Operations Management

Chapter 4: Projects
Week 2- Lecture 2
Summary
• Operations and supply chain strategy involves setting the broad
policies for using a firm’s resources
• Coordinates operational goals with those of the larger organization
• Strategies are implemented through a set of activities designed to
deliver products and services in a manner consistent with the firm's
overall business strategy
• Operations and supply chain strategies need to be evaluated relative
to their riskiness
• Supply chain disruptions are unplanned and unanticipated events
that disrupt the normal flow of goods and materials
• Supply chain coordination risks and disruption risks
Summary Continued
• A strategy that is sustainable needs to create value
• Shareholders are equity owners in the company
• Stakeholders are individuals and organizations that are influenced by
the firm
What is Project Management?
• What is a project?
• A series of related jobs, usually directed toward some major output and
requiring a significant period of time to perform
• What is project management?
• Planning, directing, and controlling resources (people, equipment, material)
to meet the technical, cost, and time constraints of the project
• Why is project management important?
• At the highest levels of an organization, management often involves juggling a
portfolio of projects
Types of Development Projects

Exhibit 4.1
Project Structure
Pure Project

• A self-contained team works full-time on the project

Functional Project

• Responsibility for the project lies within one functional area of the
firm
• Employees from that area work on the project, usually only part-time

Matrix Project

• A blend of pure and functional project structures – people from

different functional areas work on the project, possibly only part-
time
Pure Project Structure
• The project manager has full authority
• Team members report to one boss
Advantages • Shortened communication lines
• Team pride, motivation, and commitment are
high

• Duplication of resources
• Organizational goals and policies are ignored
Disadvantages • Lack of technology transfer
• Team members have no functional area
"home"
Functional Project Structure
• A team member can work on several projects

Advantages • Technical expertise maintained in functional area

• Functional area is “home” after project completed
• Critical mass of specialized knowledge

• Aspects of the project that are not directly related to the

Disadvantages functional area get short-changed

• Motivation of team members is often weak
• Needs of the client are secondary and are responded to slowly
Matrix Project Structure
• Better communications between functional areas
• Project manager held responsible for success
Advantages • Duplication of resources is minimized
• Functional “home” for team members
• Policies of the parent organization are followed

• Two bosses
Disadvantages • Depends on project manager’s negotiating skills
• Potential for sub-optimization
Project Life Cycle
Step 1: Defining the Project Scope
• Project Scope
• A definition of the end result or mission of the project—a product or service
for the client/customer—in specific, tangible, and measurable terms.
• Purpose of the Scope Statement
• To clearly define the deliverable(s) for the end user.
• To focus the project on successful completion
of its goals.
• To be used by the project owner and participants
as a planning tool and for measuring project success.

4–11
 Project Scope Checklist

• Project objective
• Deliverables
• Milestones
• Technical requirements
• Limits and exclusions
• Review with customer

4–12
Step 2: Establishing Project Priorities
• Causes of Project Trade-offs
• Shifts in the relative importance of criterions related
to cost, time, and performance parameters
• Budget–Cost
• Schedule–Time
• Performance–Scope
• Managing the Priorities of Project Trade-offs
• Constrain: a parameter is a fixed requirement.
• Enhance: optimizing a criterion over others.
• Accept: reducing (or not meeting) a criterion requirement.

4–13
Step 3:Creating the Work Breakdown
Structure
• Work Breakdown Structure (WBS)
• An hierarchical outline (map) that identifies the products and work elements
involved in a project.
• Defines the relationship of the final deliverable
(the project) to its subdeliverables, and in turn,
their relationships to work packages.
• Best suited for design and build projects that have tangible outcomes rather
than process-oriented projects.

4–14
Organizing Project Tasks
• Work Breakdown Structure (WBS)
• Task
• A further subdivision of a project – usually shorter than several months and performed by a
single group or organization
• Work Package
• A group of activities combined to be assignable to a single organizational unit
• Activities
• Pieces of work that consume time
Work Breakdown Structure Example

Overview

Details

Exhibit 4.2
Work Breakdown Structure, Large Optical
Scanner Design

Exhibit 4.3
Step 4: Network-Planning Models
A project is made up of a sequence of activities that
form a network representing a project

The path taking longest time through this network of

activities is called the “critical path”

The critical path provides a wide range of scheduling

information useful in managing a project

Critical path method (CPM) helps to identify the

critical path(s) in the project networks
Constructing a Project Network
• Terminology
A
• Activity: an element of the project that requires
time.
• Merge Activity: an activity that has two or B D
more preceding activities on which it depends.
• Parallel (Concurrent) Activities: Activities that
can occur independently and, if desired, not at
C
the same time.
Constructing a Project Network (cont’d)
• Terminology
• Path: a sequence of connected, dependent activities.
• Critical path: the longest path through the activity network that allows for the
completion of all project-related activities; the shortest expected time in
which the entire project can be completed. Delays on the critical path will
delay completion of the entire project.
C

A B D

(Assumes that minimum of A + B > minimum of C in length of times to complete activities.)

Constructing a Project Network (cont’d)
• Terminology
• Event: a point in time when an activity is started
or completed. It does not consume time.
• Burst Activity: an activity that has more than one activity immediately
following it (more than one dependency arrow flowing from it).
B
• Two Approaches
• Activity-on-Node (AON)
• Uses a node to depict an activity. A C
• Activity-on-Arrow (AOA)
• Uses an arrow to depict an activity.
D
Critical Path Method (CPM)
Identify each activity to be done
and estimate how long it will take

Determine the required sequence

and construct a network diagram

Determine the critical path

Determine the early start/finish

and late start/finish schedule
Identify Activities and Construct Network
Constructing the Network
Activity duration t The expected duration of an activity

The earliest time an activity can begin if all previous activities EFpredecessor
Early start ES
are begun at their earliest times (max)
The earliest time an activity can be completed if it is started at
Early finish EF ES + t
its early start time
The latest time an activity can begin without delaying the
Late start LS LF - t
completion of the project
The latest time an activity can be completed if it is started at LSsuccessor
Late finish LF
its latest start time (min)

The amount of time an activity can be delayed without

LS - ES
Total slack TS delaying the completion of the project without delaying the
LF - EF
completion of the project
Determine Early Start/Early Finish and Late Start/Late
Finish Schedule

Exhibit 4.7
 Activity Time, Immediate

In-class Exercise A
days
1
predecessor
-
B 2 -
1. Draw a project network path
C 2 -
2. Calculate the scheduling times and total slack for each activity D 2 A, B
E 4 A, C
3. List the critical path activities and project duration F 1 C
G 4 D
H 8 G, E, F