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© 2008 Prentice Hall, Inc. 3 – 1

OperationsManagementOperationsManagementChapter 3 –Project Management

PowerPoint presentation to accompanyHeizer/RenderPrinciples of Operations Management, 7eOperations Management, 9e


Outline

Profil Global Perusahaan : BechtelGroup

Pentingnya Manajemen Proyek Perencanaan Proyek

Manajemen Proyek Struktur Pemecahan Pekerjaan

(Work Breakdown)

Skedul Proyek


Outline - Continued

Pengendalian Proyek

Teknik Mengelola Proyek: PERT andCPMThe Framework of PERT and CPMNetwork Diagrams and ApproachesActivity-on-Node ExampleActivity-on-Arrow Example

2


Outline - Continued

Menentukan Skedul ProyekForward PassBackward PassCalculating Slack Time and Identifying

the Critical Path(s)

Variasi Waktu Kegiatan Three Time Estimates in PERT

Probability of Project Completion


Outline - Continued

Cost-Time Trade-Offs and ProjectCrashing

Kritik Terhadap PERT and CPM Menggunakan Microsoft Project

Mengelola ProyekCreating a Project Schedule Using MS

ProjectTracking Progress and Managing

Costs Using MS Project


Tujuan Pembelajaran

1. Menciptakan StrukturPemecahan Pekerjaan.

2. Draw AOA and AON networks3. Complete both forward and

backward passes for a project4. Determine a critical path

When you complete this chapter youshould be able to:

3


Learning Objectives

5. Calculate the variance of activitytimes

6. Crash a project7. Use Microsoft Project software

to create a project

When you complete this chapter youshould be able to:


Bechtel Projects

Building 26 massive distribution centers in justtwo years for the internet company WebvanGroup ($1 billion)

Constructing 30 high-security data centersworldwide for Equinix, Inc. ($1.2 billion)

Building and running a rail line between Londonand the Channel Tunnel ($4.6 billion)

Developing an oil pipeline from the Caspian Searegion to Russia ($850 million)

Expanding the Dubai Airport in the UAE ($600million), and the Miami Airport in Florida ($2billion)


Bechtel Projects Building liquid natural gas plants in Yemen $2

billion) and in Trinidad, West Indies ($1 billion) Building a new subway for Athens, Greece ($2.6

billion) Constructing a natural gas pipeline in Thailand

($700 million) Building 30 plants for iMotors.com, a company

that sells refurbished autos online ($300 million) Building a highway to link the north and south of

Croatia ($303 million)

4


Strategic Importance ofProject Management

Microsoft Windows Vista Project:hundreds of programmersmillions of lines of codehundreds of millions of dollars cost

Hard Rock Cafe Rockfest Project:100,000 + fansplanning began 9 months in advance


Satu Unit Banyak kegiatan berkaitan. Sulit perencanakan produksi dan

perencanaan persediaan. Peralatan yang digunakan secara

umum. Tenaga kerja dengan skill yang

tinggi.

Karakteristik Proyek


Contoh Proyek

Building Construction

Research Project

5


Mengelola Proyek

1. Planning - goal setting, defining theproject, team organization

2. Scheduling - relates people, money,and supplies to specific activitiesand activities to each other

3. Controlling - monitors resources,costs, quality, and budgets; revisesplans and shifts resources to meettime and cost demands


Planning Objectives Resources Work break-down

schedule Organization

Scheduling Project activities Start & end times Network

Controlling Monitor, compare, revise, action

Kegiatan PengelolaanProyek


Project Planning,Scheduling, and Controlling

Figure 3.1

Before Start of project Duringproject Timeline project

6



Figure 3.1




Figure 3.1




Figure 3.1


7



Figure 3.1


BudgetsDelayed activities reportSlack activities report

Time/cost estimatesBudgetsEngineering diagramsCash flow chartsMaterial availability details

CPM/PERTGantt chartsMilestone chartsCash flow schedules


Menyatakan tujuan Mendefinisikan Proyek Memecah Struktur

pekerjaan Menentukan

Sumberdaya Membentuk Organisasi

Perencanaan Proyek


Strukturnya sering temporer Menggunakan ahli dari seluruh

perusahaan . Dipimpim Manajer Proyek

Coordinates activities Monitors schedule

and costs

Strukturnya organisasi permanendengan ‘matrix organization’

