variability in Activity Times 108 Cost-Time Trade-offs and Project Crashing qt |A Critique of PERT and CPM 413 Using Microsoft Project to Manage Projects 116 orGLOBAL COMPANY PROFILE: BECHTEL GROUP PROJECT MANAGEMENT PROVIDES A COMPETITIVE ADVANTAGE FOR BECHTEL ig ow in its 112th year, the San Francisco based Bechtel Group (www.bechtel.com) I the worle's premier manager of massive construction and engineering projects. Known for billon-dolar projects, Bechtel is farnous {or its construction feats on the Hoover Dam, the Boston Central Artery/Tunnel project, and rebuilding of Kuwait oil and gas infrastructure after the invasion by Iraq in 1990. Concitions weren't what Bechtel expected when it won a series of billion-dollar contracts trom the U.S. {government to help reconstruct Iraq in 2003-2008. ‘A massive dredge hired by Bechte! remaves sit fom {raqis por at Umim Qasr, This paved the way for large-scale ‘davies of U.S. food arid the return of commercial shipping, . ‘workers wrestle with a 1,600-ton boring machine, measuring 25 fee in diameter, that was used to dig the Euretunnol between England and France in the early 1990s. With ever- runs that boosted the cost ofthe project to $13 bilon, fa Bechtal Group VP was brought in to head operations, ‘Saddam Hussein's defeat by Allied foroes hadn't caused much war damage. Instead, what Bechtel found was & country that had been crumbling for years, None of the sewage plants in Baghdad worked. Power flicked on and off. Towns and cltias inthe anti-Hussein south had been left to decay as punishment. And to complicate matters ‘even more, scavengers wore stealing everything from museum artiots to electric power lines. Bechtel job Was to oversee electric power, sewage, transportation, and airport repairs, Bechtel’s crews travelled under armed escort and ‘slept in trailers surrounded by razor wire. But the company’s efforts have paid off. Iraq's main seaport, Umm Qast, was reopened when Bechtel dredged the water and repaired the grain elevators. Electrical generation was back to prewar levels in 10 months. Bechtel refurbished more than 1,200 schoots. With a global procurement program, Bechtel easily tapped the company’s network of suppliers and buyers‘Managing massive con- struction projects euch as this the strength of Bechtel. With arge penal- ties fr ‘ete cornpation and Incentives for esrly sorple- tion, a.g00d project man- ageris worth his or her weight gol worldwide to help rebuild Iraq's infrastructure, Other interesting recent Bechtel projects include: © Building 26 massive distribution centers, in just 2 years, {or the Internet company Webvan Group ($1 bilion. © Constructing 30 high-security data centers worldwide for Equinix, inc. ($1.2 billion). © Building and running a rail line between London and the Channel Tunnel (84.6 billion) © Developing an oll pipeline trom the Caspian Sea region to Russia ($850 milion). +» Expanding the Dubai Airport in the United Arab Emirates ($600 milion) and the Miami Internationat Airport ($2 billion). © Buliding liquefied natural gas plants in Trinidad, West Indies ($1 billion). Reconstructed terminal at Baghdad International Arport Building a new subway for Athens, Greece (82.6 billion). © Constructing a natural gas pipeline in Thailand ($700 milion) © Building 90 plants for iMotors.com, a company that sells refurbished autos online ($300 million). © Building a highway to link the north and south of Croatia ($303 miiion) ‘When companies or countries seek out firms to ‘manage massive projects, they go to Becht, which, again and again, through outstanding project management, has demonstrated is competitive advantage. Bechtel was the construction contractor for the Hoover Dam. ‘This dam, on te Colorado Fiver, is the highest lathe Western Hemisphere TeNTeL BROT? 8090 PARY 4 Intodvetion to Cperations Management Chapter 3 Learning Objectives Chapter 3 Learning Objectives LOA: Use a Gant chartfor scheduling 88 LO Ostermine a critical path 105 raw ADA and AON networks 97 LOS: Calculate the variance of atvly times 407 {103s Compete forward and backward LOG: Crash a projet 14 passes fora proect 404 Aureon commne™” . THE IMPORTANCE OF PROJECT MANAGEMENT rer or urs resgietn set | When Bechet subjest ofthe opening Global Company Profil, entered Ing after the 2003 veseyveannirs2 | war, ie quickly had to mobilize an intertational free of manval workers, construction profes- mae spot FHonals, cooks, medical personnel, and security forees, Tis project management team had to fccess millions of tons of supplies to rebuild ports, roads, schools, and electrical systems Similarly, when Hard Rock Cafe sponsors Rockfest, hosting 100,000 plus fans atts annual con cert, the project manager begins planning some 9 rons earlier Using the software package Microsot Project, described in this chapter each ofthe hundseds of details can be monitored and contolled. When a band can’t reach the Rockfest site by bus because of massive traffic jams, Hard Rock's project manager i ready witha helicopter backup. Mineo 2 ‘Bechtel and Hard Rock are just two examples of firms that face modern phenomena: growing Proket Maeno Hd eet complexity and collapsing productiservice life cycles, This change stems from awareness Dt the strategie value of time-based competion and quality mandste for continuous improves ment Each new productservice introduction is a unique event—e project. In addition, projects tea common part of our everyday lite. We may be planning a wedding ot a surprise binday party, remodeling a house, or preparing a semester Jong class project. Scheduling project is a dificult challenge for operations manages. The stakes in project enagement se high. Cost overruns and unnecessary delays occur due to poor scheduling and oor controls Projects that take months or yeas to complete ate usually developed outside the normal pro- ution system. Project organiations within the frm may be setup to handle such jobs and ae ‘often dishanded when the project is complete. On ether occasions, managers find projects just part of thei job. The management of projects iavolves thee phases (ee Figure 3.1) 1. Planning: This phase includes goal setting, defining the projec, and team organization. 2. Scheduling: This phase relates people, money, and supplies to specific actvitie and relates activites to each other 3. Controlling: Here the frm monitors resources, costs, quality, and budgets It also revises changes plans and siftsresourees to meet ime and cost demands “We begin this chapter wih a bref overview of these functions. Three popular techniques to allow managers to pln, schedule, and contol-—Gantt chats, PERT, and CPM-—are also described. PROJECT PLANNING Pacjcts can he defined as series of related tasks directed toward a major outpat. In some firs Project organization a projet organiaation i developed to make sure existing programs continve to run sticothly on ‘morgan med to Gay-to-day basis while new projects are successfully completed trent oan ce) "Fo companies with ipl nge projets, sch aa contraction ema project razon Seve poermeenest gs erect way of assigning the poople and physical resources nedod. Is a temporary org nization stuctare designed to achieve results by using specialists from throughout the fim. NASA and many other organization use the project apprcach. You may recall Project Gemini fad Project Apollo. These terms were used to describe teams that NASA organized t0 reach space exploration objectives. “The project organization works best when 1. Werc canbe defined with a specific goal and deadline. 2. The ob is unique or omevhaunfailiar to the existing organization. 3. The work contins complex interelated tasks requiring speialized ski 4 5 ‘The project is temporary but critical to the organization ‘The project cuts across organizational lines. Caer a eee ee a ee eee a!| Chapter 9 Managing Propcts 94 Planning the Project | is i =| Sregods Cet epee PKS Gea ean ‘NOFAOR GOREN Managers stale theplanand ts work ie pn” Froet lig ips ye a Scheduling the Project ‘ane {V} Schodtledelvraties Schau resources Contraing he Pro saad ry canoe ans |_| Monitor resources, Saat ‘oats, quality "eos td ‘Shi resources | Belore Start of profoot During project i preoet Timeline AFIGURE 3.1 Project Planning, Scheduling, and Controlling The Project Manager An example ofa projet organization is shown in Figure 3.2. Project team members are temporar~ ily assigned toa project and repor tothe project manager. The manager heading the project coor- dinates activities with otter departments and reports cizectly to top management. Project managers reociv high visibility in fem and are responsible for making sure that (1) all necestary activites i se fnished in proper sequence and on time; (2) the projec eomes in within budget; (3) the project eet its quality goals; anc () the people assigned othe project receive the mosivaton, direction, FIGURE 3,2 ‘Sample Project, Organization ‘RUTHOR COMMENT Projet oraz canbe tenprary or permanant ‘Agneta is ‘sun cled sate cryin” Human Resources Mateting || | Finance Design “a Producton project |] Project |_[techarical Not anager [—] Engineer Project L[ Proje Bectical |_| computer No2 —] Manager [| Engineer [—] Engineor |] =n]92 PART Intecuetion to Operations Management Work breakdown structure (WBS) ‘A nlrrchical description ofa projet ro ce an more Caled components. © FIGURE 3.3 Work Breakaoun Structure and information nceded to do their jobs. This means that project managers should be good coaches ‘and communicators, and be able to organize activities from a variety of disciplines, Ethical lesues Faced in Project Management Project managers not only have high visi bility but they also face ethical decisions on a daily basis. How they act establishes the code of conduct for the project, Project managers often deal with (1) offers of gifts from contractors, (@) pressure to alter status reports to mask tho reality of delays, (3) false reports for charges of time and expenses, and (4) pressures to compromise quality to meet bonus or penalty schedules. ‘Using the Project Management Iastitate’s (wwwepmi.org) ethical codes is one means of ty ing to establish standards, Research has shown that without good leadership and a strong orgaxi- ational culture, most people follow their own set of ethical standards and valwes.! Work Breakdown Structure ‘The project management team begins its tase well in advance of project execution so that a plan ccan be developed. One of its first steps is to carefully establish the project's objectives, then ‘beak the project down into manageable pars, This work breakdown structure (WBS) defines the project by dividing it into its major subcomponents (or tasks), which re then subdivided into ‘more detailed components, and finsly into a et of activities and their related costs. The division of the project into smaller and smaller tasks can be difficult, but is critical to managing the proj- cect and to schedaling success, Gross requirements for people, supplies, and equipment ae also estimated inthis planning phase. “The work breakdown structure typically decreases in size from top to bottom and is indented like this: Level T Project 2. Major tasks in the project 3 Subtasks in major tasks 4 Activities (or “work packages”) to be completed ‘This hierarchical framework can be illustrated with the development of Microsolt’s operating 5yS- tem Windows 7. As we see in Figure 3.3, che project, creating a new operating system, is labeled 1.0. The first step is to identify the major tasks in the project (Level 2), Three examples would be software design (1.1), project management (1.2), and system testing (1.3). Two major subtasks for L are development of graphical user interfuees (GUIs) (11.1) and creating compatibility ‘yith previous versions of Windows (1.2). The major subtasks for 1.1.2 are level-# activities, a a peer hss “Bianning. [12.1 a Te jie ; @ | a Eas Gonpaa, 2 (Raeseneae Bees I 2 in Eater oena | [paragon rng Corea Caxoaitig swe ne ana [12 Coresite | see Hilder Heigndoti, "Te Beat Dienson of Projet Management” fate rnationalJoural of Proeet Manager 96,20. 7(Octber 2008). 18 aChapter 3 Maneging Projects 99 such as creating a team to handle compatibility with Windows ME (1.12.1), creating a team for ‘Windows Vista (1.1.2.2), and creating a team for Windows XP (1.1.23). There are usually many Ievel- activites, PROJECT SCHEDULING Project schedating involves sequencing and aliting time to all project activities, At this stage, managers decide how long each activity will eke and compute how many people and materials willbe needed at each stage of production, Managers also chart separate schedules for personnel needs by typeof skill (management, engineering, ot pouring concrete, for example). Charts ls0 an be leveloped for scheduling materials ‘One popular project scheduling approach isthe Gantt chart. Gant charts are Tow-cost mesos ‘of helping managers make sure that (1) activities are planned, (2) order of performance is doca- mented, (3) activity ime estimates are recorded, and (4) overall project time is developed. As Figure 34 shows, Gantt chars are easy to understand. Horizontal bars are drawn for each project activity along a time line. This Mlustration of a rowtine servicing of a Dela jetliner during 2 40-minute layover shows that Gantt charts also can be used for scheduling repetitive operations, In this ease, the chart helps point out potential delays. The OM in Actéon box on Delta provides additional insights. (A second illostration of a Gantt chart is also provided in Chapter 15, Figure 154.) On simple projects, scheduling charts such as these permit managers to observe the progress of each activity and to spot and tackle problem sreas. Gant charts, though, do not adequately iMastrate the interelationships between the atvitis and the resources. PERT and CPM, the two widely used network techniques that we shall diseuss shorty, do have the ability to consider precedence relationships and interdependency of activities, On com- plex projects, the scheduling of whichis almost always computerized, PERT and CPM ths have anedge over te simpler Gantt chats. Ben om huge projects, though, Gant charts can be used summaros of project satus and may complement the other network approaches. ‘To summarize, whatever the approach taken by a project manager, project scheduling serves several purposes: 1, It shows the relationship of each activity to others and to the whole projec. 