Operations management heizer 6e ch03

Operations Management Chapter – Project Management PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e © 2006 Prentice Hall, Inc Hall, Inc © 2006 Prentice 3–1 Outline  Global Company Profile: Bechtel Group  The Importance Of Project Management  Project Planning  The Project Manager  Work Breakdown Structure  Project Scheduling © 2006 Prentice Hall, Inc 3–2 Outline - Continued  Project Controlling  Project Management Techniques: PERT And CPM  The Framework Of PERT And CPM  Network Diagrams And Approaches  Activity-on-Node Example  Activity-on-Arrow Example © 2006 Prentice Hall, Inc 3–3 Outline - Continued  Determining The Project Schedule  Forward Pass  Backward Pass  Calculating Slack Time And Identifying The Critical Path(s)  Variability In Activity Times  Three Time Estimates In PERT  Probability Of Project Completion © 2006 Prentice Hall, Inc 3–4 Outline - Continued  Cost-time Trade-offs And Project Crashing  A Critique Of PERT And CPM  Using Microsoft Project To Manage Projects  Creating A Project Schedule Using MS Project  Tracking Progress And Managing Costs Using MS Project © 2006 Prentice Hall, Inc 3–5 Learning Objectives When you complete this chapter, you should be able to : Identify or Define:  Work breakdown structure  Critical path  AOA and AON Networks  Forward and backward passes  Variability in activity times © 2006 Prentice Hall, Inc 3–6 Learning Objectives When you complete this chapter, you should be able to : Describe or Explain:  The role of the project manager  Program evaluation and review technique (PERT)  Critical path method (CPM)  Crashing a project  The use of MS Project © 2006 Prentice Hall, Inc 3–7 Bechtel Projects  Restoring over 650 oil wells in Kuwait left ablaze or uncapped after Desert Storm  Building 26 massive distribution centers in just two years for the internet company Webvan Group  Constructing 30 high-security data centers worldwide for Equinix, Inc  Building and running a rail line between London and the Channel Tunnel ($4.6 billion)  Developing an oil pipeline from the Caspian Sea region to Russia ($850 million) © 2006 Prentice Hall, Inc 3–8 Bechtel Projects  Expanding the Dubai Airport in the UAE ($600 million), and the Miami Airport in Florida ($2 billion)  Building liquid natural gas plants in Yemen $2 billion) and in Trinidad, West Indies ($1 billion)  Building a new subway for Athens, Greece ($2.6 billion)  Constructing a natural gas pipeline in Thailand ($700 million)  Building a highway to link the north and south of Croatia ($303 million) © 2006 Prentice Hall, Inc 3–9 Strategic Importance of Project Management  Bechtel Kuwait Project:  8,000 workers  1,000 construction professionals  100 medical personnel  helicopter evacuation teams  full-service dining halls  27,000 meals per day  40 bed field hospital © 2006 Prentice Hall, Inc – 10 Steps in Project Crashing If there is only one critical path, then select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest Note that a single activity may be common to more than one critical path © 2006 Prentice Hall, Inc – 92 Steps in Project Crashing Update all activity times If the desired due date has been reached, stop If not, return to Step © 2006 Prentice Hall, Inc – 93 Crashing The Project Time (Wks) Activity Normal Crash A B C D E F G H 4 1 2 2 Cost ($) Crash Cost Critical Normal Crash Per Wk ($) Path? 22,000 30,000 26,000 48,000 56,000 30,000 80,000 16,000 22,750 34,000 27,000 49,000 58,000 30,500 84,500 19,000 750 2,000 1,000 1,000 1,000 500 1,500 3,000 Yes No Yes No Yes No Yes Yes Table 3.5 © 2006 Prentice Hall, Inc – 94 Crash and Normal Times and Costs for Activity B Activity Cost Crash Crash Cost – Normal Cost Crash Cost/Wk = Normal Time – Crash Time $34,000 — $33,000 — Crash Cost $32,000 — $34,000 – $30,000 3–1 $4,000 = = $2,000/Wk Wks = $31,000 — $30,000 — — Normal Cost Figure 3.18 © 2006 Prentice Hall, Inc Normal | Crash Time | | Normal Time Time (Weeks) – 95 Critical Path And Slack Times For Milwaukee Paper 0 0 Start 0 A 2 2 Slack = 4 10 Slack = 0 4 B 3 4 Slack = © 2006 Prentice Hall, Inc C D Slack = E F 13 Slack = 13 Slack = 13 8 G 13 H 15 15 Slack = 13 Slack = Figure 3.19 – 96 Advantages of PERT/CPM Especially useful when scheduling and controlling large projects Straightforward concept and not mathematically complex Graphical networks help to perceive relationships among project activities Critical path and slack time analyses help pinpoint activities that need to be closely watched © 2006 Prentice Hall, Inc – 97 Advantages of PERT/CPM Project documentation and graphics point out who is responsible for various activities Applicable to a wide variety of projects Useful in monitoring not only schedules but costs as well © 2006 Prentice Hall, Inc – 98 Limitations of PERT/CPM Project activities have to be clearly defined, independent, and stable in their relationships Precedence relationships must be specified and networked together Time estimates tend to be subjective and are subject to fudging by managers There is an inherent danger of too much emphasis being placed on the longest, or critical, path © 2006 Prentice Hall, Inc – 99 Using Microsoft Project Program 3.1 © 2006 Prentice Hall, Inc – 100 Using Microsoft Project Program 3.2 © 2006 Prentice Hall, Inc – 101 Using Microsoft Project Program 3.3 © 2006 Prentice Hall, Inc – 102 Using Microsoft Project Program 3.4 © 2006 Prentice Hall, Inc – 103 Using Microsoft Project Program 3.5 © 2006 Prentice Hall, Inc – 104 Using Microsoft Project Program 3.6 © 2006 Prentice Hall, Inc – 105 Using Microsoft Project Program 3.7 © 2006 Prentice Hall, Inc – 106 ... Project Management  Project Planning  The Project Manager  Work Breakdown Structure  Project Scheduling © 2006 Prentice Hall, Inc 3–2 Outline - Continued  Project Controlling  Project Management. .. and south of Croatia ($303 million) © 2006 Prentice Hall, Inc 3–9 Strategic Importance of Project Management  Bechtel Kuwait Project:  8,000 workers  1,000 construction professionals  100 medical... per day  40 bed field hospital © 2006 Prentice Hall, Inc – 10 Strategic Importance of Project Management  Microsoft Windows Longhorn Project:  hundreds of programmers  millions of lines of