Project Management: Operations Management, Eighth Edition, by William J. Stevenson

Project
Management
Operations Management, Eighth Edition, by William J. Stevenson

Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Projects
JAN FEB MAR APR MAY JUN

Build A
A Done
Build B
B Done
Build C
C Done
On time!
Build D
Ship
Unique, one-time operations designed to accomplish

a specific set of objectives in a limited time frame.
Project Management
• How is it different?
• Limited time frame
• Narrow focus, specific objectives
• Less bureaucratic
• Why is it used?
• Special needs
• Pressures for new or improves products or
services
Project Management
• What are the Key Metrics

• Time
• Cost
• Performance objectives
• What are the Key Success Factors?
• Top-down commitment
• Having a capable project manager
• Having time to plan
• Careful tracking and control
• Good communications
Project Management
• What are the Major Administrative Issues?

• Executive responsibilities
• Project selection
• Project manager selection
• Organizational structure
• Organizational alternatives
• Manage within functional unit
• Assign a coordinator
• Use a matrix organization with a project leader
Project Management
• What are the tools?

• Work breakdown structure
• Network diagram
• Gantt charts
• Risk management
Planning and Scheduling
Gantt Chart MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Locate new
facilities
Interview staff
Hire and train staff
Select and order

furniture
Remodel and install

phones
Move in/startup
Gannt (linked bar) chart example
Key Decisions
• Deciding which projects to implement

• Selecting a project manager
• Selecting a project team
• Planning and designing the project
• Managing and controlling project resources
• Deciding if and when a project should be
terminated
Project Manager
Responsible for:
Work Quality
Human Resources Time
Communications Costs
Ethical Issues
• Temptation to understate costs

• Withhold information
• Misleading status reports
• Falsifying records
• Comprising workers’ safety
• Approving substandard work
Project Life Cycle
Feasibility
Management
Planning
Concept
Execution
Termination
Work Breakdown Structure
Project X
Level 1
Level 2
Level 3
Level 4
PERT and CPM
PERT: Program Evaluation and

Review Technique
CPM: Critical Path Method
• Graphically displays project activities

• Estimates how long the project will take
• Indicates most critical activities
• Show where delays will not affect project
The Network Diagram
• Network (precedence) diagram

• Activity-on-arrow (AOA)
• Activity-on-node (AON)
• Activities
• Events
Network analysis
• Notation systems
• Arrow systems (activity-on-arrow)
• ADM, CPM/CPA, PERT
• Good for initial freehand planning
• Node systems (activity-on-node)

• PDM (Precedence Diagram Method)
• Good for checking
• Quite acceptable to use either – or both!

The Network Diagram (cont’d)
• Path
• Sequence of activities that leads from the starting
node to the finishing node
• Critical path
• The longest path; determines expected project
duration
• Critical activities
• Activities on the critical path
• Slack
• Allowable slippage for path; the difference the
length of path and the length of critical path
Project Network – Activity on Arrow
Order
AOA furniture 4
Furniture
Locate 2 setup
facilities
Remodel
1 5 6
Move
in
Interview
Hire and
train
3
Project Network – Activity on Node
Order
furniture
Locate Furniture
2 setup
facilities
AON
1 6
Move
Remodel
in
S 5 7
Hire and
Interview
train
3 4
Network Conventions
a
b
c a
c
b
a c
a c
b Dummy
activity
b d
Time Estimates
• Deterministic
• Time estimates that are fairly certain
• Probabilistic
• Estimates of times that allow for variation
Example 1
6 weeks
Deterministic 4
time estimates r d er e
O i tur
Fu r p
n 3 weeks
fur
set
8 weeks 2
nitu
u
Rem
ate s ode
re
c
Lo ilitie 11 weeks
l Move
fac in
1 5 6
In 1 week
te a in
rv t r
i d
4 weeks ew e a n
r
Hi 9 weeks
3
Example 1 Solution
Critical Path
P a th L e n g th S la c k
(w e e k s )
1 -2 -3 -4 -5 -6 18 2
1 -2 -5 -6 20 0
1 -3 -5 -6 14 6
Example 5
Optimistic Most likely Pessimistic

time time time
2-4-6
b
2- c
- 4
3-
-3
5
1 a
3-4-5 3-5-7 5-7-9
d e f
6
2- g
4-
3-
-
3 i
6
4-6-8
h

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Project

Operations Management, Eighth Edition, by William J. Stevenson

JAN FEB MAR APR MAY JUN

Unique, one-time operations designed to accomplish

• What are the Key Metrics

• What are the Major Administrative Issues?

• What are the tools?

Hire and train staff

Select and order

Remodel and install

• Deciding which projects to implement

• Temptation to understate costs

PERT: Program Evaluation and

• Graphically displays project activities

• Network (precedence) diagram

• Node systems (activity-on-node)

• Quite acceptable to use either – or both!

Optimistic Most likely Pessimistic

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