OPSM 301 Operations Management

1. Koç University OPSM 301 Operations Management Class 8: Project Management: Introduction and CPM Zeynep Aksin zaksin@ku.edu.tr

2. New module: outline • Chapter 3 from textbook: will skip parts on AOA networks • Two sessions on theory • Two sessions applications and Microsoft Project • MS Project available in SOS Z15 computer lab

3. Why project management? • Competition through new product development • Information-intensive products: costly to produce, cheap to reproduce • Flatter organizations • Systems approach • Project approach

4. Project • A single “product” is obtained from the completion of a project • The differentiating characteristic of projects from processes is the intense uncertainty in projects • Two types of project • With absolute deadline: olympic stadium • With relative deadline : new product development project • Successful project management: To finish on time without going over budget and without sacrificing from the scope of the project

5. Project Management • Examples • Construction • R & D • Computer system implementation • Product development • Advertising campaign • Business Plan

6. Project Life Cycle:A Facility Construction Example • Feasibility: project formulation, feasibility studies, strategy design etc. A go/no-go decision is made at the end of this phase • Planning and design: base design, cost and schedule, contract terms, and detailed planning • Production: manufacturing, installation and testing. The facility is substantially completed at the end of this phase • Turnover and start-up: final testing and maintenance. The facility is in full operation at the end of this phase

7. ProjectManagement Resources Scope Budget Schedule

8. Some observations • Most projects • Either go over time • or over budget • or the promised content cannot be delivered • Little’s law: more projects in the system (WIP), longer completion times

9. Modern Project Management • The process of project management has two dimensions: the “science” and the “art” of project management • Technical: defining, planning and controlling • Socio-Cultural: • stimulating teamwork and personal motivation • identifying and resolving problems • shaping customer expectations • sustaining political support of top management • monitoring subcontractors • negotiating with functional managers

10. Project Planning, Scheduling, and Controlling

11. Structuring Projects:Pure Project • The project manager has full authority over the project. • Team members report to one boss. • Shortened communication lines. • Team pride, motivation, and commitment are high. Advantages • Duplication of resources. • Organizational goals and policies are ignored. • Lack of technology transfer. • Team members have no functional area "home." Disadvantages

12. President Research and Development Engineering Manufacturing Project A Project B Project C Project A Project B Project C Project A Project B Project C Structuring Projects Functional Project

13. Structuring Projects Functional Project • A team member can work on several projects. • Technical expertise is maintained within the functional area. • The functional area is a “home” after the project is completed. • Critical mass of specialized knowledge. Advantages • Aspects of the project that are not directly related to the functional area not done well enough. • Motivation of team members is often weak. • Needs of the client are secondary and are responded to slowly. Disadvantages

14. President Research and Development Engineering Manufacturing Marketing Manager Project A Manager Project B Manager Project C Structuring Projects Matrix Project: Organization Structure

15. Structuring Projects Matrix • Enhanced interfunctional communications. • Pinpointed responsibility. • Duplication of resources is minimized. • Functional “home” for team members. • Policies of the parent organization are followed. Advantages • Too many bosses. • Depends on project manager’s negotiating skills. • Potential for suboptimization. Disadvantages

16. Work Breakdown Structure • 1. Project • 2. Major tasks in the project • 3. Subtasks in the major tasks • 4. Activities (or work packages) to be completed

17. The Work Breakdown Structure 1. House 1.2 Heating System 1.3 Interior Design 1.1 Building/Structure 1.4 Garden/Parking 1.2.1 Piping 1.2.2 Furnace 1.2.3 Fuel Tank 1.2.4 Solar Panels WP-FT1WP-FT2WP-FT3 WP-SP1 WP-SP4 WP-SP2 WP-SP5WP-SP3 WP-P1WP-P2WP-P3 WP-F1WP-F2

18. Time planning: activity list Activity A B C D E F Predecessor -- A B, D -- D E

19. A, 3 B, 5 C, 3 Start Finish D, 2 E, 2 F, 5 Activity-on-node network diagram (or PERT diagram)

20. 5 9 3 1 0 8 11 7 2 4 6 10 Developing Project Network • Rules: • Draw networks from left to right • Each activity has a unique identification number • An activity’s identification number should be larger than that of the activities’ preceding it • Loops (cycles) are not allowed • Conditional statement (e.g., if this happens then …) are not allowed • If there are multiple start or finish activities, a common start or finish node is used

21. A B A, 3 B, 5 C, 3 C Activity Start Finish D E D, 2 E, 2 F, 5 F Time Gantt chart: Early start

22. A B A, 3 B, 5 C, 3 C Activity Start finish D E D, 2 E, 2 F, 5 F Time Gantt chart: Late start

23. PERT/CPM Network Diagrams • Advantages • Allows visualization of task relationships • Facilitates calculation of critical path • Clarifies impact of decisions on downstream activities • Disadvantages • Complex, not easy to comprehend at a glance • Charts don’t readily depict durations, dates, and progress

24. JAN FEB MAR 1 8 15 22 29 5 12 19 26 5 12 19 26 Gantt Charts • Advantages • Easy to understand • Easy to show progress and status • Easy to maintain • Most popular view to communicate project status to client and/or senior management • Disadvantages • Can be superficial • Not always easy to visualize precedence relationships

25. Terminology • The early start (ES) time for an activity is equal to the maximum early finish (EF) times of all of its predecessor activities • ES=max (EF) of predecessors • The early finish (EF) time for an activity is equal to the early start (ES) time plus the expected activity duration (ET) for the activity EF=ES+ET

26. Terminology • The late finish (LF) time for an activity is equal to the minimum late start (LS) times of all of its successor activities • LF=min(LS) of successors • The late start (LS) time for an activity is equal to the late finish (LF) time minus the expected activity duration (ET) for the activity • LS=LF-ET • Total slack (TS) time of an activity: • TS = LS-ES=LF-EF

27. Activity Name Earliest Start Earliest Finish ES EF Latest Start LS LF Activity Duration Latest Start and Finish Steps Latest Finish

28. A ES EF LS LF Finding the Critical Path B Start at time t=0 4 7 3 6 9 D 0 4 11 9 4 2 0 4 9 11 C 4 9 Activity Slack: S = LS-ES, or S = LF-EF 4 9 5

29. A Finding the Critical Path Activity Slack: S = LS-ES, or S = LF-EF B S=2 4 7 3 S=0 6 9 S=0 D 0 4 11 9 4 2 0 4 9 11 C 4 9 Critical Path: Path with zero activity slacks 4 S=0 5 9

30. Finding the Critical Path • Start from the left (start node). For node 0: ES=0,EF=0 • For each activitity find Early Start (ES) by checking all immediate predecessors Early Finish times. ES of activitiy=max(EF) of all predecessors. EF of activity=ES+Activity time • For the late start and late finish, start calculations from the end node. • For each activity find Late Finish(LF) by checking all immediate successors of the activity: LF of activity=min(LS) of all successors LS=LF-Activity time 5. Find Slack times for all activities, S=EF-ES=LF-LS 6. All activities with S=0 are on the critical path (there can be more than one critical paths)

31. A C F F 0 2 2 4 4 7 H H H A 2 C 4 13 0 2 10 2 2 3 E H Slack=0 Slack=0 Slack=6 4 8 13 15 0 0 H F H H Start 8 4 15 13 0 0 4 2 0 Slack=0 Start B D G B D G 0 3 3 7 8 13 H H H 4 8 13 1 4 8 3 4 5 Slack=1 Slack=1 Slack=0 AON Network for Milwaukee General Hospital Slack=0