2, Ikidemtfies the precedence relationships among activities, 43, Itencourages the setting of realistic time and cost estimates for each activity, 4. Ithelps make better use of people, money, and material resources by idemtfying critical bot Hlenecks in the project. apianing Ham Passengers a = Ves as, Pumpin mea Fring. Engine nection wator te i aT aaa Mab eabh cor En Getey era acatin door me ator Ee ae ae Be e jacuencera) Seeman EED ‘Cargo arc mal ree ee z ad ere aa ees. Eset o 10 20 2 40 ‘Time, minutes ‘uTaoR comENT ‘ant charter simp and vs king ee ey oe Gantt charts Psning charts used to scheule resources andes re. LOA: Use 2 Gantt char for ‘shocking FIGURE 3.4 ‘Gantt Ghar of Serviee Activities fora Dita Jet ting 2 40-nate Layover Deta ope to save $50 milion a year mith tis turnaround time, wich sa redveton from is tradkonal -minute routing,(94 ART 4 tnrwduetion 1 Operations Management OM in Acticr > Delta's Ground Crew Orchestrates a Smooth Takeoft Fight 574’s engines soreech ts arrival as tho jet lumber ‘down Richmonds taxiway with 140 passengers arving trom ‘Alanta In 40 rainutes, the piane is to be aliborne egain. However, before this jet can depart, there is business to attend to: passengers, luggage, and cargo to unload! and oad; thousands of gallons of jet fuel and countless rinks to restock: eabin and restrooms to clean; toilet holding tanks to drain; and engines, wings, and fanding gear to inspect "The 10-person ground crow knows that a miscue ‘enywinere-~a broken cargo loader, lost baggage, misdirected passengers—can mean a late departure and trigger a chein reaction of headaches trom Richmond 10 ‘Alanta to every destination of a connecting fight. Carla Sutera, tha operations manager for Delta's Richmond international Airport, vows the turnaround ‘operation tke a pit boss awaiting a race car. rained crews are in place for Flight 674 with baggage carts and traciors, hnycrauite cargo loaders, a tuck to load food and drinks, ‘another to lift the cleanup cren, another to put fuel on, and a fourth to take water ‘off. The “pit crow" usually prtorms so smoothly that ‘most passengers naver suspect tho proportions of the effort. Gant charts, such as the one in Figure 34, aid Delta and other airings withthe stating and ‘scheduling that are needed for tis task Sowroes: Kot ser Tae Business Newsy 1 20051 and (evo 21,200 1. ‘AUTHOR conmaaaeT onoteraaeee [> PROJECT CONTROLLING pee meee ‘The control of projects, like the control of any management system, involves close monitoring, of resoutees, costs, quality, and Budgets. Cont also reans using a feedback loop to revise the project plan and having the ability to shit resources to where they are needed most Compuerized PERTICEM reports and chars are widely available tay on personal computes, ee a ‘Some of the more popular of these programs are Primavera (by Primavera Systems, Inc.), Prowaesaeneta Neale yracProject (by Apple Computer Corp), Pertmaster (by Westminster Software, In.) VisiSchedule (by Paladin Software Corp-), Time Line (by Symantec Corp.), and Microsoft Project (by Microsoft Corp), which we illustrate inthis chapter. "These programs produce a broad variety of reports including (I) detailed cost breaiciowa for cach task, (2) total program labor curves, (3) cst distribution tabtes, (4) functional cost and hour Summaries, (5) raw material and expenditure forecasts, (6) variance reports, (7) time analysis reports, and (8) work status repors. Construction ofthe naw t1-story building t Arnold Palmer Hospital in Orlando, Florida, was an enormous project forthe hospital Sdministration, The photo onthe left shows the first sx floors under construction. The photo onthe right shows the bulding as SSrpleted two yoar ater Prior to baginning actual constuction, regulatory and funding isoues added, as they do with most projects substantial time to the overall project. Cites have zoning and parking issues; the EPA has crainage end waste eaves eha regulatory authorties have the own requrement; as do issuers of bonds. The $100 railion, 4-year project at Amold Palmer Hospital is clacussed in the Video Case Study at the end of this chapter. —_____—.Ohapter @ Managing Projects 98 A Rion SORT Taser maeret ‘eyes eto ‘sortase ie | seen nhs ae PROJECT MANAGEMENT TECHNIQUES: PERT AND CPIM Program evaluation and review technique (PERT) and the critical path method (CPM) were both developed in the 1950s to help managers échedule, monitor, and control large and | complex projects, CPM artived first, in 1957, as a toot developed by J. E. Kelly of Remington Rand and M. R. Walker of duPont to assist in the building and rnaintenance of chemical planis at daPont. Independently, PERT was developed in 1958 by Booz, Allen, and Hamilton for the PFsram evaluation rar and review echnique U.S, Navy, @ERT) in A et apne The Framework of PERT and CPR tliat ops ee tir etimates foreach acy Critical path method PERT and CPM both follow six basic steps 1, Define the project and prepare the work breakdown structure, (crm) 2, Develop the relationships among the atvities. Decide which activities must precede and pret maragomert which most follow others, tecalga that uses only one | 3. Draw the network connecting all the activities ‘ime facto per ati 4. Assign time and/or cost estimates to each activity, Critiest part 5. Compute the longest time path through the network. This is called the ertieal path, isons apiaiba 6, Use the network to help plan, schediale, monitor, aad control the projec. at) rough network | Step 5, finding the critical path, is a major pat of controlling a project. The activities on the cit- ‘cal path represent tasks that will delay the entire project if they are not completed on time. Managers can gain the flexibility needed to complete critical tasks by identifying noneritical ‘activites and replanning, rescheduling, and reallocating labor and Financial resources. Although PERT and CPM differ to some extent in terminology and in the construction of the network, cheir objectives are the same. Furthermore, the analysis used in both techniques is very similar. The major difference is that PERT employs three time estimates for each activity, These time estimates are used to compute expected values and standard deviations forthe activity, CEM. ‘males the assumption that activity times are known with certainty and hence requires only one time factor foreach activity For purposes of illustration, the rest ofthis section concentrates on a discussion of PERT. ‘Most ofthe comments and procedaes described, however, apply just as well to CPM, PERT and CPM are important because they cen help answer questions such as the following about projects with thousands of activities: A. When will the entire project be completed? 2. What are th extical activities or tasks in the project—« entire project if they are late? Which aro the nonetitical activities—tho ones that can run late without delaying the whole project’s completion? “4, What the probability thatthe project will be completed by a specific date? 5. At any particular date, i the project on schedule, behind schedule, or ahead of schedule? . On any given date, is the money spent equal to, less than, or greater than the budgeted amount? 7. Are there enough resources available to finish the project on time? 5, If the project is tobe finished in a shorter amount of time, whats the best way o eecommplish this goal at the Least cost? is, which activities will delay the 3 Network Diagrams and Approaches ‘The first step in a PERT or CPM network is to divide the entire project into significant activities | in accordance with the work breakdown siracture. There are two approaches for drawing a proj- Aetivity-on-node cect network: activity on node (AON) aud activity on arrow (AOA). Under the AON conven (AON) tion, nades designate activities. Under AOA, arrows represent activities. Activities consume time Avetwotk diagram in which ‘and resources, The basic difference between AON and AOA isthat the nodes inan AON diagram — %¥8 delanate att. represent activities. In an AOA network, the nodes represent the starting and finishing times of — actiyty-on-arrow an activity and are also called events, So nodes in AOA consume neither time nor resources. (AQ) Figure 3.5 illustrates both conventions for a small portion of the airline turnaround Gantt chatt_ efwor gram a which (in Figure 3.4), The examples provide some background for understanding six common activity —arows desgnnte aces, SSIS EEE psssbetiesssestiattanstebasCy) ” ° @ @ o 86 PART 4 ntoduetion to Operations Management Acomes beter B, ‘ahicn compas bare C. Acad B mustboth be completed betore Can start Bane Cannot begin Luni Ais completed and D cannot begin ‘nil both & and B bre completed ‘G cannot begin unt bath ‘anid are completed cannot begin unt Bis completed. A my acy fs inveducedin AOA Band cannot begin untt ‘Als completed. cannot begin unis both 5 and © se completed. A dummy ‘ctv ls agatn rrocuces nA ‘A FIQURE 9.5 AComparison of AON and ADA Network Conventions Dummy activity ‘An acy nang time tat eins te anetearko satin te lg of te network, relationships in networks, In Figase 3.5(8) activity A must be finished before activity B is farted, and B must, in tum, be completed before C begins. Activity A might epresent “dept ing passengers.” while B is “cabin cleaning,” and C is “boarding new passengers.” Figures 3.5(e) and 3.5( illustrate thatthe AOA approach sometimes needs the addition of « dummy activity to clarify relationships. A dummy activity consumes no time or resources, bat js required when a network has two activites with identical starting and ending events, of when ‘ovo oF mote follow some, but not ail, “preceding” activities, The use of dummy activities is also impertant when computer software is employed to determine project completion time. A dummy activity has a completion time of zero and is shown graphically with » dashed line. ‘Although both AON and AOA are popular in practice, many of the project management soft- ‘ware packages, including Microsoft Project, use AON networks. For this reason, although we illustrate both types of networks inthe next examples, we focus on AON networks in subsequent iscussions in this chapter.Chapter 3 Managing Projects 97 Asti a aren ery earner ary seca enable be ete EL ios cn ante atone esteiah merece | Ay naat installed in the allowed time, Joni Steinberg, the plant manager, wants to make sure that installation of | Milwaukee Paper ‘Given the following information, develop a table showing activity precedence relationships. ASPROAGH P' Milvankee Paper has identified the eight activities thet need tobe performed in ‘order forthe projet to be completed. When the prlest begins, two activities can be simultaneously Started: bilding the intemal components forthe device (activity) andthe modifications necessary for the floor and oof (activity B). The consti ofthe collection stack (activity C) ean begin when the Sera eomponents are completed Pouring the concret flor and installation ofthe fame (activity D) can be started as 900m a5 the internal components ate completed and the roof and float have been modified, After the collection stackhas been consrsted two activites can begin building the igh-inpererae | LO2z Draw AOAand ACN ‘borer (activity ) and installing the potion contol sytem (activity ). The ai polluon device can be. | networks ‘niall (tivity ©) fer te coneree floor has been poate, the feme hasbeen intlld, athe high- ‘temperature burer has been built. Finally, after the contol system and polation devies have been installed, be system canbe inspected end ated (activity H), ‘SOLUTION P Activites and presedence wlatonships may seem rater confusing When they as resented in this descriptive form. It is therefore convenient to list all the etvty information ins able, ssshown in Table 3.1. We sein the table tha activity A is listed aa an ined predecessor of eli? ity C Likewise, both activities D and B rast be peformed prior o starting ectvity G. | | SEE ee eee ES Tnmediate Activity Description Predecessors a Build intenal components = B Modify rot and floor a c Construct colletion stack A D Pour concrete and instal frame AB 1 E Build high-erperature burner c F Insta petition contol sytem © G Install ar pollution device DE H Inspact ad west Ro a SRSA > To complete a network all predecessors must be cletly defined. LEARHING EXIERCESE B What isthe impact on the sequence of activities if EPA approval is required after Inspect and Tet? Answer: The immediate predecessor forthe new activity Would be H, Inspect and Test, with BPA approvals the inst ectivity) i Note that in Example 1. it i enough to list just the immediate predecessors for each activity. For instance, in Table 3.1, since activity A precedes activity C, and activity C precedes activity E, the fact that activity A precedes ectivty B is implicit. This telationship need not be explicitly shown in the activity precedence relationships. ‘When there are many activities ina project with fairly complicated precedence relationships, itis difficult for an individual to comprehend the coraplexity of the project from just the tabular information, In such cases, a visual representation ofthe projec, using a project network, is con- venient and useful. A project network is a diagram of all the activities and the precedence rela- tionships that exist between these activities in a project. Example 2 illustrates how to construct a project network for Milwaukee Paper Manufacturing.88 PART ¢ Intoducton to Operations Management OM in Action: » Prepping for the Miami Heat Game (Mondly ts time for Jchn Nicely to make a grocery ist. He's serving dinner on Saturday, 0 hel naed a few things... 