1

2. PROJECT MANAGEMENT
1GE303 OPERATIONS
MANAGEMENT

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Project management

Agenda

2. Project management
2.1. What is a project?
2.2. Project planning and management
2.3. Project representation
2.4. Critical Path Method
2.5. PERT/CPM method
2.6. Resource Management
2.7. Costs vs. Time

2 | OM 2023-24 Note: The images included in this presentation were taken from the adopted books (or previous editions of them)
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Supplementary bibliography
“Operations Management”
Slack, N. and Brandon-Jones, A. – Pearson
Chapter 19 - Project Management

“Operations Management for Competitive Advantage”

Chase, R., Jacobs, F. and Aquilano, N. - McGraw-Hill
Chapter 3 - Project Management

“Project Management in Practice”

Mantel, Meredith, Shafer, and Sutton - Wiley and Sons

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2.1. What is a project?

Project:
Set of activities (actions) to be undertaken to achieve a certain objective (deliverable). It usually requires a
considerable amount of time to execute.
Features:
▪ Uniqueness (has no repetitive nature);
▪ With precise objectives: “deliverables”, “start”, “due date”, and “budget”;
▪ Consists of multidisciplinary activities, tasks or operations;
▪ Complexity;
▪ Conflicts;
▪ Part of a more comprehensive program.

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2.1. What is a project?

Examples of Projects:
▪ Construction Projects,
▪ New Product Development (NPD),
▪ Information Technology (IT) Projects,
▪ …

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2.1. What is a project?

Initiation
1. Initiation: It involves defining the project's scope, goals, and objectives. It also involves
identifying the project stakeholders and developing a project charter.

Planning
2. Planning: it involves developing a detailed plan for executing the project. This includes
identifying the tasks that need to be completed, estimating the resources required, and
developing a schedule and budget.
Execution
3. Execution: It involves carrying out the project plan.

4. Monitoring and control: It involves tracking the progress of the project and making Monitoring
adjustments as needed. This includes identifying and mitigating risks, and ensuring that and Control
the project is on track to meet its goals and objectives.

5. Closure: It involves completing the project and delivering the final product or service to Closure
the customer.

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2.1. What is a project?

Termination of a project:

❑ Termination by extinction (project was completed, with or without success);

❑ Closing by addition (projects evolve, giving rise to a new business unit, e.g., to a
new department of the organization);

❑ Closing by integration (projects evolve, giving way to routine operations);

❑ Closing due to starvation (cutting resources, no longer part of the organization's

priorities — other priority projects, customer cancels the order, reduced budget,
key resource abandons the project, ...).

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2.1. What is a project?

Project managers vs. Operations manager:
❑ Operations Manager:
• Within a well-defined management structure (departments, sections)
• Almost always routine/repetitive tasks
• Technical skills, in the area of ​operations and logistics
• Main priority: optimization.
❑ Project Manager:
• With little authority over elements (multidisciplinary teams) – liaison, leader, negotiator, facilitator
• Unique and innovative tasks
• Planning and organization skills, conflict resolution and negotiation, communication
• Main priority: conflict resolution

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2.1. What is a project?

The Roles of a Project Manager
❑ Facilitator (instead of supervisor);
• View of the project as a whole, with a view to its optimization,
• Ensure information and resources to team members,
❑ Organizer;
❑ Communicator;

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2.2. Project planning and management

There are 3 organizational structures that can be used to link the project to the parent company:

Pure project – there is a team that works entirely on the project;

Functional project – the project is developed within a functional area of the company;

Matrix project – each project uses people from different functional areas.

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2.2. Project planning and management

Functional
project

Matrix
project

11 | OM 2023-24 Operations Management for Competitive Advantage with Global Cases”, Chase et al.
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2.2. Project planning and management

To plan the execution of a project you need:

▪ identify objectives / goals;
▪ identify the activities, their duration and the resources they require;
▪ identify the sequence between activities.

If there are factors that cannot be predicted / controlled, it might be necessary to correct the initial plan.

Project management consists of:

▪ ensure resource availability;
▪ monitor and control project implementation;
▪ revise the original plan.

