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Project Management

Project Management. MD707 Operations Management Professor Joy Field. Definition of a Project. A project is an interrelated set of activities that has a definite starting and ending point within a limited time frame and results in a unique product or service.

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Project Management

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  1. Project Management MD707 Operations Management Professor Joy Field

  2. Definition of a Project • A project is an interrelated set of activities that has a definite starting and ending point within a limited time frame and results in a unique product or service. • Examples of projects include building construction, introducing a new product, and software development.

  3. Some Terminology … • Activity • The smallest unit of work effort consuming both time and resources that the project manager can schedule and control • Precedence relationship • A sequencing constraint between interrelated activities by which one activity cannot start until a preceding activity has been completed • Schedule • A plan that sets priorities, determines start and finish times, and allocates resources to accomplish the activities

  4. Project Management Approaches

  5. Project Management Using Network Models • Describe the project • Define project activities • Determine precedence relationships • Diagram the network • Nodes (circles) and arcs (arrows) • Activity-on-node (AON) network - Nodes are activities and arcs show precedence relationships First two steps:

  6. Project Management ExampleSt. John’s Hospital

  7. AON Network for St. John’s Hospital Project I A F K C G Start Finish B D H J E

  8. Determining the Critical Path *critical path = longest path through the network

  9. Network Time Calculations • Earliest finish time (EF) for an activity • EF = ES + t • Earliest start time (ES) for an activity • ES = Max [EF times of all immediately preceding activities] • Latest start time (LS) for an activity • LS = LF – t • Latest finish time (LF) for an activity • LF = Min[LS times for all immediately following activities]

  10. Calculating Activity Slacks Activity slack: LS-ES or LF-EF, Critical path in bold

  11. Calculating Time Estimates • Optimistic time ( ) • Shortest time during which an activity can be completed • Most likely time ( ) • Best estimate of average time • Pessimistic time ( ) • Longest time an activity can take • Activity’s expected time ( ) and variance ( ) with beta distribution

  12. Calculating Probabilistic EstimatesSt. John’s Hospital Example Time estimates (weeks)

  13. Analyzing Probabilities • Probabilities can be assessed using the z-transformation formula • Assuming the activity times are independent, the path standard deviation is the square root of the sum of the activity time variances. • To determine the probability of completing a project in a specified amount of time • Calculate the probability of each of the paths being completed in that amount of time based on the value of z. For any value of z that is greater than 3, the probability that the corresponding path will be completed in that amount of time can be considered to be 100%. • If all paths are independent, then the probability of completing a project in the specified amount of time is the product of the individual path probabilities.

  14. Hospital Project Completion Time Probabilities How likely is it that the hospital project will be completed in 72 weeks?

  15. Analyzing Costs in a Project • Direct costs and time • Normal time • Normal cost • Crash time • Crash cost • Cost assumptions • Linear costs per unit of time (The problems in your textbook do not necessarily make this assumption.) • Indirect costs and penalty costs

  16. Determining the Minimum-Cost Schedule • Step 1 • Determine the project’s critical path(s). • Step 2 • Find the least expensive activity or activities on the critical path(s) to crash. • Step 3 • Reduce the time for this activity until the first of (a) it cannot be further reduced, (b) another path becomes critical, or (c) the increase in direct costs exceeds the savings that result from shortening the project. If more than one path is critical, the time for an activity on each path may have to be reduced simultaneously. • Step 4 • Repeat this procedure until the increase in direct costs is less than the savings generated by shortening the project.

  17. Direct Cost and Time Data for Hospital Project

  18. Hospital Project Minimum-Cost Schedule Assume: Indirect cost = $8,000/week, Penalty cost = $20,000 per week after Week 65

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