150 pounds of steek and chicken, ingredients for 8 gallons of Shrimp bisque, 400 sushi rol, andl 25 pounds of jabalaya. Plus a couple hundred pizzas and a couple thousand hot cdogs—just enough to faed the Miami Heat basketball players {and the 19,600 quests expected. You see, Nicely is tho ‘executive chef at American Alrines Arena in Miami, and on ‘Saturday the Heat are hosting the L.A, Lakers ‘How do you feed huge crovids good food in a short time? {takes good project management, combined with creativity ‘and improvisation, With 250 facilites serving food and. ‘bevarage, "The Arana, Nicely says, i its onn beast” Tuesday. Shopging dey. Weciesdlay-Friday. The stat prepares whatavertcan, chopping vegetables, marinating meats, mixing salad ‘ressings—everything but cooking the food. Nicely also begins his shopping liste far next Monday's game against ‘Toronto and for @ Queen concert ree days later Saturday, 3155 pa, Clutch time, Suddenly the kitchen is ‘a joke-fae zone, In five minutes, Nicely’ first clients, 200 ‘lite season ticket holders, expect their meals—from a 15:00 pat As the Heat and Lakers ‘start warming up, the chs ‘move their operation ina brisk procession of hot boxes and ‘olcood racks to the satellite kitchens. 6:00 ra. Ncoly and team face surprises at concession stands: a shoriage of cashiers and 2 broken cash register, altima, There is a run on roasted potatoes in the Flagship restaurant. But Nicely has thought ahead ‘and anticipated, The backup potatoes arrive betore customers even notice, For John Nicely, successful project management moans happy quosts as the result of a thousand detalls thet have been identified, plannod, and executed. Just another night of delivering restaurant-quafty meals and top-gradetast food, toa sold-out stacium crowd in a span of a couple hours, _soueas: ast Company (May 2008) 58-6: ed righ ir Tbure Unique menu ereated for each game. Bears Nana (ar 9, 2003) 1 ‘Draw the AON network for Milwaukee Paper, using the dst in Exazzple f. ABPROACH P Inthe AON approach, we devote each activity by a node, The lines, of sefows, represent the precedence relationships between the activites. SOLUTION P In this example, thre are two activities (A and B) that do ot have any’ pedeces- ors, We draw sepatate nodes for each of these activities, as shown in Figure 36, Although not “euired, is usually Convenient fo have a unique stating ecivity fora project. We have therefore Sackided a dun acivisy called Stor! in Figure 3.6, This duitmy activity doesnot really exist and ‘kes up ze time end resources. Activity Stare ig an immediate predecessor for bo activites A and and serves a the unique stating activity forthe entire project “4 AON graph for Milwaukee Paper > Flaune 6 Beginning ADH Network tor Milwaukee Paper petty A (Qo letra Components) nen ety (Meaty Roo! ard Fi) ‘We now show he precedence elatonsips using ines wit arrow synbols. Fr xaiol, a a8! fran acy Sa fo stig A iniats tat Stat a predecessor for stity A. tna simi fashion, swe dra a ac om Stato B : ‘Nex we 30s ne node foe evi C. Sno city A precedes atvilyC, we daw a aos fom ode A to node (os Fgute 37) Liki, re fst daw anode 0 sepresentectvsy D, Ton, sinse ‘svitigs A an B both prceode activity D, we draw ators fom A toD and from B to D (see Figue 3.1).Chnaptor 8 Managing Projects 98 Act kPrecede Acti C anounes.7 Z Intermediate AOR Motwore Ou ©) Precede Actviy D ‘We proceed in this fashion, adding a separato node foreach acivity and a sepaate line fr each precedence relationship thet eists.-The complete AON project. network fr the Milwaukee Paper ‘Manufaciuting project is sbovm in Figure 38. sriaunE 3.9 ‘Complete AON Network for ‘Milwaukee Paper | eros Show Precednce elotersnipe IMGIGHT P Drawing a project setwork properly takes some time and experience, We would like ‘the lines to be straight and aows to move othe right when possible. LRARMING EXERCIE 1 EPA Approval occurs after Inspect and Test, what ste impact ox the graph? (Answer, A straight line is extended tothe right beyond Ho reflec the additional activity.) RELATED PROBLEMS 23,36,37,3.95,3.10, 312.3153 ‘When we first draw a project network, itis not unusual that we place our nodes (activities) in the network in such a fashion that the arrows (precedence relationships) are not straight lines. ‘That i, the lines could be intersecting exch other, and even facing in opposite directions, For ‘example, if we had switched the location of the nodes for activities E and F in Figure 3.8, the lines from F to H and E to G would have intersected. Although such a project network is per- fectly vali, it is good practice to have a well-drawn network, One rule that we especially recom- ‘mend is to place the nodes in such a fashion that all arrows point in the same direction, To achieve this, we suggest that you frst draw a rough draft of the network, making sure all the rela- tionships ate shown, Then you can redraw the network to make appropriate changes inthe loca tion ofthe nodes. As with the unique starting node, it is convenient to have the project network finish with a ‘unique ending node. Inthe Milwaukee Paper example, ic tums out that a unique activity, H, is the last activity in the project. We therefore automatically have @ unique ending node. In situations in which a project has multiple ending activities, we include a “dummy” ending activity. This dummy activity has all the multiple ending activities in the project as immediate predecessors, We illustrate this type of situation in Solved Problem 3.2 atthe end ofthis chapter.4100 PANT 4 Introduction to Operations Management Activity-on-Arrow Example ‘We scale that nan AOA project network we can represent atvtes by arrows. node rep- qesent an event which marks the start or completion ie ofan stivity. We usually identify an vent (node) by a number. serene penne nem ‘Draw the complete AOA projet network for Milwaukee Paper’ problem. Activity-on-arraw for APPAODON PY Using the data from Table 3.1 in Example 1, draw one activity at atime, startin ‘Milwaukee Paper 7 m 5 vith 8. SOLLUTION P We seo that activity A stares at event | and ends at event 2. Likewise, activity stats event | dnd ends atevent 3. Activity C, whase only imedite prodecesor i nctivity A, sects ataode 2and ends at node, Activity D, Roweve, has (wo predecessor (Le. A and B). Hens we heed both itiviies A and B to end at event 3, 2 tat acthity D can stata that event, However, we fant have multiple activites with common starting and ending nodes in an AOA network. To ove ‘Sonne thi difialy, in sich cases, we may need tp add 2 dujmy ine (activity) to enforce the preee= ‘Senee relationship, The dummy setiviy, shown in Figure 3.9 asa dashed line, is inserted between ‘ves 2 and 3 to take th diagram reflect the precedence between A and D."The remainder of the ‘AOA project network for Milwaukee Paper's example is alo shown, : beigURE 3.8 Complete ADA Hetwor (vith Dury Aoi) for Miwaukee Paper (Genetic Steck) ia Dummy Actty oung para) (Pour Coveretatinstat Frame) (Crarioa comment) x : 2 5 ite ouvmeyaahily, :8SFOHT> Dum activities are common in AOA networks. They dott really exist inthe pro} cansumes inn, trote | | cand ake zero tine. ori changes peas ow arty ens bein ‘8 an te dary ie compa, eanwinea RENCISE) A av alviy. EPA Appel flows avy H Add oFigue 9, Tren er a avowed eno 7 wch cs a new de 8 anda abeled | (EPA Approval).t. RELATED PROBLEMSP 3.4,35,390 Tito CoRRENT We rw 00 est DETERMINING THE PROJECT SCHEDULE cen bons | Lok back Fight 38 (in Example) fra momento ee Milwaukee Paper's completed AON tsi ah) work, Once this project neswork bas been drawn to Show al the activities and the Pr tenceelaiontip, te next step iso determine the pojst cheno, Tha i, we ned to Taenify the planned starting and ending time foreach act. Lets game Minatee Paper estimates the me required for each activity, in wees, as sown n-uble 3.2 Theale indots that th ol time forall eight of he company’s actives Cte path anayis 25 nek Howee, since Svea an ake plac sinacoy lea tht te Cte path analysis al pet compton ine may bo ls then 25 west, Tondo jst Bow Tong the pret Shot te wl ke, ve perform the eral path analysis for he networkchapier ® Managing Prolecs 10 ‘etivty Description "Time (weeks) ‘Build intemal components 2 Modify roof ané floor Construct eolecion stack 2 Pour concrete and itll frame 4 Build igh temperature bumer 4 Jnstall polation contol system. 3 Tastl air poluion device 5 2 noumoae> ‘As nentioned earlier, the critical path is the longest time path through the network. To find the critical path, we calealate two distinet starting and ending times for each activity. These are defined as follows: Earliest start (BS) = eadliet time at which an activity can start, assuming all predecessors have been completed Earliest finish (ER) = eacliest ime at which an activity can be finished ‘Latest start (LS) ~ latest time at which an activity can start so as to not delay the completion time of the entire project atest time by which an activity has to finish soas to not delay ‘the completion time ofthe entire project We use a two-pass process, consisting of a forward pass and a backward pass, to determine these time schedules for each activity. The early start and finish times (ES and EF) are determined during the forward pass, The late start and finish times (LS and LF) are determined during the backward pass Latest fnish (LF) Forward Pass ‘To cletcly show the activity schedules on the project network, we use the notation shown in Figure 3.10. The ES of an sctvity is shown in the top left comer of the node denoting that actiy- ity. Tae BP is shown in the top right comer. The latest times, LS and LP, are shown in the bottom- left and bostom-right corners, respectively. Earliest Start Time Rule Bofore an activity can star, all its immediate predecessors must be finished: ‘+ Ifan activity has only a single immediate predecessor, its ES equals the EF ofthe predecessor. © fan activity has multiple immediate predecessors, its ES isthe maximum of all EF values of its predecessors. That i, ES = Max {BF of all immediate predecessors) ei Earliest Finish Rule The earliest finish time (EF) of an activity is the sum ofits earliest start time (ES) and its activity time. ‘Tht is, EF = BS + Activity time 02) Activity Name or Symbol Earlest Fins Latost Finch 25 ae srt os tt 25 arasuna.2 Time Estimate or iba Pager Masefactuing AUTHOR COMMENT Does is ean te pot el ak 25 et 0 ama? he, Doe oe hater ofthese ‘ebony pevtomed at weeks ey wee ane ‘sega ‘Forward pass ‘prose hatceies athe ar ties and backward passes for a project ‘RUTROR GoMmiENT ‘Aeedraca sets wb colts bore an sein beg aiguae 3.10 Notation Used in Hodes tor Forward and Bacouard Pass$02 SA4YF 4 Intoduetion o Operations Management EF of A= ES of C ES of A+2 EF ofA Activity Name es | ES = Max(EF of D, EF of E) Activity Max(7, 8) = 8 Duration Avrouna 3.11 Eales! St and Earliest Finish Times for Milwaukee Paper “Calculus ths cast tre and Bish times forthe aetvites in the Milwaukee Paper Manufacturing projet. Computing earliest APPROACH P Use Table 3.2, which contains the activity mes. Complete the project network for start and finish | the company’s projec, along with the BS and EP values for ll acvities, times for Milwaukee | Gouurrson > Withthe help of Figure 3.11, we describe how these values are called, Paper since aoivity Stat bas no predecessors, we bein by seting it ES to O. Thais, activity Star can begin time 0, which ste same asthe beginning of week 1. [activity Start hasan ES of 0, ts BF is also 0, sinc its activity the is 0. ‘Nest we consider etvties A and B, both of which have only Stat as an imunedite predecessor. Using te cata tart tire, he BS for both aces A and B equals 2r0, whichis the E of activity Start. ‘Now, using the eae finish time rle, the EP for Ais 2 (= 0-2), and the BF for Bis 3 (= 0+), ‘Since activity A precedes activity C. be ES of C equals the EF of A (=2). The BF of Cis therefore 46242) ‘We nowecome to activity D, Both activites A and Bare immediate predecessors for B. Whereas A hasan EF of 2, activity B hes an EF of 3 Using the earliest start time role, we compute the ES of activity Das follows: ESofD = Max(GF of A, BFof B) = Max(2,3) = 3 7 “The EF of D equals 7 (=3 44) Next, both activities B and F have activity C as their only immediate ‘prodos, Therefore, the ES for both Eand F equils 4 (= EF of C). The BF of Bis 8 (=4 +4) and Ihe EF of Fis7 +3). ‘Acthity G has both activities D and E as predecessors. Using the earliest start time rule its ES is thovefore te maximum ofthe EF of D andthe BF of E. Hence he ES of activity G equals 8 (= maxi- +9). ‘mum of7 and 8), and its EF equals 13Chapters Managing Projects 108 | ina ce wai Sint ato at eden Pani, he BY He me [Jum EF of thee wo actives, Tat, the BS of Hl equals 13 (= maxima a 13 and), This ples thatthe EF of His 15 (= 13+ 2). Since Hs te lat acti i the proj, his ls imps tat he er “is me in whit teenie project can be completed is 15 weeks. 