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2.2. Project planning and management

Objectives and Key Performance Indicators (KPIs):

❑ Time (do not exceed the stipulated delivery time)

❑ Cost (do not exceed the stipulated budget)

❑ Quality (respect the specifications defined at the

beginning, by the client/project owner)

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2.2. Project planning and management

2.2.1. Project Planning Methodologies:

Waterfall:
❑ Sequential activity planning;
❑ Customer feedback is given after product
validations;
❑ Little flexibility to change;
❑ Sequence of activities clear and subject to
minor deviations;
❑ Requirement: Existence of technical
requirements from the beginning

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2.2. Project planning and management

2.2.1. Project Planning Methodologies:

Agile
❑ Multiple iterations of development, testing and customer feedback;
❑ Great flexibility to change;
❑ Necessary autonomy of teams for decision making;
❑ No technical requirements from the start;
❑ Common in the areas of software development and R&D;
❑ In some R&D projects it can be combined with waterfall techniques.

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2.2. Project planning and management

2.2.2. Project definition (based on waterfall approach):

A. Preparing a project proposal that includes:

❑ Summary
• Short description of the project
• “Deliverables”
• “Milestones”
• Expected profit and impact
❑ Objectives
• Detailed description of deliverables and project mission
❑ Approach
• Technical and management approaches, relationship with other projects, deviations from
common practices).

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2.2. Project planning and management

2.2.2. Project definition (based on waterfall approach – Continue):

B. Project launch:
❑ Identify atypical aspects of the project and the stakeholders’ expectations,
❑ Build the team,
❑ Project launch meeting (initial plan and assignment of responsibilities),

C. Hierarchical planning:
❑ Define objectives based on SMART criteria (Specific, Measurable, Attainable, Realistic, Time
bounded).
❑ Most important activities (level 1)
❑ Delegating level 1 activities to coordinators so that they can obtain higher levels of detail
(WBS structure – “Work Breakdown Structure”)

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2.2. Project planning and management

2.2.2. Project definition (based on waterfall approach – Continue):

D. Summary:

A project starts with

• A description of the objectives to be achieved and the work to be carried out;
• A proposed timetable (start and completion dates and key milestones);
• Performance targets in terms of budget and completion dates for key milestones;
• Reports to be delivered (deliverables).

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2.2. Project planning and management

2.2.3. Work Breakdown Structure (WBS):

The WBS, decomposition of the project into a tree of subprojects, tasks, subtasks and work packages ("work
packages"), well-defined and controllable sequences of small activities, typically not exceeding 10 days in
duration, and independent of each other.

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2.2. Project planning and management

2.2.3. Work Breakdown Structure (WBS):

An Example (Serve breakfast in bed):

❑ Objective: having breakfast in bed;
❑ End result: breakfast in bed of boiled
eggs, toast and orange juice;
❑ Success criteria: the plan uses minimal
human resources and time, and the
product is of high quality (freshly
cooked egg, hot toast, etc.);
❑ Scope: the project starts in the kitchen
at 6:00 am and ends in the bedroom;
requires an operator and normal
kitchen equipment.

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2.2. Project planning and management

2.2.4. Time planning:

After identifying the activities (and obtaining the WBS) one needs to
❑ Estimate the duration of each activity and the resources needed;
❑ Identify dependency relationships between activities (some activities may have to start only after others
have finished);
❑ Identify additional restrictions;
❑ Get the schedule of activities.

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2.3. Project representation

2.3.1. Table of Dependencies:
List of activities, the dependencies, and durations
Activities Precedents Duration

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2.3. Project representation

2.3.2. Network of Activities:
• Activities on Node (AoN) or Activities on Arc (AoA)
networks to show dependencies and duration.

D,1

A,8 B,1 C,4 F,5 G,3

E,8

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2.3. Project representation

2.3.3. Gantt chart or timeline:
• A bar chart over time which also shows the dependencies.

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2.3. Project representation

2.3.4. Resource utilization diagram:
• The cumulative resource requirements over time.

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2.3. Project representation

❑ Features of network of activities (common between AoN and AoN networks):

▪ consisting of arcs and vertices;
▪ consisting of paths;
▪ cannot have circuits;

❑ AoA networks can only have one starting vertex and one ending vertex while AoN networks can have
several starting and ending vertices or one “start the project” and one “finish the project” nodes.

❑ Path:
▪ Sequence of activities from the start node to the end node of the network.

❑ Critical path:
▪ Sequence of activities (from the start node to the end node) that cannot be delayed without
delaying the project (critical activities). The duration of the critical path is called the critical time.

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2.3. Project representation

Additional notes for AoA networks:

❑ In AoA networks, it may be necessary to use dummy activities

▪ to show the dependency relationships
▪ To avoid side activities.