Mengorganisasi Proyek

8


Contoh Organisasi Proyek

TestEngineer

MechanicalEngineer

Project 1 ProjectManager

Technician

Technician

Project 2 ProjectManager

ElectricalEngineer

ComputerEngineer

Marketing FinanceHumanResources Design Quality

Mgt Production

President

Figure 3.2


Organisasi Proyek TerbaikBila:

1. Pekerjaan didefinisikan de tujuanspesifik dan dibatasi waktu.

2. Pekerjaannya unik, relatif unikterhadap organisasi secarakeseluruhan.

3. Pekerjaan berisikan tugas yangbertalian satu dengan lainnya danmembutuhkan skill khusus.

4. Proyek sifatnya temporer terhadaporganisasi.

5. Proyek melintasi garis-garisorganisasi.


Organisasi MatriksMarketing Operations Engineering Finance

Project 1

Project 2

Project 3

Project 4

9


The Role ofthe Project Manager

Bertanggungjawab danmemastikan hal berikut.

Semua kegiatan siap sesuai denganurutan dan waktu.

Proyek dan biaya yang d harus disiapkan. Proyek memenuhi tujuan kualitas. Orang yang ditugasi sehingga menerima

motivasi, pengarahan, dan informasi.


The Role ofthe Project Manager

Highly visibleResponsible for making sure that:

Manajer proyek harus:

Pelatih yang baik Komunikator yang Mampu mengorganisir dari

berbagai disiplin ilmu.


Ethical Issues Bid rigging – divulging confidential information

to give some bidders an unfair advantage “Low balling” contractors – try to “buy” the

project by bidding low and hope to renegotiateor cut corners

Bribery – particularly on international projects Expense account padding Use of substandard materials Compromising health and safety standards Withholding needed information Failure to admit project failure at close

10


Work Breakdown Structure

Level1. Project2. Major tasks in the project3. Subtasks in the major tasks4. Activities (or work packages)

to be completed


Work Breakdown Structure

Figure 3.3

Level IDLevel Number Activity

1 1.0 Develop/launch Windows Vista OS2 1.1 Develop of GUIs2 1.2 Ensure compatibility with earlier

Windows versions3 1.21 Compatibility with Windows ME3 1.22 Compatibility with Windows XP3 1.23 Compatibility with Windows 20004 1.231 Ensure ability to import files


Project Scheduling

Identifying precedencerelationships

Sequencing activities Determining activity

times & costs Estimating material &

worker requirements Determining critical

activities

11


Purposes of ProjectScheduling

1. Shows the relationship of each activity toothers and to the whole project

2. Identifies the precedence relationshipsamong activities

3. Encourages the setting of realistic timeand cost estimates for each activity

4. Helps make better use of people, money,and material resources by identifyingcritical bottlenecks in the project


Scheduling Techniques

1. Ensure that all activities areplanned for

2. Their order of performance isaccounted for

3. The activity time estimates arerecorded

4. The overall project time isdeveloped


Gantt chart Critical Path Method

(CPM) Program Evaluation

and ReviewTechnique (PERT)

Project ManagementTechniques

12


A Simple Gantt Chart

TimeJ F M A M J J A S

DesignPrototypeTestReviseProduction


Passengers

Baggage

Fueling

Cargo and mail

Galley servicing

Lavatory servicingDrinking waterCabin cleaning

Cargo and mail

Flight services

Operating crewBaggagePassengers

DeplaningBaggage claimContainer offloadPumpingEngine injection waterContainer offloadMain cabin doorAft cabin doorAft, center, forwardLoadingFirst-class sectionEconomy sectionContainer/bulk loadingGalley/cabin checkReceive passengersAircraft checkLoadingBoarding

0 10 20 30 40Time, Minutes

Service For A Delta Jet

Figure 3.4


Project Control Reports Detailed cost breakdowns for each task Total program labor curves Cost distribution tables Functional cost and hour summaries Raw materials and expenditure forecasts Variance reports Time analysis reports Work status reports

13


Network techniques Developed in 1950’s

CPM by DuPont for chemical plants (1957) PERT by Booz, Allen & Hamilton with the

U.S. Navy, for Polaris missile (1958)

Consider precedence relationships andinterdependencies

Each uses a different estimate ofactivity times

PERT and CPM


Six Steps PERT & CPM

1. Define the project and prepare thework breakdown structure

2. Develop relationships among theactivities - decide which activitiesmust precede and which must followothers

3. Draw the network connecting all ofthe activities


Six Steps PERT & CPM

4. Assign time and/or cost estimatesto each activity

5. Compute the longest time paththrough the network – this is calledthe critical path

6. Use the network to help plan,schedule, monitor, and control theproject

14


1. When will the entire project becompleted?

2. What are the critical activities or tasks inthe project?

3. Which are the noncritical activities?4. What is the probability the project will be

completed by a specific date?