5 BHSIGNT P. The BS ofan activity that has ont ae predecessor is simply te Ba that peices si For en activity wits mor than one predecesor, we mia cartel examine the Eis of ll immed | te predecestors and choot the largest oe, : x 1 [ EBAREUNG SxEROISE PA new activity 1 EPA Approval; takes 1 week, Iie predecessor activity B. Wht are PS ES and FF? fAnswer: 18,16) RELATED PROBLEMS P 311,3.14 [FACEL on Daa Fle ChsEst cn be owt mow. porengaeledons.somfize. Although the forward pass allows us to determine the earliest project completion time, it does | not identify the critical path, To identify this path, we need to now conduct the backward pass to determine the LS and LF values forall activities. Backward Pass Just as the forward pass began with the first activity in the project, the backward pass begins Backward pass with the last activity in the project. For each activity, we first determine its LF value, followed by Anat hat ideal he its LS value, The following two rules sre used inthis process, te stat ana ti rs. 7 Latest Finish Time Rule’ ‘This re is again based on the fact that before an activity can start, all its immediate predecessors must be fisished: * If'an activity is an immediate predecessor for just a single sctviy, its LF equals the LS of the activity that immediately follows i * Han activity is an immediate predecessor to more than one activity, is LF isthe minimum of all LS valves of all activities thet immediately follow it, Tat is H u Min(LS of all immediate following activities) 2) Latest Start Time Rule ‘The latest start time (LS) ofan activity is the difference of its latest, finish time (LF) and its activity tine, That is ea) ‘Calulate the letest start and finish times for cach activity in Mitwankee Papers pollution projec. ABPRDACIE DP Use Figure 3.11 ar x begining point Oveday 1 of Figure 311 shows the com> Computing latest ‘plot projet network for Mlwauhée Paper, slong with LS and LF valies fr ll actives, In what fol | gtart and finish Tons, we see how these values were calculate, ‘ | times for Milwaukee SOLAPTION We begin by espning an LF vale of 15 woos for ct H. Thats ve spec | Paper ‘hat the Ines finish ime forthe ene projec isthe same a its earliest inch ime. Using the latest stat time rule, the LS of sctvty Hs equal o 13 (= 15 ~2) i ‘Since activity H is he lone sucéeeding activity For both activities P and G, the LF for both Fand G ‘equals 13, This implies thatthe L$.0f G is 8 (= 13 ~), and the LS of Fis 10 (~ 13 ~ 3). Proceeding inthis fashion, we see tal the LF of Bis 8 (= LS of G), and lis LS is 4 ‘Likewise, he LF of Di 8 (= 1S of), and ts LSis 4(= § ~ 4). ‘Wenow consider activity C, which s an imodiatepredesessor to two activites: Band F. Using the ‘atest finish time rule, we compute the LF of ectivity C as follows: LF of C= Min(.S of F,LS of F) = Min(1, 10) = 4 ‘The LS of Cis computed as 2 (= 4“ 2). New, ve coniputs the LF of Bas 4 (= LS of D, an its LS as 14-3),404 PART 1 Introduction to Operations Management Slack time Foe tine for an sci. Teas Calculating slack times for Milwaukee Paper braBLE 9.2 iaukoe Papers Senate ‘and tack Times |. ve’ now consider activity A: We compute its LE as 2 (= minimum of LS of C and LS. ‘of D). Hence, the LS of activity Ais 0 (~ 2:~ 2). Finally, both the LE and LS of activity Star are qual 10, SGISIGECE The LF ofan activity that isthe predecessor of only one sctvity i just the LS of that following setvty, the activity is the predecessor fo more than ane activity, ts LE isthe smallest LS vyelue of al activities that follow immediately. LEARNING ENERGIE DA new activity 1, EPA Approval, takes 1 week. Its predecessor is activity H. What are PS LS and LE? (Arswer: 15,16) FELATED PROBLEMS D 4.11, 3.146, Calculating Slack Vime and identifying the Critical Path(s) ‘After we have computed the eatiest and Intest times forall activities, it isa simple matter to find the amount of stack time? that each activity has, Slack isthe length of time an setivty can be delayed without delaying the entire project. Mathematically Slack = L$ ~ BS or Slack = LF ~ EF 3) B Catculate the stack forthe ati isin the Milyaicee Paper projet APPROACH m Stact with he data in Overlay 1 of Figue 3.11 in Example 5 and develop Table 3.3, one lineata tine. SOLUTION Tible 33 summarizes the ES, ER LS, LE ad slack ime forall ofthe ir’ activi- ties, AciityB, for example; hs | esi of sack time snes ss | and is FSi O(liermativey is {Fe nds Eo) moar tat ety B ea be layed ap | wes ad te whole = oot ca sl be Gished in 15 weeks, Tarliet ‘Eavlest Latest Latest ‘On Start Finish =—=Start_—— Finish Slack Critical Activity __BS. EF. Ls LF _1S-ES__ Path a © 2 0 2 ° Yes B 9 3 1 4 1 No c 2 4 2 4 ° Yes D 3 7 4 5 1 No. E 4 s 4 8 ° Yes P 4 1 10 B 6 No G 5 B 8 B 9 Yes H B 15 1B 15 ° Yes On ihe other hind, activites, C, F, G, and have'no Slack tne, This means that none of them can. be delayed without delayiig the entice project: Conversely, if plant manager Joni ‘Steinberg wants to reduce the total project times, sho will have to reduee the length of one ofthese activities, s > Ovvay 2 of Figs 311 ahi the eck compe foreach a, aBtGHt > Stack may bo computed fom either erate at oc xo fishes, The key is ‘lad which activities have zo slack, Leaning: EXERCISE A ow scifi 1, EPH Approvals aii Hen takes { week {ston thecal path? (Anse: Ys, is LS — BS =O} SLATED PROBERES h 36,311,327 “ACTIVE MODEL 2. This eong ire usr che ost’ wm pacers mmr Sack ine ny sao be sof toa fre tn je lot, fe slackShapter 2 Managing Projects 108 ‘The activities with zero slack are called critical activites and are said to be on the critical path. LO. “The critical path isa continuous path through the project network that: path termine aerial Start a the first activity inthe project (Start in our example), Terminates at te last activity in the project (Hin our example), Includes only critical activities (ie, activities with no slack time), ‘Show Milwankee Papers citeal path ae find the project completion lime APPROACH D We nee Teble3.3 and Overiay 3 of Figure 3.11. Overlay 3 of Figure 3.11 indicates | Showing critical that ttl project completion ine of 15 wooks coresponds ote engest path ne network That | path with blue path Sian-A-CB-G-11 in petwork Form, shown va Bick Be rows antes BBISEGHET ‘The evita path follows te atviy with slace = 0. This is Considered the longest pat hough the ator 5 LEARNING EXERCISE» ny we actvides B,D, and F not onthe pal with he thick bles ‘line? (Answer: They are not critical and have slack values of 1, 1, and 6 weeks, respectively] WIGLAYED PROBLEMS h 33,34,35,3.6,37,9:12,9.A4o, 3.15 317,308 3224 323,326 Total Slack Time Look again a the project network in Overlay 3 of Figure 3.11. Consider activities B and D, which have slack of 1 week each. Does it mean that we can delay each activ. ity by 1 week, and still complete the project in 15 weeks? The answer is no. Let's assume that activity B is delayed by 1 week. It has used up its slack of 1 week and now has an EF of 4. This implies that activity D now has an BS of 4 and sn EF of 8, Note that these ate also its LS and LF values, respectively. That is, activity D also has no slack time now. Essentially, the slack of | week that activities B and D had is, for thet path, shared between ther. Delaying either activity by 1 week causes not only that activity, but also the other activity, to lose fs slack, This type of a slack time is referred to as total slack. Typically, when two or morencn- Total slack. critical activities appear successively in a path, they share total slack. Ti sta aorg mo an conway, VARIABILITY IN ACTIVITY TIMES ~<| rentoanty ohana | Jn identifying al eatost and latest mes so far, and the associated critical pths), we have | essai ach ‘opted the CPM approach of assuming that all activity times ere known and fixed constants, | gq git@ambles ‘Thats, there is no vaiailty in ectivity times, However, in practice its likely that activity com> | secanearte te poe ty ate ee pletion times vary depending on various factors. ‘To plan, monitor, and ‘control the huge number ‘of detalis involved in ‘sponsoring & rack festival attended by more than 100,000 fans, Hard Rook Cafe uses Mloroso® Project and the tools discussed inthis chapter. “The Viaoo Case Sty “Managing Hard Rock’s Rocket,” atthe end of the chapter, provides more details of the management task406 PART + tnrecueton to Operations Management Optimistic time ‘he est” actly completion time tat ould be tthed in PERT rework Pessimistic time ‘The “wort” acity in ha ‘od be eupeta na PERT tor Most likely time ‘The most praabl tie completa activity na PERT stork > riaune 202 Beta Probably Distribution with Thee Time Estimates FFor example, building internal components (activity A) for Milwaukee Paper Manufactaring is estimated to finish in 2 weeks. Cleat, factors such 2s late arrival of raw materials, absence of key peesonnel, and s0 on, could delay this activity, Suppose activity A actually ends up taking [weeks Since A is on the critical path, the entire project will now be delayed by 1 week to 16 weeks. If we had anticipated completion ofthis project in 15 weeks, we would obviously miss cour deadline. "Although some activities may be relatively less prone to delays, others could be extremely susceptible to delays. For example, setivity B (modify roof and floor) could be heavily dopendent on weather conditions. A spell of bad weather could significantly affect its com- pletion time, "Thi means that we cannot ignore the impact of vatiability inactivity times when deciding the schedule fora project, PERT addresses this issu. Three Time Estimates in PERT tn PERT, we employ a probability distribution based on thres time estimates for each activity, as follows: Optimistic time (a) = time an activity wil take if everything goes as planned. In estimating this valve, there should be only a small probability (Gay, 1/100) thatthe activity time will be b. ost realistic estimate ofthe time required to complete an activity, ossimistic time (5) ‘Most likely time (7) “When usiug PERT, we often assume that activity time estimates follow dhe bete probability dis tribution (see Figure 3.12). This continuous distribution is often appropriate for determining the expected value and variance for activity completion times. "fo find the expected activity me ¢, the beta distribution weights the three time estimates as follows: 1 (at 4m + D/O os ‘That i, the most likely tive (m) is given four times the weight asthe optimistic time (a) and pes- simistic time (6). The time estimate computed using Equation 3-6 for each activity is used in the project network to compute all earliest and latest times. "To compute the dispersion ot variance of activity completion time, we use the formula" Variance = [(b ~ «)/6}° on Probbity oft in 100 of accounting Probabiy oft in 100 of > boogung \ Atiy Time Opimate Most Like Possinistc Tene (@) Tine Time) ris froulaebasot o th satistal const that frm one end ofthe bes stbetion wo the others 6 tandaré ovalos U2} sand devicon ror the nan) Shoe (6) 6 standard deviations, the variance is (~ ehChapter 8 Menagng Projects 107 Joni Steinberg an the project managemeat (eam at Milwaukee Paper want an expected lime and vt ance for Activity F (Installing the Pollution Coatrl System) where: a weeks = 2 weeks, b= 9 weeks, APPROACH D Use Equations 3-6 and 3-76 compat the expected time and vatianice for F SOLUTION P The expected time for Activ Fis: g : at dmb b 14 4Q) 49.48 Sa Expected times and variances for Milwaukee Paper / i 9 vi -[f=y- ae ets [Se4P- (Beis HSUSIGHTT >. Steinberg now has infoanation tha slows her to understand and, LOS: Calculate the ‘The expected times, n fact the activity the used In our evtiercomputatcn abd idenicston of te | variance of activity times ‘tel path ‘KeaRNina EXERCISE p Reon the exponed ties and pales for ll of he her activin | tes inthe project. These ae shown in Teble 34 iow aivapie ae Optimise Likely Pessimistic Expected Time Tine Eines wea tae ees ee teiinaiee Popes jet at 2 3 2 (G-eP= 436 Bo 3 4 3 te-2ePe ae It — ee 8 Bee 4 6 4 (6-206) ~Tenias tate eo 4 2 4 (o-6p | Spun ctee? tie pees 2 8 3 Ww sot eer apt 63 son 3 ican ta pene be Hod 2 3 2 (= DOP = 4B6e ll RELATED PROBLEWS > 3.15,3.4,3.17ap, 3218 : "EXCEL OM Dt Feats cab est wan ensogltnestons. cma, oi We see here a ship being buat at the Hyun shipyard, Asia's largest shipbuider, in Korea. Managing this project uses the same teciiques as managing the remodeling ofa slore or intaling & new production ine4108 PART. Invedoton te Operations Management Computing project variance and standard deviation for Milwaukee Paper b FIGURE 3.12 Probability Distibutin for Projet Completion Times al Waukee Paper Probability of Project Completion ‘The critical path analysis helped ws determine that Milwaukee Paper's expected project comple tion time is 13 weeks. Joni Steinberg knows, however, tht there is significant variation in the time eatimates for several activities. Variation in activities that are on the critical path can affect the overall project completion time—possibly delaying it. This s one occurrence that worries the plant manager considerably. 'PERT uses the variance of critical path activites to help determine the variance ofthe overall project. Project variance is computed by summing variances of critical activities: a = Project variance = 3¢variances of activities on rtal pat) oa ‘alice Paper's manages now wish to hnow the projec variance and vandard deviation. [ APBROAGH Because the actvies ae independent, we can ad the variances ofthe sctvities 1 on the extcal path and then take the quare root to determine te project’ standard deviation @OEA7HON DH Feom Example § (Table 3.4), we have the variances of al of the activities on the “niin path: Specifically, we know thatthe variance of ativity i 0.11, vasiance of activity Cis 0.11, ‘aciance of activity Eis 1.00, vatiance of activity Ois 1.78 and variance of activity H 0.11 ‘Compt the tte projet variance and project standard deviation: ject variaicn(o) = O41 + O11 + 1.00-+ 1.28 + ON = 31 wh elie: Projet dan devon, VB vane = VSTT"= 1.76 weeks ENUGHEAETT m-Masageieat tow hasan estinais not only of expected completion time forte pro} cect also ofthe standard deviation ofthat estimate. me LinAROUING EXEAOSOED Iethe vstance fr activity Ais actualy 0.30 Gnstead of 0.11), what ig the new project standard deviation? [Answer L817.) - RELATED PRORLMD 3.17 rennin How can this information be used to help answer questions regarding the probability of finishing the project on time? PERT makes two more assumptions: (1) total project completion times follow a normal probability distribution, and (2) activity times are statistically independent. With these assumptions, the bell-shaped normal curve shown in Figure 3.13 can be used to represent project completion dates. This nocmal curve implies that theze i 850% chance that the manufac; turer's project completion time will be less than 15 weeks and a 50% chance that it will exceed 1S weeks. Standard Deaton = 1.76 Wks a 4 ans os (eye oreo TeChapter 3. Managing Projects 409 “oni Steinberg woul ike ofr te probability that her pres will be finshed or beter the 16 Sa ‘week EPA deni TP Probabitly of APPRGASHP To doso, she aeeds to determine the appropiate arca under the normal curve, This | completing a isthe area io the let of the U6 werk. project on time SOLUTION D The standard normal equation can be applied as follows: 2 (Due dete ~ Expected date of complotion)/o, 39) = (US weeks — 15 weeke)/1.76 weeks = 057 ‘whete Zs the nubs of standard devistons the de dt or tage dete ics fim he mea o expected dae ‘Refering todo Normal Table in Appendix I, we Mind a Z vale of 0.57 tothe tight ofthe mean indi cas probably of 07157 Ts, tes 71.57% hanes hat plan contol plpment ce | “AUTHOR COMRIENT | be putin plac in 16 weeks o les. This is shown in Figure 3.14 Helps chance revow your tte te twee tfsnomal ibn tbe (appen | 087 sianare Deviions ariqunn 3.14 Probability That Mibecukee Paper nil Meat he 16-Neok, Deatline IMESHOHET P The shaded aes tthe eof te 16h week (71 57%) represents te rosy ot the project wil be completed in less than 16 weeks LBAROGING EXEROISE P What is the probability that the project wil be completed on or before the 17th week? (Answer: About 87.2%) RELATED PROBLEMS D 314d, 3174, 321de, 322,324 Determining Project Completion Time for a Given Confidence Level Les say Joni Steinberg is worsied that there is only a 71,57% chance that the pollution control equipment can bbe putin place in 16 weeks or ess. She thinks that it may be possible to plead with the environ ‘meatal group for more time. However, before she approaches the group, she wants to arm herself with sufficient information about the project. Specifically, she wants to find the deadline by which she has a 99% chance of completing the project. She hopes to use her analysis to convince the group to agree to this extended deadline. ‘Clearly, this due date would be greater than 16 weeks. However, what i the exact value ofthis new due date? To answer this question, we again use the assumption that Milwaukee Paper’s project completion time follows « normal probability distribution with 2 mean of 15 weeks and a standard deviation of 1.76 weeks. ‘Joni Steinberg wants to find the doe date that gives her eompany's project a 99% chance of on-time ‘eompleion ‘ Computing APPROACH She fist nosis to compute the Z-valie comeapording to 99%, as shown is | probability for any Figure 3.15. Matera snr to Example 10, excep kon now Zraiertanike | Gormalatin date dhe de.ee oe 440° PART 1 Intredueton to Operations Managemen » FIGURE 18 Probably s ‘Dialuefor 9% Probably of0s9 ‘01 Projet Completion at es Iaukee Paper Probably SOLUTIODL Refecing agia to the Normal Table in Appendix i, we Meaty a Zvalue of 2.39 at betng lost tothe probably of 0.99. Thats Jon Steinber's du date shold be 2.39 stander devi- ce bows the mean project completion time, Saving withthe stendard nonma equatin (ee Ea tion 39), we can solve forthe due date and reat the equation a o ‘De date = Expected completion tine + @ X 0p) 2:0) : = 15 + (2.33 X 1.76) = 19.1 weeks Hasire bf Steinberg can get the environmental group fo agree to give lier a new deadline of 19.