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Project Management Managing the Transformation Process

Project Management Managing the Transformation Process. What is a project ?. A project is a series of tasks (jobs) performed sequentially or in parallel aiming to achieve an important goal, and requiring a significant amount of resources and time. Some examples of projects ….

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Project Management Managing the Transformation Process

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  1. Project ManagementManaging the Transformation Process

  2. What is a project ? A project is a series of tasks (jobs) performed sequentially or in parallel aiming to achieve an important goal, and requiring a significant amount of resources and time

  3. Some examples of projects … • The adoption of an ERP system by a manufacturer (new process) • The construction of the new management building at Tech Square (new product) • The group assignment that you have to write for this course (new product) • The development of an Unmanned Aerial Vehicle - UAV (new product)

  4. What is project management about ? Project management is about the administrative tasks that determine the planning, directing, and controlling of resources in order to meet the technical, cost, and time constraints of the project

  5. Project Management A Project can be organized in different ways (based on who is managing the project) … • Project-Based • Functional-Based • Matrix Organization

  6. Project-Based Organization Marketing R&D Operations Project 1 Project Manager Project Managers have more power “Heavy Weight” Project Manager Project Manager Project 2

  7. Functional-Based Organization Marketing manager R&D manager Operations manager Project 1 Project 1 Project 1 Project 2 Project 2 Project 2 Project 3 Project 3 Project 4 Functional managers have more power

  8. Matrix Organization Marketing manager R&D manager Operations manager Project Manager Project 1 Project 2 Project Manager

  9. Project Control Tools • Gantt charts • Overall cost breakdown • Divisional cost breakdown • Stage-Gate (milestone chart) • Cost-Performance tracking schedule

  10. Gantt Chart A Gantt chart shows each activity with time lengths and precedence relationships.

  11. Overall Cost Breakdown Cost ($) Overall cost Overall cost breakdown can be used to control which resources are being used effectively Material cost Labor cost Time

  12. Stage-Gate (Milestones) G1 Phase 1 G2 Phase 2 Phase 3 G3 … Concept Development System-level Design Detail Design Phase 0 Planning In every development process formal stage-gates (milestones) contribute to the timely completion of the project.

  13. Project Management How can we plan the evolution of a project ? We need to represent precedence relationships, showing the sequence and interdependence of activities! • Activity-on-arrow diagrams (AOA) • Activity-on-node diagrams (AON)

  14. Project Management EXAMPLE: Planning for a vacation…

  15. Project Management A3 A4 A1 A7 A6 A2 A5 A8 The activity-on-arrow diagram

  16. Project Management The activity-on-node diagram A6 A3 A4 A7 A1 A2 A5 A8

  17. Project Management EXAMPLE: Bridge Construction…

  18. Project Management A8 A3 A9 A1 A2 A4 A7 A10 A5 A11 A6 The activity-on-arrow diagram

  19. Project Management Why are project networks useful? • They show precedence relationships among activities • They can be solved in order to identify the key steps for the completion of the project… The Critical Path

  20. Critical Path What is a critical path? The critical path of a project is a series of tasks that determine the amount of time it will take to complete the project. The critical path of activities forms the longest chain of tasks in order to complete the project.

  21. Critical Path 2 5 1 3 3 Example… What is the longest path to get from the starting node… … to the completion node?

  22. Critical Path 2 5 1 3 3 Let’s work it out… 2 / 0 / 7 / 8 / 3/ Forward completion (early start/finish) analysis: find out how long will it take to complete the project IF WE START TODAY

  23. Critical Path 2 5 1 3 3 … and … / 4 / 2 / 9 / 10 / 6 Backward completion (late start/finish) analysis: find out when to start given that the project must be done in 10 weeks!

  24. Critical Path 2 5 1 3 3 The difference between the two values at each node is called a slack time! 2 / 4 0 / 2 7 / 9 8 / 10 3 / 6 The critical path is the sequence of tasks with the SMALLEST slack time!!

  25. Critical Path 2 / 2 0 / 0 2 5 7 / 7 8 / 8 1 3 3 3 / 4 Another way to find it… Set the early completion time as the available time for the project!

  26. Critical Path 2 5 1 3 3 The critical path is… What does this actually mean? One day of delay on the critical path is one day of delay for the entire project!

  27. Critical Path • The Critical Path Method (CPM) determines the set of activities that impact the project completion time. • CPM applies only in cases where times are deterministic. • Management should concentrate effort on monitoring activities on the critical path.

  28. Critical Path 6 4 3 3 3 5 6 2 4 1 5 Back to the construction example… What is the critical path?

  29. Critical Path 6 4 3 3 3 5 6 2 4 1 5 / / / / / / / / / /

  30. Critical Path 6 4 3 3 3 5 6 2 4 1 5 7/ 13/ 0/ 11/ 3/ 6/ 17/ 19/ 20/ 10/

  31. Critical Path 6 4 3 3 3 5 6 2 4 1 5 7/10 13/16 0/0 11/11 3/3 6/6 17/17 19/19 20/20 10/12 So, what is the critical path?…

  32. Critical Path The critical path is… 6 4 3 3 3 5 6 2 4 5 1

  33. Critical Path Developing an Unmanned Aerial Vehicle (UAV)

  34. Critical Path 4 2 2 4 5 1 3 2 2 2 The project network is… What is the critical path ?…

  35. Critical Path The critical path is… 4 2 2 4 5 1 3 2 2 2

  36. Time-Cost Trade-off • Two concerns: • Time to complete the project • Cost to complete the project • Costs: • Activity direct costs – costs directly associated with activities • Project indirect costs – costs associated with sustaining the project • We can shorten tasks (“crash” them). This would • Increase activity direct costs • Decrease indirect costs if the project finishes earlier

  37. Time/Cost Tradeoff Data • Normal time: original time estimate for activity • Normal cost: cost to complete activity in normal time • Crash time: the shortest possible activity time • Crash cost: the cost to complete activity in crash time • Unit crash cost: cost to shorten activity time by one time unit • Example: • normal time = 5 days, normal cost =10 • crash time = 2 days, crash cost = 16 • Unit crash cost = (16-10)/(5-2) = 2/day

  38. Resource Allocation & Cost/Time Trade-Off • Prepare the CPM network diagram • Determine the cost per unit time to “crash” activities. • Compute the critical path • If possible, shorten the critical path at the least cost (one day at a time). • Repeat steps 3 and 4.

  39. Resource Allocation & Cost/Time Trade-Off “Crashing” projects Consider the following project… A1(2) A3(5) A5(1) A2(3) A4(3) Assume that it takes $1000 per day to crash A3, and $500 per day to crash A2. Total available budget to spend on crashing activities is $4000.

  40. Resource Allocation & Cost/Time Trade-Off Which activities would you “crash” to minimize the project duration with the available budget? By how many days ?

  41. Resource Allocation & Cost/Time Trade-Off Decision:Total $ Spent: Crash A3 by 1 day $1000 Crash A2 and A3 by 1 day $1000+$1500 = $2500 Crash A2 and A3 by 1 day $2500+$1500 = $4000 Summary of steps: Crash A3 by 3 days Crash A2 by 2 days Before: 8 days After: 5 days (at a cost of $4000)

  42. Example B A D C Act. NT NC CT CC Max redn Unit crash cost A 2 6 1 10 1 (10-6)/(2-1)=4 B 5 9 2 18 3 (18-9)/(5-2)=3 C 4 6 3 8 1 2 D 3 5 1 9 2 2 Project indirect cost: $10 up to 8 days, $5 more per day beyond that

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