Questions PERT & CPMCan Answer


5. Is the project on schedule, behindschedule, or ahead of schedule?

6. Is the money spent equal to, less than, orgreater than the budget?

7. Are there enough resources available tofinish the project on time?

8. If the project must be finished in a shortertime, what is the way to accomplish thisat least cost?

Questions PERT & CPMCan Answer


A Comparison of AON andAOA Network ConventionsActivity on Activity Activity onNode (AON) Meaning Arrow (AOA)

A comes beforeB, which comesbefore C

(a) A B CBA C

A and B must bothbe completedbefore C can start

(b)A

CCB

A

B

B and C cannotbegin until A iscompleted

(c)B

AC

AB

CFigure 3.5

15



C and D cannotbegin until bothA and B arecompleted

(d)A

B

C

D B

A C

D

C cannot beginuntil both A and Bare completed; Dcannot begin untilB is completed. Adummy activity isintroduced in AOA

(e)CA

B D

Dummy activityA

B

C

D

Figure 3.5



B and C cannotbegin until A iscompleted. Dcannot beginuntil both B andC are completed.A dummyactivity is againintroduced inAOA.

(f)A

C

DB A B

C

D

Dummyactivity

Figure 3.5


AON Example

Activity DescriptionImmediate

PredecessorsA Build internal components —B Modify roof and floor —C Construct collection stack AD Pour concrete and install frame A, BE Build high-temperature burner CF Install pollution control system CG Install air pollution device D, EH Inspect and test F, G

Milwaukee Paper Manufacturing'sActivities and Predecessors

Table 3.1

16


AON Network forMilwaukee Paper

A

Start

BStartActivity

Activity A(Build Internal Components)

Activity B(Modify Roof and Floor)

Figure 3.6



Figure 3.7

C

D

A

Start

B

Activity A Precedes Activity C

Activities A and BPrecede Activity D



G

E

F

H

CA

Start

DB

Arrows Show PrecedenceRelationships

Figure 3.8

17


H(Inspect/

Test)

7DummyActivity

AOA Network forMilwaukee Paper

6

5D

(PourConcrete/

Install Frame)

4C(Construct

Stack)

1

3

2

Figure 3.9


Determining the ProjectSchedule

Perform a Critical Path Analysis The critical path is the longest path

through the network The critical path is the shortest time in

which the project can be completed Any delay in critical path activities

delays the project Critical path activities have no slack

time



Perform a Critical Path AnalysisActivity Description Time (weeks)

A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25Table 3.2

18



Perform a Critical Path Analysis

Table 3.2

Activity Description Time (weeks)A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25

Earliest start (ES) = earliest time at which an activity canstart, assuming all predecessors havebeen completed

Earliest finish (EF) = earliest time at which an activity canbe finished

Latest start (LS) = latest time at which an activity canstart so as to not delay the completiontime of the entire project

Latest finish (LF) = latest time by which an activity has tobe finished so as to not delay thecompletion time of the entire project



Perform a Critical Path Analysis

Figure 3.10

A

Activity Nameor Symbol

EarliestStart ES

EarliestFinishEF

LatestStart

LS LatestFinish

LF

Activity Duration

2


Forward PassBegin at starting event and work forwardEarliest Start Time Rule:

If an activity has only a single immediatepredecessor, its ES equals the EF of thepredecessor

If an activity has multiple immediatepredecessors, its ES is the maximum ofall the EF values of its predecessors

ES = Max {EF of all immediate predecessors}

19


Forward PassBegin at starting event and work forwardEarliest Finish Time Rule:

The earliest finish time (EF) of an activityis the sum of its earliest start time (ES)and its activity time