£ weeks (or more), se can be 99% sure of fnisbing the projexton time Lm Aginttie: EXEROISE P What due date gives the project a 95% chance of on-sime comple tion? [Answer About 17.9 weeks RELATED PROBLEMS PR 3.722, 3246 Variability in Completion Time of Noncritical Paths _ In our discussion so far, we have focused exclusively on the variability inthe completion times of activities on the ential path ‘This seems logical sine these activites are, by definition, the more important activities in # proj cat network. However, when there is variability in activity times, i¢ is important that we also investigate the variability inthe completion times of activities on noncritical paths. ‘Consider, for exemple, activity D in Milwaukee Paper's project. Recall from Overlay 3 in Figure 311 (in Example 7) tha this is a noncitca activity, witha stack time of 1 week. We Baye ‘hccfore not considered the variability in D's time in computing the probabilities of project com- pletion mes, We observe, however, that D has a variance of 04 (se Table 3.4 in Example 6) Jn fac, the pessimistic completion time for Dis 6 wecks. This means thet if D ends up taking ts pessimistic ime 1 finish, the projeat will not ish i 15 weeks, eventhough D isnot. eritcal activity Tor this reason, when we find probabilities of project completion times, it may be necessary {for us to not focus only on the critical path(s) Indeed, some research has suggested that expend. tng projet resources o reduce the variability of stivies not onthe etal path canbe an fe cae cfement in project management We may need also to compute these probabilities for toncitca paths, especially those that have relatively larg variances tis possible for a uonesi- seal path to have & smaller probity of completion within ade date, when compared with the {rtieal path. Determining the variance and probability of completion for noneritcal path 3s done in the same manner as Examples 9 and 10. What Project Management Has Provided So Far Project management techniques tare thus far been able to provide Joni Steinberg with several valuable pieces of management information: 4 The project’s expected completion date is 15 weeks. 2. There i 2 71.57% chance thatthe equipment will bein place within the 16-week dead ‘PERT analysis can easly find the probability of finishing by any dae Steinberg is interested in «gM Poblndit, TF Antony, RR. Hil, G Ulich, “A rec Look at Estimated Project Dutton: NonritealFats Tidy Contain wo Projo Variance in PERTICPM Proceeding fhe 203 Sones Decision cence Conference, Hovston.freee: ehaptor 3 Managing Projects 414 3, Five activites (A, C, E, G, and H) are on the critical path If any one of these is delayed for any reason, the entire project will be delayed. 4, Three activities (B, D, F) are not critical and have some slack time builtin, This means that Steinberg can borros' from thei resources, and, if necessary, she may be abe to speed up the whole project. 5. A detailed schedule of activity strting and ending dates, slack, and critical path activities has been made wveilable (see Table 3:3 in Example 6) COST-TIME TRADE-OFFS AND PROJECT CRASHING While managing « projec, it is not uncommon for a project manages to be faced with either (or both) of the following situations: (1) the project is behind schedule, and (2) the schediled proj- «ct completion time has been moved forward. In either situation, some or all of the remaining activities need to be speeded up (usualy by adding resources) to finish the project by the desired due date. The process by which we shorten the duration ofa project in the cheapest manner pos- sible is called project crashing, CPM is a techtique in which each activity has a normal or standard time that we use in our comaputations. Associated with this normal time is the normal cost of the activity. However, another time in project management is the crasit time, which is defined as the shortest duration required to complete an activity. Associated with zis crash ime is the crash cost of the activity Usually, we can shorten an activity by adding extra resources (e.g. equipment, people) to it Hence, itis logical for the erash cost ofan activity to be higher than its normal cost. ‘The amount by which an activity can be shortened (j.., the difference between its normal time and crash time) depends on the activity in question, We may not be able to shorten some sctvities at all. For exemple, if a casting needs to be heat-treated in the furnace for 48 hours, adding mote resources does not help shorten the time. In contrast, we may be able to shorten some activities significantly (e.g. frame a house in 3 days instead of 10 days by using throo times as many workers) Likewise, the cost of crashing (or shortening) an activity depends on the nature of the activity. ‘Managers are usuelly interested in speeding up a project at the east additional cost. Hence, wien choosing which activities to rash, and by how much, we noed to ensure the following: © The amount by which an activity is crashed i, in fact, permissible ‘© ‘Taken together, the shortened activity durations will enable us to finish the project by the dae date © ‘The total cost of crashing is as small as possible Crashing a project involves four steps: STEP 41 Compute the crash cost per week (or other time period) for each activity in the net- work. If crash costs are linear overtime, the following formula can he used (Crash cost ~ Normal cost) (Nomnal dime = Crash time) Crash cost per period ean STEP 2 Using the current activity times, find the critical path(s) ia the project network, entify the critical activites. If there is only one critical path, then select the activity on this critical path that (a) can still be crashed and (b) has the smallest crash cost per period. Crash this activity by one period, {Af there is more than one critical path, then select one activity from each critical ‘path such that (@) each selected activity can still be crashed and (b) the total erash cost per period of al seleced activities is the smallest. Crash each activity by one period. Note thatthe same activity may be common to more than one critical path ‘STEP 4: Update all activity times. Ifthe desired due date has been reached, stop. Ifnot, ren to Step 2 sTer ‘We illustrate project erashing in Example 12. ‘ROFHOR COMMENT Wen a teed to te shuren, ae want as ihe most acerca way hg Crashing Shortening acti tein rales reduce tothe tcl path so ttl cmipleton tines eouoed. 1.06 Crash projost442 ART 4 Inrodvetion to Operatone Management EEZAUTETESREE MSAD Sapp har atc Paps Matcarng to ban given only 1 went (stead ot 16 wel) | Project crashing fp | islsienew pole contol ccipeat or fae cere xed shutdown, Ax youreal, te eng ‘of Joni Steinbeg’s eitical path was 15 weeks, but she rust sow complete the project in 13 weeks. meet a deadline at Milwaukee Paper | appromcsi > siciaberg need to determine which sctivities to cash, td by how mach, fo mest this 13-wek de dite. Naturlly, Steinberg is iterested in speeding up the projec by 2 weeks, a the least additions eos. | ‘SOLU'TICAN P The company’s nora and crash times, and noma and crash costs, of shown i "Table3 5, Not, for example that activity B's noma time is 3 woeks (he exit sed in comping ‘he eiieal pet), end is crsh ine i 1 week. Ths means that activity B can be shortened by up 1 2 Weeks if ea resoutes are provided. Ths cost ofthese adtional resources it 8,000 (= difference | ‘ptveen the cash eos of $4,000 and the normal ost of $30,000). Ie sume that the crashing cost is linear ove te (i, the cot is the sae each weet), activity B's cash ost per week is $2,000 j $4,000?) ee > waBLE 3.5 Normal and Crash Data Time Weeks) _Cost(S)_ fortitwoabee Paper Crash Cost Critical anuacorag Activity Normal _Crash_Normat_Crash_per Week) _ Pat? A 2 1 2200 22,730 750 Yes 8 3 130,000 34000 2.000 No © 2 126,000 27,000 1.000 > 4 348,000 49,000 #000 No E 4 2 56000 58,000 1000 Yes e 3 2 30.000 30.500 500 No G 5 2 80,000 84.500 1.500 Yes Hl 2 116000 19.000 3,000 Yes a “Tals Gslolstion for Acuvity B is showa ia igure 3.16, Crash costs for all other ativities can be ‘compated ina similar asin. FIGURE 3.15 Act (rash and Hormal Times Cost and Goals for ality 8 2100 cosieek = Stash Cost Normal Cost cram? (Crash Cost W00K = mal Tana = Crash TMS Cosi $23,000 = $34,000 ~ $90,000 3 $32,000 = 90 = seooarweek 91,000 Normal $90,000 “ Noral” Cost 3 Tine (esis) Z 1 rast Tine Homal Tene ‘Steps2, 3, nd 4 can now be applied to reduce Milwaukee Paper's project completion time a min- Jam eogt We show the project network for Milwaukee Pape again n Figure 3.17 if saad isChapter 9 Managing Projects 113. tricuRe 3.17 ‘ric! Path and Stack Times for Mivaukoe Paper an ‘Siaok= 1 Slack = 0 Duration rent ile path hing ma es i Stat ACEH nyc Stair dan tering ec) Of ths tel ett sity A asthe lowest ach cost per west oF 950. Je Stenberg should therefore cash sity A by Tree fo ede the projet completion time to 1 ‘et, The cot an aonl $750 Nolet anvil A Canc cashed any tice has eich ise ii of 1 eek At his stag, the orginal pth StrA-C-E-GH ounng cca wit e completion ine of 14 ‘weeks Homever. ew pth Star-B-D-Geilin local ow, with a completion inc of 14 weeks Hence an fuer centing mst be dane tot ital pats (On ech ofthese cel pts, we ned to doy one sc shat cn tl bs cased We als “vat thot ent of ereshing an acy on each ath tobe he sales. We might be tepid 9s | iy pik tbe activites withthe sale rsh cot per period in each path I edi thi, we would Selec activity C fromthe path and acy Dos the sco pr. Th al eres cot won the 02,000 $1 00 + $1,000. Be that try Gs como o bts pas Thar i by esting att Gwe wil sia taneusresoe fe completion ne of th paths. Even thw gh th $1,500 srnh cost facil Ga ghee than hat for act Cad, we wonlé il eter ewhngG, sae the ttl cashing seat sell been S1 50D (nina wi th $000 we cash C and D) HOSSIGHT. To cs the project down to 13 weeks, tainberg should crash activity A by | week, ad activity © by 1 week. The tual aditenal cost willbe $2,250 (= $750 $1,500). This is important because maay contacts fr projects inelude bonuses or peas fr eal of late nihes. LEARNING EXERCISE ® Say the crash oot for ecivity B i $3,000 ins of $24,000 ow oes tia chine the aise? (Answer: no change.) RELATED PROBLEMS P 4.16,3.18,5.19,3.20,3.25 ES PTT Aca ce Leena | A CRITIQUE OF PERT AND CPM AAs a critique of our discussions of PERT, here are some of its features about which operations ‘managers need to be aware: my tecelae as str ‘as ullasvegts.s inprentto ave bth. Advantages 1. Especially useful when scheduling and controlling large projects. 2, Straightforward concept and not mathematically complex, 3. Graphical networks help highlight relationships among project activities. 4. Critical path and slack time analyses help pinpoint activities that need to be closely watched. 5, Project documentation and graphs point ont who is responsible for various activites. 6. Applicable to a wide variety of projects. 