❑ The dummy activities …

▪ are not real activities, but are interpreted for the purposes of numerical analysis as activities with
zero duration;
▪ are represented with a dashed arrow (- - - ->).

❑ In this course we will focus only on AoN networks.

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2.3. Project representation

❑ Other types of dependencies in AoN networks:

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2.3. Project representation

Examples
Create an AoN and AoA networks

Activities Precedents Duration

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2.3. Project representation

Activities Precedents Duration
Examples
Create an AoN and AoA networks

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2.4. Critical Path Method

For simple projects,
• which allow the easy identification of all existing paths in the project,
• with known and deterministic duration of activities,
• with activities that can be represented in a network, in a sequential way, and
• with at least one task whose completion marks the end of the project
we can identify the critical activities and the critical time of the project.

Steps:
I. Identify existing paths in the project;
II. Calculate the total duration of each path;
III. Identify the longest path (critical path) and its duration (critical time).

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2.4. Critical Path Method

Example
• Create a AoN network of the following list of activities.
• Identify the paths and the critical path(s).

Activity A B C D E F

Precedent Activity - A A C B D, E

Activity (days) 4 12 3 5 14 2

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2.4. Critical Path Method

B (12) E (14)

A (4) F (2)

C (3) D (5)

Path Total Duration

A-B-E-F 4+12+14+2= 32 weeks
A-C-D-F 4+3+5+2 = 14 weeks

The longest path (critical path) enforces the duration of the project (i.e., the project cannot be completed
before 32 weeks – the critical time)
Critical path activities are called critical activities and have zero slack (that is, they cannot be delayed)

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2.4. Critical Path Method

Critical Path Method (CPM) is essentially focused on time planning, starting with the goal of minimizing
the project's time.

Knowing the duration of the activities:

i. how long does it take to execute the project?
ii. when should each activity begin and end?

Notes:
• Critical time – Least possible time required to complete the project;
• Critical activities - Activities that cannot be delayed without delaying the whole project;
• Critical path - Longest path (i.e., with the longest duration) in the project network. Sequence of
critical activities.
• Total slack – maximum delay of non-critical activities, so as not to delay the project. Critical
activities have zero total slack.

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2.4. Critical Path Method

Time calculation in an AoN network:

To determine the earliest project completion time, for each vertex i of the network one needs to
calculate:
▪ ES: earliest start of an activity (i.e., after completion of all its precedent activities)
▪ EF: earliest finish of an activity

Once the deadline has been set, or knowing the later project completion date, for each vertex i of the
network one needs to calculate:
▪ LS: latest start of an activity (i.e., starting an activity as late as possible, not delaying the following
activities)
▪ LF: Latest finish of an activity (i.e., Finishing an activity as late as possible, not delaying the
following activities).

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2.4. Critical Path Method

Being j, i and k project activities,

ESi = Max EFj , j  precedents ESi EFi

LSi LFi
EFi = ESi + activity duration i
j i k
LFi = Min LSk , k  subsequent
LSi = LFi - activity duration i

ESbeginning = 0
LFend = EFend, The shortest possible end of the project.

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2.4. Critical Path Method

Total slack (TS) is the maximum delay that an activity can suffer without jeopardizing the total duration of
the project. This assumes that the preceding activities end as soon as possible and that the following
activities start as late as possible.
TSi = LFi – EFi = LSi – ESi =LFi – ESi – di

Critical activities have TS=0.

NOTE: When only the term “slack” is mentioned, it is intended to indicate the total slack.

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2.4. Critical Path Method (CPM)

Steps:
A. Forward calculations:
1. Calculate the earliest start time of activities (ESstart= EFstart= 0, ESactivity= max {EFprecedent activities}),
2. Calculate the earliest finish time of activities (EFactivity= ESactivity + durationactivity),
3. Calculate the earliest finish time of the whole project (EFend = LFend = max {EFactivities}).
B. Backward calculations:
1. Calculate the latest finish time of activities (LFactivity= min {LSsubsequent activities}),
2. Calculate the latest start time of activities (LSactivity= LFactivity - durationactivity),
C. Calculate the total slack time of activities.
D. Introduce the Critical Path and the project duration.

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2.4. Critical Path Method (CPM)

Example:
❑ Identify activities and represent them in a network,
❑ Do the CPM calculations and identify the critical path.

