Chapter Project Management Operations Operations Management Management 66thth Edition Edition Roberta Russell & Bernard W Taylor, III Copyright 2009 John Wiley & Sons, Inc Beni Asllani University of Tennessee at Chattanooga Lecture Outline        Project Planning Project Scheduling Project Control CPM/PERT Probabilistic Activity Times Microsoft Project Project Crashing and Time-Cost Trade-off Copyright 2009 John Wiley & Sons, Inc 9-2 Project Management Process  Project  unique, one-time operational activity or effort Copyright 2009 John Wiley & Sons, Inc 9-3 Project Management Process (cont.) Copyright 2009 John Wiley & Sons, Inc 9-4 Project Management Process (cont.) Copyright 2009 John Wiley & Sons, Inc 9-5 Project Elements         Objective Scope Contract requirements Schedules Resources Personnel Control Risk and problem analysis Copyright 2009 John Wiley & Sons, Inc 9-6 Project Team and Project Manager  Project team  made up of individuals from various areas and departments within a company  Matrix organization  a team structure with members from functional areas, depending on skills required  Project manager  most important member of project team Copyright 2009 John Wiley & Sons, Inc 9-7 Scope Statement and Work Breakdown Structure  Scope statement  a document that provides an understanding, justification, and expected result of a project  Statement of work  written description of objectives of a project  Work breakdown structure (WBS)  breaks down a project into components, subcomponents, activities, and tasks Copyright 2009 John Wiley & Sons, Inc 9-8 Work Breakdown Structure for Computer Order Processing System Project Copyright 2009 John Wiley & Sons, Inc 9-9 Responsibility Assignment Matrix  Organizational Breakdown Structure (OBS)  a chart that shows which organizational units are responsible for work items  Responsibility Assignment Matrix (RAM)  Copyright 2009 John Wiley & Sons, Inc shows who is responsible for work in a project 9-10 Microsoft Project (cont.) Copyright 2009 John Wiley & Sons, Inc 9-44 Microsoft Project (cont.) Copyright 2009 John Wiley & Sons, Inc 9-45 Microsoft Project (cont.) Copyright 2009 John Wiley & Sons, Inc 9-46 Microsoft Project (cont.) Copyright 2009 John Wiley & Sons, Inc 9-47 PERT Analysis with Microsoft Project Copyright 2009 John Wiley & Sons, Inc 9-48 PERT Analysis with Microsoft Project (cont.) Copyright 2009 John Wiley & Sons, Inc 9-49 PERT Analysis with Microsoft Project (cont.) Copyright 2009 John Wiley & Sons, Inc 9-50 Project Crashing  Crashing  reducing project time by expending additional resources  Crash time  an amount of time an activity is reduced  Crash cost  cost of reducing activity time  Goal  reduce project duration at minimum cost Copyright 2009 John Wiley & Sons, Inc 9-51 Project Network for Building a House 12 12 Copyright 2009 John Wiley & Sons, Inc 9-52 Normal Time and Cost vs Crash Time and Cost $7,000 – $6,000 – $5,000 – Crash cost Crashed activity $4,000 – Slope = crash cost per week $3,000 – Normal activity $2,000 – $1,000 – Normal cost – Normal time Crash time | | | | | 10 | 12 Copyright 2009 John Wiley & Sons, Inc | 14 Weeks 9-53 Project Crashing: Example ACTIVITY NORMAL TIME (WEEKS) CRASH TIME (WEEKS) NORMAL COST 12 12 4 1 $3,000 2,000 4,000 50,000 500 500 15,000 $5,000 3,500 7,000 71,000 1,100 1,100 22,000 $75,000 $110,700 CRASH COST Copyright 2009 John Wiley & Sons, Inc TOTAL ALLOWABLE CRASH TIME (WEEKS) 3 3 CRASH COST PER WEEK $400 500 3,000 7,000 200 200 7,000 9-54 $7000 $500 Project Duration: 36 weeks $700 12 FROM … 12 $400 $3000 $200 $200 $7000 $500 $700 12 TO… Project Duration: 31 weeks Additional Cost: $2000 $400 $3000 $200 $200 Copyright 2009 John Wiley & Sons, Inc 9-55 Time-Cost Relationship  Crashing costs increase as project duration decreases  Indirect costs increase as project duration increases  Reduce project length as long as crashing costs are less than indirect costs Copyright 2009 John Wiley & Sons, Inc 9-56 Time-Cost Tradeoff Minimum cost = optimal project time Total project cost Cost ($) Indirect cost Direct cost Crashing Project duration Copyright 2009 John Wiley & Sons, Inc Time 9-57 Copyright 2009 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her own use only and not for distribution or resale The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs Copyright 2009 John Wiley & Sons, Inc 9-58 ... & Sons, Inc 9-14 Project Control     Time management Cost management Quality management Performance management  Earned Value Analysis  a standard procedure for numerically measuring a project’s... project’s progress, forecasting its completion date and cost and measuring schedule and budget variation  Communication  Enterprise project management Copyright 2009 John Wiley & Sons, Inc 9-15... John Wiley & Sons, Inc 9-7 Scope Statement and Work Breakdown Structure  Scope statement  a document that provides an understanding, justification, and expected result of a project  Statement