7. Useful in monitoring not only schedvles but costs as well A —114 PART. Inrodvoton to Operates Management OM im Actiow > Docklands Light Railway (DLR): A Vital Transport Link to Woolwich Arsenal ‘The Royal Artilery Barracks in Woolwich wil hold the ‘shooting events during tre London 2012 Olympic games. It wil accommodate up to 7,500 people per day, and the OLR extension will have a crucial roe in providing spectators with a fast, frequent, and reliable link between the Olympie Park and the equoetrian and shooting events. ‘Around 16 years before the Olympics in 20%2, DLR Lis. ‘commissioned consultants to study potential extensions to the existing DLA network. Ona ofthe main outcomes of the study wes the extonsion of the network toward Woobwich ‘Arsenal, with the folowing alms: ‘© Aseiotng in @ sustainable shit from car to pubbe transportation by Improving the acoesstblty for the ‘communities of Woolwich, Silvertown, and North ‘Woolwich and by providing an alternative River Thames ‘rossing DLR service: + Providing a new direct ral connaction from Woolwich to the oy, Canary Wharf, and London City Airport that wil ‘enhance aocess to jobs and amenities; + Boing the catalyet for substantial regeneration of Wookwich ‘and the Souther Foyal Docks and helping bring news jobs, homes, shops, and leisure facie to those areas. Prior to 2000, DLR Lis. developed an intial feesible ‘engineering elighment for @ OLA extension to Woolwich ‘Arsenal Detals ofthe project, up tothe level required for a transport and works act application, were developed next ‘Woolwich Arsenal Rall Enterprises-a joint venture of AMEC ple and tho Foyal Bank ot Scotiand—was contracted to design, build, finance, and maintain the project, Construction began in June 2008. “To allow trains to run in hoth directions, the project ‘considered driving two tunnels under the River Thames. ‘The tunnels were completed on time, and the 540-tonne boring machine broke through the earth south of the: ‘Thames in July 2007, It removed about 104,000 cubic eters of material—enough to fill around 2,000 buses. (On October 25, 2008, the fis test tains ran on the extension ral, This was followed up with further tests that ‘simulated an operational service. All esis were completed ‘successfully, and the station was opened on January 10, 2009, around two months ahead ofthe scheduled contract. “The DLR Woohwich Arsenal station is now open, with trains running at least every 10 minutes to and trom ‘Woolwich Arsenal, linking to tne rest of the London. Underground. ‘The sucoesstul DLR extension Is an example of appropriate projact planning, control, and management that met all deadlines—ahead of schedule, Sources Deans Lt aty—Deveepal rjc acon at Iitpdensienetronaknx.ap Limitations 1. Project activites have to be clearly defined, independent, and stable in thet retationships. 2. Precedence relationships must be specified and networked together. 3. Tite estimates tend to be subjective and are subject to fudging by managers who fear the dangers of being overly optimistic or not pessimistic enough, 4, There isthe inherent danger of placing too much emphasis on the longest, or critical, path [Nenr-critcel paths need to be monitored closely as well Now at you underside ‘erie PERT an OP, You ae maser is tell progam, veg ‘oh iar ges ou a eget oer he fai USING MICROSOFT PROJECT TO MANAGE PROJECTS ‘The approaches discussed so far ae effective for managing small projects. However, for large cor complex projects, specialized project management software is much preferred. In this sec- tion, we provide a brief introduction to the most popular example of such specialized soft ‘ware, Microsoft Project. A time-limited version of Microsoft Project may be requested with this text, “Microsoft Project is extremely useful in drawing project networks, identifying the project schedule, and managing project costs and other resources, Entering Data Let us again consider the Milwaukee Paper Manufacturing project. Recall that , this peoject has eight activities (repeated in the margin on page 115). The first step isto define the activities and their precedence selationships. To do so, we select Fie|New to open a blank project, ‘We type the project stat date (as July 1), then enter all activity information (see Program 3.1). For ‘each activity (or task, as Microsoft Project calls it), we fil in the name and duration, The descrip- tion ofthe activity is also placed in the Task Name column in Program 3.1. As we enter activities, and durations, the software automatically inserts start and finish dates. “The next step isto define precedence relationships between these activities. To do so, we enter the relevant activity numbers (e.g, 1,2) in the Predecessors column,Sheplers Manages Prects 145 ee roe ea a na aa OSES SQ s/t Bo) o/Ole eee COG) mew ES Boe 6 Ay tonsa re rie £0 ile Slated ‘alerts aaa Sa |r re “A biliberwonsimis vie! Fiadt Fide Suivayrent Sos Sie Pali — za carat vin dick 2a in ie raza Per conse iar” eens" Fre @ 12 °F pashahiesptarr vin hun Buy, Fr dun 28 ipl etl”! ugt Prd t0 8 ‘ute poten deve | Sis Man y28) Flsens0 43 epee et Dike ented Fons €7 Gant chert {Project wish on view (Friday 10/16 AWPROGRAG 3.4 Ganil Chart in Mleosa Project fr Mihvauk Paper Manutacuring Viewing the Project Schedule When all links have been defined, the complete project Milwaukee Paper Co. schedule can be viewed as a Gantt chart. We can also select View|Network Diagram to view Activities the schedule asa project nctwork (shown in Program 3.2). The critical path is shown in red on the screen in the network diagram. We can click on any of the activites inthe project network to view details ofthe activities. Likewise, wo can easly add or remove activities from the proj- ect network. Each time we do s0, Microsoft Project automatically updates all start dates, finish dates, and the critical path(s). If desired, we can manually change the layout of the network (eg, reposition setvities) by changing the options in #ormas|Layont, ata pa Clik say tome details regerding the sci. wiper at ee Ciel path ond aavites (A.C, Gand H) ave shown inved16 PART 4 introduction 1 Operations Management Using PERTIOPM, Taco Bell uit and opened this fastfood restaurant in Compton, California, in Just 2 days! Typical, 2 months are needed tw accomplish such fa tak, Good project management means & {aster revenue stream instead of money tod up in construction, Pollution Project Percentage Completed nommoae> Programs 3.1 and 3.2 show that if Milwaukee Paper’s project stats July 1, itcan be finished ‘on October Ld, The stat and finish dates forall activities are also clearly identified. Project man- fgement software, we see, can greatly simplify the scheduling procedures discussed earlier in this chapter. PERT Analysis Miccosoft Project does not perform the PERT probability caleulatfons discussed in Examples 10 and L1. However, by clicking YienTootbars|PERY Analysis, we ‘can get Microsoft Project to allow us to enter optimistic, most likely, and pessimistic times for tach activity. We can then choose to view Gantt charts based on any of these three times for each activity ‘Tracking the Time Status of a Project Pethaps the biggest advantage of using software © manage projects is that it can tack the progress ofthe project, In this regard, Microsoft Project hhas many features available to track individual activities in terms of time, cost, resource Usage, and so on ‘An easy way 10 tack the time progress of tasks isto enter the percent of work completed for each task, One way to do so is to double-click on any activity inthe Task Name column in Program 3.1. A window is displayed that allows us to enter the percent of work completed for each task. “The table in the margin provides data regarding the percent of each of Milwaukee Paper's sctvities as of today. (Asstme that today is Friday, August 12, ic. the end of the sixth week of the project schedule.) ‘As shown in Program 3.3, the Gantt chart immediately reflects this updated information by drawing a tick line within each activity’s bas. The Length of this line is proportional to the pes- cent of that aetivity’s work that has been completed. How do we kaow if we are on schedule? Notice that there is a vertical line shows on the Gantt chart corresponding to today's date, Microsoft Project will automatically move this fine to correspond with the current date, Ifthe project is on schedule, we should sce all bars to the left of today’s lin indicate that they have been completed, For example, Program 3.3 shows that activities A, B, and C ate on schedule, In contrast, activities D, E, and F appear to be behind Schedule. These activitics need to be investigated further to determine the reason for the delay. ‘This type of easy visual information is what makes such software 90 useful in practice for proj fect management ‘We encourage you (0 load the copy of Microsoft Project that may be ordered with your text nd to create a project network for work you are currently doing. Serer ions(Crackin cans | | sci is 100% complet, jor. Chapters Menagng Projects 497 Bar indicates activity process. Thy biaeterionorete PF, Batt BEY comms” ae! eat Eblanpirenew i apt [Retiviy Fis behind | schedule, ane APROGRA 8.9. Taking Projet Progress in iersoR Projest [setiies D and E "ihe he inciewor or soday's date ug. 12). CHAPTER SUMMARY PERT, CPM, and other schediling techniques have proven to be valuable tools in controlling large and complex projects With these tools, managers understand the status ofeach activ ity and know which activities ae critical and which have slack; in addition, they know where crashing makes the most sense. Projects are segmented into discrete activities, and specific resources are identified. This allows project managers to respond aggressively to global competition. Effective project management also allows firms to create products and services for global markets. As with Microsoft Project illustrated i Key Terms chapter, a wide variety of software pack- ages are available to help managers han- dle notwork modeling problems. PERT and CPM do not, however, solve all the project scheduling and man- agement problems. Good management prac- tices, clear responsibilities for tasks, and straightforward and timely reporting systems are also needed. It is important to remember that the models we described in this chapter are ‘only tools to help managers make better decisions. Projet oxganizstion (p90) Work breakdown structure (WBS) [p 2) Gantt chats (0.98) Program evalation and review technique (PERT fp. 98) Ceitca path method (CPM) (98) Ctea path (6. 88) (eile Ib (Canancs ‘Actvity-on-node (AON) (p. 88) Activity-on-arrow (AOA) (p05) Dummy activity (£0) CCiticl path snalysis(p. 100) Forward pas (p. 101) Backward pass (p.108) Slack time (ip. 108) “ota lack (195) Opsiisti tie (p.108) Pessinste tae (p 108) Most likely te (p18) Caashing (. 110) ‘Two examples of massively mismanaged projects axe TAURUS and the “Big Dig” The fist formally called the Landon Sock Exchange Automation Project, cost $575 milion before it was finaly sban doved. Although mos IT projects have a eputation for cost over: runs, delays, and underperformance, TAURUS oet «new standard ‘But even TAURUS pale next the biggest, mest expensive pub lic works project in U.S. history—Boston’s 15-year-long Central Artery/Tunnel Project. Called the Big Dig, this was perhaps the Poorest and most felonious case of project mismanagemest in decades. From a starting $2 billion budge toa final pice tg of $15 bila, the Big Dig cost more than the Panama Canal, Hoover Dam, ‘or Interstate 95, the 1,919-mile highway berween Maine and Five, Read about oneof these vo projects (or another of your choice) and explain why it faced such problems. How and hy do project managers allow euch massive endeavors to fall into such a state? Wat do you think ae the causes?418 PART 4 tnxeducton to Operations Management 4. Give an example of situation in which project management is needed Explain the purpose of project organization ‘What are the three phases involved in the management of large project? ‘What are some of the questions that can be answered with PERT and CPM? Define work breakdown structure. How is it used? What isthe use of Gantt chats i project management? What isthe difference between an activity-on-arrow (BOA) setworke and an activty-on-tode (AON) network? Which spi= sasly used in his caper? ‘What i he significance of the cxitcl path? ‘What woulda project manager have to do to crash an activity? Describe how expected activity times and variances can be ‘cermputed in a PERT nervork. Define early start early finish, late fash, and lot stort times. see e Using Software to Solve Project Management Problems to the Microsot Project softwace jut lustre, both Excel OM and POM for Windows are ‘lable to readers ofthis toxt as pect management tools. * nade BE Using Excel OM ctivities sth thee ten estimates. > PROBRAN 3.4 Excel O's Use o taken Paper Wanutatsiags Data ‘eam Examples 4 an 3 [Excel OM has # Projest Schedoling module. Program 3:4 wes the data from the Milwaukeo Popet “Manufacturing example inthis chapter (See Bxeimples 4 and 5). The PERT/CEM analysis also handles 1. eer the tak arian, he nares ofthe [5 precedence. Ba crc tate pracedanca sae] ames math tha asknanes 12, Students ate sometimes confused by the concept of critical path, and wat to believe tht it isthe shortest path through a ‘network. Convincinghy explain why this is nots. ‘What are dummy activites? Why are they used in atvity-on- axroxe (AOA) project networis? 