EF = ES + Activity time


ES/EF Network forMilwaukee Paper

Start

0

0

ES

0

EF = ES + Activity time



Start0

0

0

A

2

2

EF of A =ES of A + 2

0

ESof A

20


B

3


Start0

0

0

A

2

20

3

EF of B =ES of B + 3

0

ESof B


C

2

2 4


B

3

0 3

Start0

0

0

A

2

20


C

2

2 4


B

3

0 3

Start0

0

0

A

2

20

D

4

73= Max (2, 3)

21


D

4

3 7

C

2

2 4


B

3

0 3

Start0

0

0

A

2

20


E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4


B

3

0 3

Start0

0

0

A

2

20

Figure 3.11


Backward PassBegin with the last event and work backwards

Latest Finish Time Rule:

If an activity is an immediate predecessorfor just a single activity, its LF equals theLS of the activity that immediately follows it

If an activity is an immediate predecessorto more than one activity, its LF is theminimum of all LS values of all activitiesthat immediately follow it

LF = Min {LS of all immediate following activities}

22


Backward PassBegin with the last event and work backwards

Latest Start Time Rule:

The latest start time (LS) of an activity isthe difference of its latest finish time (LF)and its activity time

LS = LF – Activity time


LS/LF Times forMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = EFof Project

1513

LS = LF – Activity time



E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = Min(LS offollowing activity)

10 13

23



E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = Min(4, 10)

42



E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00


Computing Slack TimeAfter computing the ES, EF, LS, and LF timesfor all activities, compute the slack or freetime for each activity

Slack is the length of time an activity canbe delayed without delaying the entireproject

Slack = LS – ES or Slack = LF – EF

24


Computing Slack TimeEarliest Earliest Latest Latest On

Start Finish Start Finish Slack CriticalActivity ES EF LS LF LS – ES Path

A 0 2 0 2 0 YesB 0 3 1 4 1 NoC 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesF 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes

Table 3.3


Critical Path forMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00


ES – EF Gantt Chartfor Milwaukee Paper

A Build internalcomponents

B Modify roof and floorC Construct collection

stackD Pour concrete and

install frameE Build high-

temperature burnerF Install pollution

control systemG Install air pollution

deviceH Inspect and test

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

25


LS – LF Gantt Chartfor Milwaukee Paper

A Build internalcomponents

B Modify roof and floorC Construct collection

stackD Pour concrete and

install frameE Build high-

temperature burnerF Install pollution

control systemG Install air pollution

deviceH Inspect and test

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16


CPM assumes we know a fixed timeestimate for each activity and thereis no variability in activity times

PERT uses a probability distributionfor activity times to allow forvariability

Variability in Activity Times


Three time estimates are requiredOptimistic time (a) – if everything goes

according to planPessimistic time (b) – assuming very

unfavorable conditionsMost likely time (m) – most realistic

estimate


26


Estimate follows beta distribution


Expected time:

Variance of times:t = (a + 4m + b)/6

v = [(b – a)/6]2


Estimate follows beta distribution


Expected time:

Variance of times:t = (a + 4m + b)/6

v = [(b − a)/6]2 Probabilityof 1 in 100 of> b occurring

Probability of1 in 100 of< a occurring

Prob

abili

ty

OptimisticTime (a)

Most LikelyTime (m)

PessimisticTime (b)

ActivityTime

Figure 3.12


Computing VarianceMost Expected

Optimistic Likely Pessimistic Time VarianceActivity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 1 2 3 2 .11B 2 3 4 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11

Table 3.4

27


Probability of ProjectCompletion

Project variance is computed bysumming the variances of criticalactivities

2 = Project variance

= (variances of activitieson critical path)

p



Project variance is computed bysumming the variances of criticalactivitiesProject variance

2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

p = Project variance

= 3.11 = 1.76 weeks

p



PERT makes two more assumptions:

Total project completion times follow anormal probability distribution

Activity times are statisticallyindependent

28



Standard deviation = 1.76 weeks

15 Weeks

(Expected Completion Time)Figure 3.13



What is the probability this project canbe completed on or before the 16 weekdeadline?

Z = – / p

= (16 wks – 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Z is the number ofstandard deviations the duedate or target date lies fromthe mean or expected date



What is the probability this project canbe completed on or before the 16 weekdeadline?

