OMG 402 - Operations Management Spring 1997

1. OMG 402 - Operations ManagementSpring 1997 CLASS 16: Project Management Harry Groenevelt

2. Agenda 1. Introduction 2. Planning and scheduling • Scheduling with network diagrams • Scheduling resources 3. Planning for risky projects 4. Reducing project time • ‘Crashing’ and changing the project structure • Monitoring and control 5. Summary and comments on Boeing

3. project job shop batch line flow continuous flow 1. Introduction: What is a Project? A project is...a business within a business, designed to go out of business when the goals are met Distinguishing attributes: • low volume • high labor costs, specialization • customized

4. A Few Examples • Installation of automatic readers on 1/2-million RG&E gas and electric meters • Development of the Advanced Automation System (AAS) for U.S. air traffic control • Launch of an on-line banking service • My daughter’s birthday party

5. Introduction: Why Project Management? • Effective project management of new product development is a competitive priority in markets with short life-cycles • Poor project management can be financially (and emotionally) destructive to the firm • Project management is the core business for some firms

6. Introduction: Project Management Stages StageDecision Level Evaluation strategic Planning tactical Scheduling operational Monitoring and control operational Termination all Post-project assessment strategic

7. 2. Planning and Scheduling • MacroTemp precedence relationships

8. earliest start earliestfinish _____ _____ activity, duration, slack activity, duration, ____ latest start _____ latestfinish _____ Planning and Scheduling with Project Networks (how to represent ‘dependent events’) This activity ends … Before this one begins Note: you may see a variety of formats in books and software packages

9. earliestfinish earlieststart Activityduration, slack latestfinish lateststart Begin End Notify1.5, _____ Ppl move0.5, _____ Set up ppl1.0, _____ Appt1.0, _____ Walk0.5, _____ Move Equip1.0, _____ Phones1.0, _____ Network0.5, _____ Calculating start dates, stop dates, slack

10. Critical Activities and Path(s) Notify1.5, 0 Ppl move0.5, 1.0 Set up ppl1.0, 0 Begin Appt1.0, 0.5 Walk0.5, 0 Move Equip1.0, 0 End Phones1.0, 2.0 Network1.0, 2.0 How long will the project take?

11. Comments on the Critical Path Method (CPM) • Critical path = longest ‘path’ of activities from start to finish • Activities on the critical path have slack = 0 • Duration of project = duration of critical path (CP) • “CPM” says: focus attention on critical activities BUT: ignoring other activities may not be wise … Why?

12. Scheduling Resources • Scarce resources may be shared between activities Examples: • engineers and programmers for a new electronics product • trucks and crew for a touring rock concert • Method for resource scheduling: • determine time and resource needs for each activity • determine resource availability • derive schedule and adjust to fit available resources • Is encoded in software (e.g. Microsoft Project)

13. Scheduling Resources Example: a software development project (20 programmers available)

14. Software Development Project Schedule GANTT chart with all activities at earliest start date A B C D E ACTIVITIES F G H I 0 5 10 15 20 25 TIME (IN WEEKS FROM PROJECT START)

15. Resource Consumption number of programmers according to earliest start schedule 30 20 NR OF PROGRAMMERS 10 0 1 3 5 7 9 11 13 15 17 19 21 23 25 TIME (IN WEEKS FROM PROJECT START)

16. Scheduling Resources What can be done to satisfy 20-programmer resource constraint?

17. 3. Planning for Risky Projects Example: the Air Traffic Control Technology Project • Financial Risk • Risk to On-Time Delivery What aspects of the project increased these risks? How could the risks have been managed?

18. 1/2 Probability 4 months 8 months Duration of HANDOFF Planning for Risky Projects Quantifying on-time delivery risk. RADAR TRACKING SOFTWARE DEVELOPMENT 6 months USER INTERFACE 4 months INTEGRATION 1 month AIRCRAFT HANDOFF SOFTWARE 4 months with probability 1/2 8 months with probability 1/2

19. Task Duration Uncertainty Expected duration of HANDOFF = _______ Expected project duration using expected activity times = ________ Expected project duration = _______ To find the expected task of a project, can we ‘plug in’ the expected duration of each activity?

20. Task Duration Uncertainty FACT: when large projects are subject to variability: Expected project duration > Project duration calculated from expected activity times of individual tasks Typically managers ‘plug in’ expected values and under-estimate project duration Does this concept sound familiar?

21. Task Duration Uncertainty • A project may have many random (or unknown) activity times and critical paths • Use simulation to find distributions of project duration, slack times, probabilities that activities lie on critical paths • Schedules and probabilities updated asproject progresses 1 CumulativeProbability 0.5 0 3 4 5 Project Duration (weeks)

22. 4. Reducing Project Time Direct costs from ‘crashing’ a new product development program: Indirect costs from (not) crashing:

23. Reducing Project Time: Time/cost Trade-off Total Cost Project cost Indirect Cost Direct Cost Expedited Normal Optimal time time time Project time

24. Reducing Project Time,Using Project Networks as a Guide 1. Construct project network. 2. Select least expensive speed-ups along critical paths until … • Deadline is met • No more speed-up is possible • Other paths become critical 3. If other paths have become critical, return to step 1

25. A B A B Reducing Project Time: Changing the Structure of the Project • Do things in parallel • simultaneous engineering • multiple test facilities Note that this can create ‘coupled’ tasks, where each task depends on the output of the other Communication is vital! How can communication be encouraged?

26. Changing the Structure • Shorten or eliminate error correction loops • increase communication and information accuracy(when are problems in an activity usually reported?) • use multi-functional teams • clearly define specifications

27. Changing the Structure • Do it faster • remove start-up delays • remove ‘waiting delays’ due to busy resources (especially for activities on the critical path) • use proven technology and improve communication from project to project

28. Reducing Project Time:Monitoring and Control • While the project is running: • Progress against schedule • Cost against scheduled expenditures • Earned Value = budgeted cost of work performed

29. Monitoring and Control: Earned Value earned value = budgeted cost of work performed 30000 25000 20000 Actual Cost of Work Performed ($) 15000 cost variance 10000 5000 0 0 5000 10000 15000 20000 25000 30000 Earned Value ($)

30. 5. Project Management Summary • Manage effectively to remain competitive • Project planning: • tools to schedule and balance resources • planning for and managing risk • Speeding up projects: • examine the project structure • consider multiple performance measures • encourage communication

31. Comments on Boeing • Consider risks Boeing facesHow does Boeing manage those risks? • Define criteria for choosing among production options (in-line vs. off-line conversion) • Consider pros and cons of each choice • Do not try to draw a project network (at Boeing, they cover walls)