1. What ao the thee time estimates used with PERT? 5. Would a project manager ever consider crashing a noncritical activity ima projet network? Bxplain convincingly How isthe variance of the total project compated in PERT? Describe the meaning of slack, and discuss how i¢caa be deter. mined. . How ean we determine the probability that a project will be ‘completed by a certain date? What assutmptions are made in ‘his computation? ). Name sorie ofthe widely used project management software programs. | 3B. Exp rats the nasimom ofthe cemputaters baton Tae snr elt ih rar belo noe the teins ae hes depend on he aos at precage te gn ase Tho at ih Bovcrhet ofthe dapandoncie §® Using POM for Windows POM for Window's Project Seedling modal en slo Sd the expected projet completion dof {CPM end PERT network wi ett ope or te ine estimates, POM fr Windows also performs ‘fet ring, Fo furtierdtas eer to Append IV an anChanter 2 Managing Projects 419 Solved Problems viral once Hours bep is ratabieat wer.pearcongloaeatonscomnyomlab v SOLVED PROBLEM 3.1 CConstrut zn AON netic based onthe flloning: Trnmediate Activity Predeceson(s) A = B = © = D E SOLVED PROBLEM 3.2 Insert « dammy activity and event to comrect the following AGA netwerk V SOLVED PROBLEM 2.3 CCalclate the erica path project completion time, and project varlance o, based oa the following AON netwerk information: ‘Actvig me Variance ES EFS LF A 2 3 0 202.0 B38 Fa a Ca 2 $82 ea ao p44 Ey ly Ee B44 8 4 80 Pos bo 47 wuts. 6 i ott gente tisha Y soLuTION Since we eaunot bave two activities ataeting and ending st tho same node, we add the following dummy activity and dummy ‘event to citin the corect ADA network: fee vm) EY : ‘veouurion ‘We conclude thatthe cca path is Star-A-CE-G-ind. Total pojectine = T72424445= 13 4y 6 Sincrontectatpan «2444 2+ 4 6420 BART 4 Invedloton to Operations Management ‘y'sOLVED PROBLEM 9.4 “To.completé tie wing astembly for an experimental dior, Jim. Gilbert has fad out the seven major activities involved. These activites have been labeled A through G inthe following table, “which algo shows ther estimated completo simes (in woeks) and ‘mmesiats predecessors. Determine the expected time and var- ance foreach avy: mediate Activity. a mb Predecessors 4 1 2 3 i B 2 3 4 ~ © 4 5 6 A D 8 > 0 B EB 2 5 8 op F 4 5 6 D o 1 2 3 E SOLVED PROBLEM 3.5 Referring to Solved Problem 3:4, now fim Gilbert would ike to ‘eteraine the tical path for the entice wing dsembly project ab ‘wel asthe expected completion time forthe total project. In ad tion, he webld like to determine the earliest and latest stat and fin jah dee focal sii. y SOLUTION ‘The AON network for Gilbert's project is shown in Figure 3.18, [Note that this project bas multiple activities (A and B) with no immediate predecsscors, and multiple activities (F and G) with no successors. Hence, in addition to a unique stating activity (tar), we have included s unique finishing activity (Bod) forthe project. Figure .18 shows the evlost and latest tines fr all ties. The results are also seramarized inte fllowing table: > Foume 3.12 “Critical Path for Solved Problem 3.5 . Dury Staring ‘oy VsoLuTION Expected ties and variances can be computed using Equations (6-6) and (3-7) presented on page 106 inthis chapter. The eras ‘are summarized in the following table: "Bipeted Tine Activity "Gnwenis) Variance A 2 4 B 3 7 c 5 : > > 7 5 5 i F 5 : s 2 : aay ime Activity 357 EF__—S sack Ae a ep TS Boe a OO Co at ia ws Do. 3 ml 3. moO Bo ogo mo oO Pom 6 7 BT Bo Sxpeced pj length = 19 weeks Variance ofthe erties! path = 1.333 Standard devition ofthe eideal path = 1.155 weeks ‘The activities along the ertcal path are B, D, E, and G. These testes have zero slack as shown inthe table. amin Ending ‘seityY SOLVED PROBLEM 3.6 ‘The following information has been computed from 8 projet Expected total pojecttime i T = 62 weeks Project variance (o8) = 82 ‘Whats the probability tha the project wil be completed 18 weeks before its expected completion date? vsouuTion ‘The desi completion date is 18 wosks Defoe he expected com pletion date, 62 Weeks. The éesived completion date i 44 (or (6218) weeks op = V Projet variance Due date ~ Expected compl date ‘The norma curve appears as follows: Y soLVED PROBLEM 3.7 Determine the least cost of reducing the project completion date bby3 months based onthe following information: . “eh = O-O- ut Normmal Crash ‘Time ‘Time Normal Crash ‘Activity (months) (months) __Cost Cost a 6 4 $2,000. $2,400 B 7 5 3.000 3,500 © 7 6 40001300 D 6 4 2000 2,600 E 9 8 8500 9,000 Y souurion ‘Te first sep in this problem isto compute ES, ER, LS, LE, and sack for each activity Activity ES ER US OLE Slack. 0 6 eB 8 o 7 0.7... 0 6 Bow 2 8 7 6 7 0 B 2 Bm Oo Shepter 8 Managing Prats 124 Due date=4¢ T= 62 Decasse the normal curve is syrametseal and table values are Calelated for postive values of Z, the tea desired is equal to 1 = (able value) For Z = +20, the aea from the wble is 97725 ‘Thus, he area corresponding to aZ value of -2.05s 02775 (oc = 97725). Hence, she probability of completing the project 18 ‘weeks before the expected completion dat is approximataly 023, or 23%, ‘The cttical path consists of activites B, D, and. "Next, rash cor/moath must be computed foreach activity Normal Crash Cost— Crash ‘Time- "Normal Cost) Critical Activity Crash Time Cost __Month__Path? A 2 $400 $200mont No 5 2 300° 250/month Yes c 1 300 200manth Ne D 2 600. 300/momtb Yes EB 1 200 200momth Yes Finally, we wil select that activity onthe etical path with the ‘smallest crash Cosvinonb, This i activity B. Thus, we ean reduce the total project completion date by 1 month for an adationl cost, ‘of $200, We sill nood to rede the projestcomplaton dato by 2 ‘ore ments. This eduction canbe achieved atleast cost along the citcl path by reducing aeiviy B by 2 months for an addtional ‘ost of $500, Neither eduction hes an effect on novertcal atv ties, This solution is suromarized in the folloving table ‘Activity ‘Months Reduced zB 1 $200 B 2 200 ‘Toval: 3700422 BORI4 tntesucton to Operations Management Probiems* + 34 The work breakdown structure for building a bouse (evels | and) is shown below: (ete) [seo] [Seem] [ents] [ene 1) Add two lovel3 activities to exch ofthe Jevel-2 activities o pro vide more det to the WBS, by Select one of your level-3 activites and add to level activi ties below it s+ 9.2 Robest Melford has decided to num for 2 seat a5 ‘Congressman fom the House of Representative distict 3 in Califo "eviews hs mom campaign fr ofice as amajce project and wishes tocreate a work beakiown sructare (WS) 1 help conto he dette scheduling So fi, he hts developed the fllowing pices ofthe WBS: Tevet Level No. Actvity 10 Develop politcal campaign AL Fund-raising plan 12 Develop «postion oa major issues ran H Stating for campaign en Help Mr, Mettord by providing details where the blank lines appear. Are there anyother major (level-2} activites to create? f 0, tek en ID no, 1.6 sn noe them + a3 Draw the activity-on-node (AON) project network ‘associated with the following activites for Dave Cashat’s consul- ing company projet. How long should it take Dave and his team to coroplee this project? What are the eiical path activites? Tionediate Tine Activity Predecessor) ___(davs) a = 3 B A 4 c, a 6 D 3 6 z B 4 F c 4 6 D 6 H F a Re ote: Pc maa the probes may be solved ith FOM for Windows sncloe Bet OM +84 Given the activities whose sequence is describe by the following table daw the appropeateacivity-on-arow (AOA) net svork dagen, 8) Which activities ae onthe eal path? 'b) What ise length ofthe eitical path? Tramediate Time Activity Predecessor) days) A = 3 B A 2 c A 4 D B 5 E B 5 F © 5 6 EF 2 B D 3 i GH 5 PK +345 Using AOA, diagram the networks described below for Sarah MleComb’s construction project. Catalate it eltieal path iow fong is de salnimum duration ofthis netwook? ++ 3.6 Shey Hopkins i developing a program in leadership traning for mid-level managers. Shisley has listed a number of tectivtes that mnst be completed before a uaining program ofthis ature eoald be conducted, The activites, immediate predecessor, fand times sppeat inthe aecompanying table immediate ‘Activity _Predecessori)_‘Time (ays) ‘a 7 2 B 5 c = 1 D B 10 E AD 3 F c 6 G BE. 8 8) Develop an AON network for this problem. 1) What it the xitest path? ©) What sche total project completion time? 4) What is the slack time foreach individual activity? Pe ‘3.7 Tas te estimates fora production line setup project at Robert Klassen’s Ontario factory ae as follows a ‘Time Gnhours) __Predecessors 4a 60 RB 72 oe © 50 A D 60 Be E 45 B,C F 7 D 3 40 BEChapter S Managing Projects 123, Table for 3.8 “Time Timmediate Code Activity Deseription (a bos) Predecessor(s) A Planning Find lation; determine resource equiemeais 20 None B Purchasing Requisition of umber and sand 6 Planning © Excavation Dig ara grade 100 Planning D Sev lumber into appropriate sizes 0 Purchasing 5 Position lumber in contest locations 2 Sawing, excavation F Nail umber together 0 Placement a Pot sand in and under the equipment » Assembly H Put dit around the equipment 0 Assembly 1 Decoration Put grass all over the gud, landscape, paint 20 Inf, oul Problem 3:7 (continued) 4) Drow the project network using AON. 1) Identify the erica path ) What is the expected project length? 4) Draw ¢ Gant char forthe projet. ++ 3:8 The City Commission of Nashville has decided to build a botanical garden and pinie area inthe heart of the city for the recreation ofits citizens The precedence table forall the alive ties required wo construct this area successfull is piven onthe top of| this page. Draw the Gant char forthe whole constuction activity. s+ 3,9 Referto the table in Problem 3.8 2) Draw the AON network fr the construction ati. ) Draw the AOA network lor the construction activity + 3:40 The activities needed to build an experimental chemical A 3 8 u E Be t ° i e > 2 3 6 c D 1 7 a a EF 4 4 6 t as ' 6 a 1 t 2 5 7 K 1 5 ° un L 5 2 4 6 Mw K t 2 3 N Lu 6 8 soe ‘++ 3.23 Dream Team Produetions «firm hised to coordinate the release ofthe movie Paycheck (staring Uma Tharman and Ben ‘Alek), identified 16 activites to be completed before the rlence ofthe fila 28) How many weeks in advance ofthe film release should Dream ‘Team have stared is marketing campaigo? What isthe cial path? The task (in time nits of weeks} area follows: chapters Managing Projects 128 ‘Biost Immediate Optimistic Likely Pessimistic Activity Predecessors ‘Time Time __Time a = r 2 ‘ 5 = 3 35 4 c - 10 2 1B D - 4 5 7 E ~ 2 4 5 F A 6 7 8 6 B 2 4 55 H c 5 7 5 I c 90 2 I c 2 4 5 K D 2 4 6 L E 2 4 6 M Ran 5 6 65 N LKL 1 ul 2 ° 1M 5 7 8 P x 5 1 3 1) BF acts I and J were not necessary, wit impact would this have on the erica path and the number of weeks needed £9 compete the marketing campaign? Fc 8.24 Using PERT, Harold Beason was ablo to determine thatthe expected project completion time forthe construction of & pleasure yacht is 21 months, nd the project valance i 4 8) What iste protablty thatthe project wil be completed in 17 months? 1) What isthe probability thatthe projec wil be completed in 20 months? ) What is the probability thatthe project willbe completed in 23 months? 4) What is te probability thatthe project wil be completed in 25 months? ©) Whats the de date that yells a 95% chance of completion? Fy s+ 3,28 Bolling Electronice menufecares DVD players for ‘commercial use. W. Blaker Bolling, president of Bolling Electronics, is contemplating producing DVD player for home use. The activie426 PAIY 4 Intoduetion ts Operations Managem=nt ties necessary fo build an expesimental mode) and related dat ore ven inthe following abe: — ‘Normal Cra ‘Time Time Normal Crash Immediate ecks) _(esks) Cost )_Cost($)_ Predecessor zo 2 Lato (000 7" 1 2000 2,700 a 130300 — 73 1300 L680 a 6 3 0 Lom 2 2 1 4900 5000 © 421309 2000 1) Whats the projet completion date? 1b) Cinsh this project 10 weeks a the least cost «) Crash tia projet to 7 weeks (which isthe maximum i can be cashed) at the Feast cost. Fe c++ 8.26 The Maser is a new custom-designed sports cet. At ‘alysis ofthe task of building the Maser reveals the following ist of relevant activities, thse iamodite predecessors, and their uration Normal Job Iramediate Time Letter Description Predlecessors) —_(@ays)_ A Start 0 B Design A 8 © Order special accessors. = B oa D Build fame B 1 E Build doors B 1 F Attach axles, wheels, D L ‘gas tank. “Sources ames A.D, Stone and Charles Wank, Afenagement, 3 et (pper Sad Rr I: Penis Hall): 195, Case Studies > Southwestern University: (A)* ‘Southwestern University (SWU), a large sate college in Stephenville, “Texas, 30 res soutiest of the Dallas/Fort Worth metroplex entols close t> 20,000 student. In atypical town-gown relationship, the ‘Schoolisa dominant force in the sll iy, with more students doting fal and spring than permanent residents “A longline football powerhouse, SWU is a member ofthe Big leven conference and is usualy inthe top 20 in cotege football raukings. To bolster Its chances of reaching the elusive and leng- Gesired number-one ranking i 2003, SWU hired the legendary Bo Fitemo a its besd coach sthiintgsted dy vas ooghout te text. Oe ses faxing Southwest's otal xpusion inclu B) frosting gene sea Normat Sob ‘Time Letter _Deseription Predecessor(s) (das) Build body shelt B 2 H Build emsmiscion and B 3 cvewain 1 Fitdoors bodyshell OE 1 J Build engine B 4 K Benches engine 5 2 1 Assemble chassis BELK 1 M — Roadstest chassis L os N Paint body t 2 © Install wiring N 1 P Tosa interior N 1s Q— Anveptelivesy of c 5 special accesories R Mount body and M,0,2.Q 1 chassis Sond test car R 05 T — Attachexterir tim s 1 u__ Fish T ° 8) Draw a network diagram forthe projec. 1b) Mak the eiical path and state its length } Ifthe Maser had tobe completed days earlier, would ithelp to: {) Buy pressterabled wansmissions and dtivetrains? 4i) Install robots to belve engine-bilding time? ii) Speed delivery of special acessories by 3 days? 48) How inightresoarces be borowed from activities onthe nonest jeal path to speed activities onthe ritieal path? sc D> Refer to ifiyucish © for these additionat homework problems: 327-333 One of Pittero's demands on joining SWU hat! been a nese stadiam, With atendance increasing, SWU administrators began to face the issue head-on Afi 6 months of tody, mach politeal arma ‘wrealing, and some serious financial analysis, Dr. Joel Wishes, president of Southwestern University, had reached a deeision 1 “xpi the capacity a ite on-campus tad, ‘Adding thousands of seats, including, dozens of huxucy skybones, would not pleste everyone. The influential Pitter had Aacqued the need for afrtclss stadium, one with built-in dormitory rooms for his players and a palatial office appropriate forthe coach (Chapter (© uals fass(ehaper (0 beaiceven analy for fod eves Supplement 7 Web te) (E) Icstonof the now sadium (Chap & Web st) (Gy venton planing of otha prog (Chapter [2 Web sit) and (G) scheduling of canpus etc otc fr sae days (Chapter 18)'V VABLE 3. Southwest University Project wapter 9 Managing Projects 297 Tine Estimates (ays) ‘Most Crash Activity _ Description Predecessor(s) Optimistic Likely _ Pessimistic Cost/Day ‘A Bonding, inswance, tx suctring 7 20 0 40 $1,500 B Foundsiion, coneceto footings for boxes A 20 6 80 3500 Upgrading shybox staciam seating A 30 © 100 000 D Upgrading walkways, stairwells, elovators © 0 50 B—_Interior wiring, lathes B 25 30 F Inspection approvals E on ou G Plumbing DF 3 30 Ho Paining 6 10 20 C Hlardvare/AC/metal workings q 20 25 1 ‘Tilefcarpevvindows H 8 10 K Inspection I on ou Lina detail workietesnup LK 2 25 fof future NCAA champion tar. But the decision was made, and ‘everyone, incloding th coach, woul arnt live with it ‘The job now was to get Construction going immedistely after the 2009 season ended. Tis would allow exactly 270 days until the 2010 season opening game. The contrctor, Hill Conszuction (Bob Hill being an slamnos, of course, signed his contact, Bob Hl Tooked at ite tasks his engineers had outlined ant looked President ‘Wisner in the eye. “ guarantee the team willbe able totale the field on schedule next year” he said wits a senso of confidence. "I ‘sure hope so" replied Wisner. "The contrec penalty of $10,000 per ey for runing late is nosing compared to what Coach Piterno ‘will do to you if our opening game with Penn State is delayed ce canceled” Hil, sweating slightly, didnot need to respond. In Foot- ball-crazy Texas, Hill