Lecture 11

PRODUCTION AND OPERATIONS

MANAGEMENT
 Projects
JAN FEB MAR APR MAY JUN
Build A

A Done

Build B

B Done

Build C

C Done
On time!
Build D

Ship

Unique, one-time operations designed to

accomplish a specific set of objectives in a limited
time frame.

2
 Project Management
• How is it different?
– Limited time frame
– Narrow focus, specific objectives
– Less bureaucratic
• Why is it used?
– Special needs
– Pressures for new or improves products or
services

3
 Project Management
• What are the Key Metrics
– Time
– Cost
– Performance objectives
• What are the Key Success Factors?
– Top-down commitment
– Having a capable project manager
– Having time to plan
– Careful tracking and control
– Good communications
4
 Project Management
• What are the Major Administrative Issues?
– Executive responsibilities
• Project selection
• Project manager selection
• Organizational structure
– Organizational alternatives
• Manage within functional unit
• Assign a coordinator
• Use a matrix organization with a project leader

5
 Project Management
• What are the tools?
– Work breakdown structure
– Network diagram
– Gantt charts
– Risk management

6
 Planning and Scheduling

Gantt Chart MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Locate new facilities

Interview staff

Hire and train staff

Select and order

furniture

Remodel and install

phones

Move in/startup

7
 Key Decisions
• Deciding which projects to implement
• Selecting a project manager
• Selecting a project team
• Planning and designing the project
• Managing and controlling project resources
• Deciding if and when a project should be
terminated

8
 Project Manager
Responsible for:

Work Quality
Human Resources Time
Communications Costs

9
 Ethical Issues
• Temptation to understate costs
• Withhold information
• Misleading status reports
• Falsifying records
• Comprising workers’ safety
• Approving substandard work

10
 Project Life Cycle

Feasibility

Management
Planning
Concept
Execution

Termination

11
 Work Breakdown Structure
Figure 17.2

Project X

Level 1

Level 2

Level 3

Level 4

12
 PERT and CPM
PERT: Program Evaluation and
Review Technique
CPM: Critical Path Method

• Graphically displays project activities

• Estimates how long the project will take
• Indicates most critical activities
• Show where delays will not affect project

13
 The Network Diagram
• Network (precedence) diagram – diagram of project
activities that shows sequential relationships by the
use of arrows and nodes.
• Activity-on-arrow (AOA) – a network diagram
convention in which arrows designate activities.
• Activity-on-node (AON) – a network diagram
convention in which nodes designate activities.
• Activities – steps in the project that consume
resources and/or time.
• Events – the starting and finishing of activities,
designated by nodes in the AOA convention. 14
 The Network Diagram (cont’d)
• Path
– Sequence of activities that leads from the starting
node to the finishing node
• Critical path
– The longest path; determines expected project
duration
• Critical activities
– Activities on the critical path
• Slack
– Allowable slippage for path; the difference the length
of path and the length of critical path
15
 Project Network – Activity on Arrow
Figure 17.4
Order
AOA furniture 4
Furniture
Locate 2 setup
facilities
Remodel
1 5 6
Move in

Interview
Hire and
train
3

16
 Project Network – Activity on Node
Figure 17.4
Order
furniture
Locate Furniture
2 setup
facilities
AON
1 6
Move in
Remodel

S 5 7

Hire and
Interview
train

3 4

17
 Time Estimates
• Deterministic
– Time estimates that are fairly certain

• Probabilistic
– Estimates of times that allow for variation

18
 Example 1
Figure 17.5

6 weeks
Deterministic 4
time estimates
3 weeks
8 weeks 2

11 weeks Move in
1 5 6
1 week

4 weeks
9 weeks

19
 Example 1 Solution
Critical Path

Path Length Slack

(weeks)
1-2-3-4-5-6 18 2
1-2-5-6 20 0
1-3-5-6 14 6

17-20
 Advantages of PERT

• Forces managers to organize

• Provides graphic display of activities
• Identifies
4
– Critical activities 2

– Slack activities
1 5 6

21
 Limitations of PERT

• Important activities may be omitted

• Precedence relationships may not be
correct
4
• Estimates may include 2
a fudge factor
• May focus solely 1 5 6

on critical path
142 weeks

3
22
 Project Management Software
• Computer aided design (CAD)
• Groupware (Lotus Notes)
• CA Super Project
• Harvard Total Manager
• MS Project
• Sure Track Project Manager
• Time Line

23
 Advantages of PM Software
• Imposes a methodology
• Provides logical planning structure
• Enhances team communication
• Flag constraint violations
• Automatic report formats
• Multiple levels of reports
• Enables what-if scenarios
• Generates various chart types
24
 Project Risk Management

• Risk: occurrence of events that have

undesirable consequences
– Delays
– Increased costs
– Inability to meet specifications
– Project termination

25
 Risk Management

• Identify potential risks

• Analyze and assess risks
• Work to minimize occurrence of risk
• Establish contingency plans

26
 Summary
• Projects are a unique set of activities
• Projects go through life cycles
• PERT and CPM are two common techniques
• Network diagrams
• Project management software available

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