Z = − / p

= (16 wks − 15 wks)/1.76

= 0.57

due expected datedate of completion

Where Z is the number ofstandard deviations the duedate or target date lies fromthe mean or expected date

.00 .01 .07 .08.1 .50000 .50399 .52790 .53188.2 .53983 .54380 .56749 .57142

.5 .69146 .69497 .71566 .71904

.6 .72575 .72907 .74857 .75175

From Appendix I

29



Time

Probability(T ≤ 16 weeks)is 71.57%

Figure 3.14

0.57 Standard deviations

15 16Weeks Weeks


Determining ProjectCompletion Time

Probabilityof 0.01

Z

Figure 3.15

From Appendix I

Probabilityof 0.99

2.33 Standarddeviations

0 2.33


Variability of CompletionTime for Noncritical Paths Variability of times for activities on

noncritical paths must beconsidered when finding theprobability of finishing in aspecified time

Variation in noncritical activity maycause change in critical path

30


What Project ManagementHas Provided So Far

The project’s expected completion timeis 15 weeks

There is a 71.57% chance the equipmentwill be in place by the 16 week deadline

Five activities (A, C, E, G, and H) are onthe critical path

Three activities (B, D, F) are not on thecritical path and have slack time

A detailed schedule is available


Trade-Offs And ProjectCrashing

The project is behind schedule The completion time has been

moved forward

It is not uncommon to face thefollowing situations:

Shortening the duration of theproject is called project crashing


Factors to Consider WhenCrashing A Project

The amount by which an activity iscrashed is, in fact, permissible

Taken together, the shortenedactivity durations will enable us tofinish the project by the due date

The total cost of crashing is as smallas possible

31


Steps in Project Crashing

1. Compute the crash cost per time period.If crash costs are linear over time:

Crash costper period =

(Crash cost – Normal cost)(Normal time – Crash time)

2. Using current activity times, find thecritical path and identify the criticalactivities


Steps in Project Crashing3. If there is only one critical path, then

select the activity on this critical paththat (a) can still be crashed, and (b) hasthe smallest crash cost per period. Ifthere is more than one critical path, thenselect one activity from each critical pathsuch that (a) each selected activity canstill be crashed, and (b) the total crashcost of all selected activities is thesmallest. Note that the same activity maybe common to more than one criticalpath.


Steps in Project Crashing

4. Update all activity times. If the desireddue date has been reached, stop. If not,return to Step 2.

32


Crashing The Project

Time (Wks) Cost ($) Crash Cost CriticalActivity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 YesB 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes

Table 3.5


Crash and Normal Timesand Costs for Activity B

| | |1 2 3 Time (Weeks)

$34,000 —

$33,000 —

$32,000 —

$31,000 —

$30,000 —

—

ActivityCost Crash

Normal

Crash Time Normal Time

CrashCost

NormalCost

Crash Cost/Wk = Crash Cost – Normal CostNormal Time – Crash Time

= $34,000 – $30,0003 – 1

= = $2,000/Wk$4,0002 Wks

Figure 3.16


Critical Path And SlackTimes For Milwaukee Paper

Figure 3.17

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00

Slack = 1 Slack = 1

Slack = 0 Slack = 6

Slack = 0

Slack = 0

Slack = 0

Slack = 0

33


Advantages of PERT/CPM

1. Especially useful when scheduling andcontrolling large projects

2. Straightforward concept and notmathematically complex

3. Graphical networks help highlightrelationships among project activities

4. Critical path and slack time analyses helppinpoint activities that need to be closelywatched


Advantages of PERT/CPM

5. Project documentation and graphicspoint out who is responsible for variousactivities

6. Applicable to a wide variety of projects7. Useful in monitoring not only schedules

but costs as well


1. Project activities have to be clearlydefined, independent, and stable in theirrelationships

2. Precedence relationships must bespecified and networked together

3. Time estimates tend to be subjective andare subject to fudging by managers

4. There is an inherent danger of too muchemphasis being placed on the longest, orcritical, path

Limitations of PERT/CPM

34


Project Management Software

There are several popular packagesfor managing projects Primavera MacProject Pertmaster VisiSchedule Time Line Microsoft Project


Using Microsoft Project

Program 3.1



Program 3.2

35



Program 3.3



Program 3.4



Program 3.5

36



Program 3.6



Program 3.7

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