Construction would be mud if the 270-day target was missed ‘Back in his office, Hil again reviowed the data (see Table 3.6) ‘and noted that optimistic ime estimates en be vse as erah times He then gathered his foremen. “Folks, if wee not 75% sure we'll, finish his stam ines than 270 days, want this project crashed! Give me te cot figures fr a target date of 250 days—alao for 240 days. wart tobe ea, nt just on time!” Discussion Questions 1. Develop «network desing for Hill Constuction and determine the rita path, How long is the project expected to take? 2. Whats the probability of finishing in 70 days? 3, If itis necessary to erash to 250 or 240 days, how would Hill do 0, and at whal costs? As noted in the case, assume that opti mise time estimates can be used 2s crash ties > Project Management at Arnold Palmer Hospital ‘The equivalent of a new kindergarten class is born every day at Orlando's Amold Palmer Hospital. With more than 12,300 bic in 2005 in a hospital that was designed in 1989 fora capacity of 6,500 births a year, the newhom intensive care unit was stretched tothe imit. Moreover, with continuing strong population growth in o2n- teal Florida, the hospital was often ful It was clear that new fseil- ties were neded. After much analysis, forecasting, and discussion, the management team decided to build a new 273-bed building cro he sieet from the existing hospital. But he faiity had to be builtin accordance with the hospital's Guiding Principles and is uniqueness asa health center deicsted tothe specialized needs of ‘women and infants, Those Guiding Pineples are: Family-centored focus, a healing environment where privacy and dignity are respected. sanctuary of caring that includes warm, serene Sur- roundings with nacural lighting, sincere and dedicated staf provid. ing the highest quality eave, and pationt- centered low and fretion, The vice president of business development, Karl Hodges, ‘wanted 3 hospital that was designed from the inside out by the Video Case gs eople who undertod he Guiding Principles, who knew /d Thos boat te cmon yet, and who ere gong ose the new system, namely, the doctors and muses. Hodges nd his tt spent 13 months discussing expansion needs with this up, a8 well ac with paints ad the sommnity before develop ig pes fr he ne ty on Dee 7201. a nse team created 38 wr groups, which held over 1.60 Dlaming mess (ang ra #8 hones wl a) They oven rete a “Supreme Court” to deal with conflting views on the molfaeted issues facing the new hospital. Funding sn egulstory issues added subtantal complesity to this major expansion, and Hodges was very concerned that he project stay on time and within budget. Tom Biya, director of facility development, was gen the task of onsite manager ofthe $100 milion project, madition to overseeing ongoing enovs tons expnsiono, and oter projec. The seit in the malt yea projet forthe new building at Arold Palmer are shown in Table 37428 PART + intoduetion to Operations Management ‘y “TABLE 3.7 Expansion Planning ond Amold Palmer Hospital Construction Actives and Times? ‘Activity i 7 Scheduled Time ___ Precedence Actvityies) 1. Proposal and review meat = 2, Esblish master schedule 2vecks 1 3. Architect selection process 5 works 1 4, Survey whole campus an is needs 1 month 1 5, Conceptual architects plans 6 weeks 3 6. Cost estimating 2 months 245 7. Deliver pans to board for couskeration!Secision month 6 £8. Surveysregulatory review 6 weeks 6 9, Constraction manager selection 9 weeks 6 10. State review of need for more hospital beds ("Certificate of Need”) 3.5 moms 18 UL Design drawings ‘months 10 12, Construction documents S months 911 13, Site prepartion/demolish existing building 9 weeks a 14, Constraction staVbuilding pad 2 montis BD 15, Relocate utlties 6 weeks 2 16, Deep foundations 2 months 4 17, Building structure in place 9 months le 1. Exterior skinvoofing 4 months 0 19. Interior buildout months a 20, Building inspections S weeks 13,19 21. Occupancy 1 month 20 ts arf eis eth rps of hi coe ay, or agit ase sah wes» 28 om ay 2 necks = 3 nh 6 we Discussion Questions" 4. What percent ofthe whole projet duration was spent in planning that cceured prior the proposal and reviews? Prior co the 1. Develop the network for planning and construction of the new Mt i Bop howpitl at Atmold Panes tetual building constuction? Why? 2, What the sca path and how to tske? the project expected to + You may wis sew te video accompanying is case before adessng 3. Why is the construction of this 1 1-story building any more com- ee let han constuction of en equivalent fice baling? > Managing Hard Rock's Rockfest Video Case ga rib Hrs Roce Ct ko many ogo, pt mmage or WBS) lr bok, detetng market? onine 4% smears key pleming took With Hard Roc’s constant grewh in promeden, teision, show production, ave, sponsorships Frias aad aes, remodeling of existing cles, scheduling for Hard. operations, and merchandising Usinga WBS, cach of set Tent rive concert and event venues, ead planning the annual father divided inf a eis of surah. Table 38 enifes 26 of te Racktecs mmagers rly on project management fechnigues and major sevities aod subacivites, heir immediate predecessor, and sotvare to sits schedule and budget performance te estimates, Tomasso enter il thos int the Microsoht Projet rahonthleelt Padee” rye Here Rock Vie President software Towasso ales de Microvof Project document and the Cus Tomo "there fs nosy le so nary peopleon the same tie te a he project progresses. "i's Okay 10 change a long 8 age” Toma isin chage ofthe Rocfes event, which satended yo keep on ack” he sates Pre oes 10000 cuanuatofaneThe challenge ispuling to! ‘The day ofthe rock concert sf snot th end of dhe projet uaa tigt Sinonh planing beczon As the event approaches, planing. I's nothing bt surpass. A band nt beng abl fo getto Try orcs greater energy to is aves, Forte fist 3 the vee Because of tac jms i sures, but an anticinnted! pee femcen updates he Microsoft Project charts monthly, suis. Weed «helicopter on stand-by ready to the band ‘Toe athe Grmonth mark e pds his progress weekly. At the says Tomaso Sven mar, be checks and ered his schedule twice a wel ‘On completion of Rockfestin July, Tomaso and hs texm have uy inthe projec management poess,TomassoMenies « Saoeth reprieve before stating the project planning acess tomar asks called eve actives ina wok breakdown sce, again‘Activity Description Hise production manager Design promotional Web site SetTY deal ire diroctor Plan for TV camera placement ‘Tager headline entertainers ‘Target support entertainers ‘Travel accommodations fr toeat Set venue capacisy Ticketmaster contact Onsite deketing Souad sad seging Passes and stage credentials Travel sccommodations fr att? ie sponsor coordinator Finalize sponsors Delfine/pace signage for sponsors ire operations manager Develop site plan Hire security dtector Set poicefive security plan Power, plumbing, AC, tole services Secure merchanie desis, Online merchandise ssles N4MZ C4 owO TOBE DRA zOumyOwD Discussion Questions’ 1, Identify the tical path and its activites for Rockfest, How long oes the project take? 2, Which activities havea slack ime of 8 weeks or more? eeatiy five major challenges a project manager faces in events suchas this one, 4. Why is © work bealsown stractareusefl in a project such a8 this? Take the 26 activites and break them into what you think shouldbe level2, level-3, and level tasks, Prosdeceseor(s) Chapter 2 Managing Projects 429 ‘Time (weeks) > TABLE s8 Sonne of the Fajor Aci 7 H and Subactties inthe 7 7 Rocktest Pan B 3 D 6 E 4 F 2 B 4 a 4 I 10 € 2 DK 3 L 3 c 6 1k 7 3 20 B 4 Q 4 RX a a 4 T 6 tT 7 v 4 v 4 B 6 ¥ 6 ‘There aot ithe Rociet conver ite ‘there areacwaly 127 actives used by Temesso the leis abbreviea for his ease ody, ou may wish vlew the video accompanying ti cave before aressng hese questions > Adiional Case Stady: sit www: pearsongobaledtionscom/myorlab or wwwpearsonglobaleidonscomhelae fer is ie ease study: Shale Off Company: This cil refinery must shut down fr mainrenance of a major piece of equipment. Bibliography Balalsishnan,R, B. Reader, and R. M. Star. Managerial Decision Modeling with Spreadsheets, ad ed. Upper Sade River, NI Prentice Hall 2007) Cleland, DL, and L, R Ireland. Project Management, 5 ed ‘New York: MeGraw-Hilifewin (2007) Gray, CL, and BW, Larson, Project Management with MS ‘Project, New York: McGaw. Hien (2008), Helgadotr, Hilder. "The Ethical Dimension of Project “Management” Interational Jourel of Project Menagemant 26, no. 7 (October 2008): 783. Karls, eal. "Foundations of Project Management.” “International Journal of Project Management 27, n0. 1 ‘Ganuary 2008) 1. Keraner,H. Projet Management Case Studies, 3d ed. New York: Wiley (2009). Kumar, P .“Etfetive Use of Gant Chart for Managing Large. ‘Scale Projects Cost Engineering 47, 0.7 uly 2005) 14-21 Ling, F.¥. ¥ etl. "Key Project Management Practices Affecting ‘Singaporean Fim’ Project Performance in China”190 PAST 4 Introduction to Operators Managorent ‘nvemationalfournal of Project Management 27, no, | (anary, 2008) 39. (Mata, NR, and RN. Ashkenss. “Why Good Projects Fal “Anyways” Hanvard Business Review September 2003) 108-114. Maylor, Harvey, Project Monagemant, th ed. Upper Sate Rives, Ni: Prentice Hall (2008). ‘Meredith, ER, and S, Mantel. Project Monagement, hed "New Yorke Wiley (2008). ‘Gotes, Devid, “Understanding and Solving the Causes of Project Failise Knowledge Managemen Review 9, 0.5 (May-~fone 2006): 5. Render, B.,R, Mi. Steg, and M. Hanne. Quanttative Analysis for Marnagestent, Lt ed. Upper Sadie River, NJ: Prentice Hatt 2009). Vereth, Ecc, The Fax Forward MBA in Project Management. "New York: Wiley (2008), iysookl, RK Effective Project Management, Sth ed. New York ‘Wiley (2009).Chapter 3 Rapid Review een Fan Main Heading Review Material Riyontas > THEIMPORTARGE OF The ranagsnent of ejeds males Us pases VIDEO 3.1 PROJECT MANAGEMENT 1. Planning This pte nstods goal setog, defining th projet and team Projet Magento oe) comet Ee eet asd Rock’ Rockies 2 Sehedullog”Thie pas rele pope, money, aod saps o ei aes fn lates sive! wo eich be 42. Contoling Hee fi monitors resources, cos, qui, td bod. t als tvs or changes plas an sis resus wont ne and cost detands PROJEDT PLANNING Projects abe Sed as ris ofreled ual dicted onarde maj cup ‘op 30-5) = Projet rgienton—An emit fort neni ht progran (nj) (Cp oben 3.1 receive the proper mangement and atention. 1 Work breakdown srctar (WHS) Dict projet ty dividing elt mee mor dtd componets, FROUEGT SCHEDULING = Gant charts—Piasing cane vcd hedue voces aod sas Une to. 2-84) Project seling serves several parpoces 1. Tesh he lanhipo each stv toler’ ad the whole projet 2 ideas te pecoenoeslensips among activites, 3. Ieencourages he stg of elite ine dd ot estates for ech acy 4 Tehelpe ke boner se of people, mote, and mati resource by Mentfng ial borensks nthe poet. PROJECT CONTROLLING —Oompurcizsé cerns produce «bce varie of PERDTCEN epora, including (69.98) (Q) deed cit telson fs cash tas, (2 tl programs labor corey est dstibton bes, (fancies and ho sums, () a tates and expand frec, (valance reports) ve eal opr, and) wok Problem 38 ‘VIDEO 3.2 Project Management at ‘Ame Palmer Hospital Sans epee. PROJECT WAMAGEVISIT = Program evaluat ad review echalas PERTIA pebamaraaenenl > paaiean gat, TEORMIQUES: PERT AMID technique tempo tee ne eats cach act. Ores cou + Ciel pth method (CPND—A poet mage ecb at se ny one entity ay eee = Creal patt—Ta eons ong ire pa) toagh a et iat Ofis Hows oe PERT end CPM buh fellow bse ws, Solved Problems 31,52 “Th ace oe ep il ley eee poet iy ave ot com: Meeton aoe ‘het de AOA ran nih ene en *Aegraram (08) ms dap ih ses ea Irena wma te sts ernst sing a oni Sava "Dammann vino inh ete i tsk mach elope tte ro iy eng sty can alan AON gaa et Sicrmstpucang hes DETER THE ee path aa pos si I PROJECT SCHEDULE — To find the critical path, we calculate two distinct starting and ending times foreach Sy Bereta bn 0 sa OR, + Earliest start (ES) = Earliest time at which an setivity can Start, assuring that all oe roca encapins » Ente "Ea ih on vic ined "Li (cea ao shy ca yg be ‘soa of tees + HES (ees ihn vy i sa et ey cnn ecto Fe Foran peste ety deny ne ‘ES = Maximum EF of limameiate predecesors on EF = BS + Activicy ime 0) = ackoard pase—A proces het idesfe al tet stat and ate nish ies, LE = Minimum LS ofa immedi following aii: 63) ES = LF ~ Aesivy time oo «Slack time—fioe ime fran activity. ES of Shick =LF- BF 6sChapler3 Rapid Review conines Main Heading _Reviow teteriat Fiyomtab®) Tanna aig RCE oa ag RW GO TS wel one tam ie ee : cmlomets acing bl mig iweb al nb Fe el mulnms _ AOTIE MODEL eee GATT WREATH 7% Problems: 3.13, tee eT 6 usw vy nebo endian © WD 316321334 1 tty dn )—Te wet robe ine to simple many nave Ya OfesHass Se Depend c= Co sy oo ‘Variance of Activity Completion Time = ((b ~ 4)/6)" en ‘o} = Project vasianea = Z(omances of activities on cxical pak)” G-8) ‘(Due date ~ expected date of completion)/o7 oo) Dusiden'S Keyed Stploiontine + EX op. Sk GIO) TE ee ee ee Cee ce Gp mesg rasta Cas os ~ Nowa st) (pp. 411-113) Crash cost per period = ‘ (Cea ont = Normal 281) 614) vial Otic for ‘ovnal tne = cahine) «CP Solved Problem: 3.7 IRGRTTOUE OF PERT vat every ectnigue for pobion solving, PERT and CEM have x pombor of ‘AND CPM fvantages as well ac ceveral imitations. (op. 118-118) USING WIGROSOFT _ Miceosof Projet, the st popalar example of specialized project managsinent PROJECT TO MANAGE softwar, is extremely useful drawing project networks, identifying the project PROJECTS Sciedule, and menaging project cost and other resouices. (op. H117) ee Self Test ‘efor aking the eles oor othe earring objties Ute atthe begnrng of he chapter andthe ay terms sed al the endo the chaptes. if a gO a tee seasonal » ere noraranainataaes ype pectin once oa d) Gantt charts ave expensive. 1a) the sum of the variances of all activities in the project. eee 'b) the sum of the variances ofall activities on the critical path. ©) Activities consume time and resoarces, ‘is the difference in costs divided by the difference in times (crash 3 mecca 2 eget iets titrant ©) Allof the above. 'b) Is considered to be linear in the range between sormal and crash. aero Besa et {El guh canbe consoved fo tie eduction rs, @ alot theskowe Answers LOL. LO2, 6: 1.03.5 LO LOS. by LO6.a