Activity A B C D E F

Precedent Activity - A A C B D, E

Activity (days) 4 12 3 5 14 2

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2.4. Critical Path Method (CPM)

1. Calculate the earliest start and finish times for each activity (ES, EF). (Forward calculation)

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2.4. Critical Path Method (CPM)

2. Calculate the latest start and finish times for each activity (LS, LF). (Backward calculation)

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2.4. Critical Path Method (CPM)

3. Using the values of ES, EF, LS and LF, we obtain critical time (highest EF value),
4. Critical activities are those with ES=LS and EF=LF.
5. Total slack = LF-ES-activity duration

Critical duration= 32 days

critical activities: A, B, E, F

total slack:
TSA= TSB = TSC = TSD = 0

TSC =25-4-3= 18 days

TSD =30-7-5 = 18 days

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2.4. Critical Path Method (CPM)

Example

1. Draw activity network, compute ES, EF,

LS, LF, compute critical time, critical path
and non-critical activities.

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2.4. Critical Path Method (CPM)

Solution
29 29 37
C (8)
37 39
29 29 37
ESi EFi 29 34
LSi LFi 21 37 39

j i k 22 27 29 32 37

0-0 0 Yes
22-21 1 No
21-21 0 Yes
27-26 1 No
32-29 3 No
29-29 0 Yes
37-37 0 Yes

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2.5. PERT/CPM method

❑ PERT: Program Evaluation and Review Technique,

❑ US Navy, 1950s (created for the Polaris missile project),

❑ It is a critical path method,

❑ Activities with estimated and uncertain duration,

❑ Allows you to obtain the same information as the CPM,

❑ And also information about probabilities of project completion within a certain time frame.

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2.5. PERT/CPM method

I. Identify activities and represent them in a network,
II. Calculate the average durations of each activity, from the optimistic, pessimistic and most likely
estimates of duration using:
dmean = (doptimistic+ 4 dmost_likely + dpessimistic)/6
III. Apply the CPM method, using average durations, dmean , to obtain the average critical time, Tmean, (a
random variable) and identify critical activities. 2
Pessim. − Optim.
2
IV. Calculate the variance of the duration of each of the critical activities .𝜎 = 6
V. Calculate the variance of the random variable “time to complete the project” (T2), given by the sum
of the variances of the durations of critical activities. 𝜎𝑇2 = σ𝑖𝜖𝐼 𝜎𝑖2 , 𝐼 is the set of critical activities.
VI. Use T~N(Tmean, T) to calculate probabilities based on timeframes and probabilities.

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2.5. PERT/CPM method

Example

Data for the activities:

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2.5. PERT/CPM method

1. Calculate expected value of the durations of the various activities

E [dA]= (3+4 x 6+15)/6 =42 / 6 = 7

Opt. Time + 4(MostLikely Time) + Pess. Time

E[T] =
6

2. Use the CPM method to find the critical activities and time critical (A , C, E, H, I).
Tmean = 7 + 14 + 11 + 4 + 18 = 54 days.
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2.5. PERT/CPM method

3. Calculate variance of critical activities,
2
2
Pessim. − Optim.
𝜎 =
6

2
෍ 𝜎 =41

4. The variances of critical activities are added

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2.5. PERT/CPM method

Now, it is possible to further investigate on the completion time of the project (e.g.,):
1. What is the probability of completing the project in less than 53 days?

𝐷−𝑇𝑚𝑒𝑎𝑛
p(t < D = 53 ) = p(𝑧 ≤ )=
𝜎𝑇2

53−54
p(z ≤ )= p(z≤ - 0.156) = 43.8%
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2.5. PERT/CPM method

Normal Distribution Table - 1

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2.5. PERT/CPM method

Now, it is possible to further investigate on the completion time of the project (e.g.,):
2. What is the probability of completing the project in more than 56 days?

𝐷−𝑇𝑚𝑒𝑎𝑛
p(t > D = 56 ) = p(𝑧 ≥ ) =
𝜎𝑇

56−54
p(z≥ )= p(z≥0.312) = 1- (p(z≤0.312) ) 37.7%
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2.5. PERT/CPM method

Normal Distribution Table - 2

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2.6. Resources
❑ The execution of activities, besides consuming time, also implies the use of other resources.
❑ The scarcity of resources can prevent the project from being executed in its critical time.
❑ Types of resources: Materials, Money, Workforce and Equipment (non-accumulative resources).

Resource
Units Resource needs
Typically, regardless of the schedule of activities,
the total needs of a given resource per unit of
time are quite uneven.

Time
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2.6. Resources
In face of such a situation one may wish to:
i. level resource utilization as much as possible over time, while meeting the critical time.
• We can reschedule the activities that have some slack times,
ii. do not exceed a given available resource limit, which may bring about the need to exceed the
critical time.
• The problem of planning a project in the presence of limited resources is difficult to solve,
even if it is only a resource being considered. Therefore, heuristic procedures are usually
used.

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2.6. Resources
Simplification assumptions of the resource levelling problem:
▪ the duration of activities is well known;
▪ once an activity has been started, it is not interrupted;
▪ the amount of resources allocated to the execution of an activity is constant throughout its
execution.

After finding the critical activities (with CPM method), we can apply a heuristic algorithm to level the
resources while observing the available resource limit:

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2.6. Resources
I. Start Time = 0,
II. From the set of “unscheduled” activities, identify those without precedent or with precedents have
been done by current Time,
III. Sort the activities (identified in step II.) based on:
1) in ascending order of total slacks;
2) in ascending order of earliest date (ES);
3) in descending order of duration.
IV. Schedule the “sorted” activities without exceeding the available resource and remove them from the
list of unscheduled activities.
V. If there is no more “unscheduled” activities STOP; otherwise, Time = Time + 1 and return to step II.

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2.6 Resources
Example
A construction project was broken down into seven main activities. For each activity the duration and the labor requirements, expressed
in men / day, are known. These data are in the following table:

Activities Precedence Duration (days) Men/day

A — 2 3
B — 5 2
C A 1 2
D A 1 3
E B,C 1 4
F B,C 5 2
G E,D 1 3
a) Determine the minimum duration required to complete the project.
b) Determine the daily labor requirements during project implementation by considering activities starting at their earliest dates.
c) Develop alternative scheduling to achieve a more uniform use of labor while meeting critical duration.
d) Suppose the company has only 5 employees. Assign the 5 workers to the different activities in order to minimize the duration of the
project execution.

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2.6 Resources
a) Determine the minimum duration required to complete the project.

0 2 2 3
A (2) D (1)
2 4 8 9
0 0 2 3 5 6 6 7 10 10
Start C (1) E (1) G (1) End
0 0 4 5 8 9 9 10 10 10

0 5 5 10
B (5) F (5)
0 5 5 10

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2.6 Resources
b) Determine the daily labor requirements during project implementation by considering activities
starting at their earliest dates.
Gantt Chart
of the
project
(activities
start at ES)

Diagram of
resource
requirements
over the
project
duration

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2.6 Resources
c) Develop alternative scheduling to achieve a more uniform use of labor while meeting critical duration.

Graphically:

(3)

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2.6 Resources
d) Suppose the company has only 5 employees. Assign the 5 workers to the different activities in order
to minimize the duration of the project execution.
Through a heuristic: Order activities according to....
1) in ascending order of total slacks;
2) in ascending order of earliest date (ES);
3) in descending order of duration
Solution obtained by the heuristic algorithm Optimal solution

By heuristic: start activities in the order B-A-C-D-F-E-G, not exceeding the

limit.

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2.7. Costs vs. Time

❑ The execution of activities consumes time and resources, and this is associated with a certain cost.

❑ There is a direct relationship between the duration of an activity and its cost.

❑ When considering the cost-execution time of an activity, it is assumed that if more resources are
allocated to its execution, it will be possible to accomplish it in less time.

❑ If the duration of the project is to be shortened, what activities to consider?

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2.7. Costs vs. Time

Notation:
di = duration of activity i
ni = normal duration of activity i
ai = accelerated duration of activity i
C (di) = cost associated to the duration of activity i
Duration-cost graph:
C (di)

Ki
C (ai)

C (ni)

ai ni di

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2.7. Costs vs. Time

Procedure to follow in order to reduce costs:
1 - draw the network of activities;
2 - determine the cost per unit of time to accelerate each network activity;
3 - calculate the critical time considering normal durations for activities;
4 - identify critical activities;
5 - shorten the path by reducing the duration of the critical activity with the lowest marginal cost;
6 - repeat steps 3. (with the new duration), 4., and 5. until the desired decrease is achieved.

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2.7. Costs vs. Time

Example

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2.7. Costs vs. Time

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2.7. Costs vs. Time

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2.7. Costs vs. Time

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