Operations

Management

Project Management
Chapter 3
 Learning Objectives
When you complete this chapter, you should
be able to :
Identify or Define:
– Work breakdown structure
– Critical path
– AOA and AON Networks
– Forward and Backward Passes
• Early Start or Early Finish
– Variability in Activity Times
Learning Objectives - Continued
When you complete this chapter, you should
be able to :
Describe or Explain:
– The role of the project manager
– Program evaluation and review technique
(PERT)
– Critical path method (CPM)
– Crashing a project
– The Use of MS Project
 Bechtel
• Asked by Kuwait to begin rebuilding after
Desert Storm (Not unlike now)
• 650 wells ablaze, others uncapped
• No water, electricity, food or facilities
• Land mines! Bombs! Grenades!
• Many fires inaccessible because of oil-
covered roads
 Bechtel
• Project required:
– Storage, docking, and warehousing facilities at
Dubai
– 125,000 tons of equipment and supplies
– 150 kilometers of pipeline capable of delivering
20,000,000 gallons of water per day to the fire
site
– more than 200 lagoons with 1,000,000 gals of
seawater
 Defining Global Operations
• International business - engages in cross-border transactions

• Multinational Corporation - has extensive involvement in

international business, owning or controlling facilities in
more than one country

• Global company - integrates operations from different

countries, and views world as a single marketplace

• Transnational company - seeks to combine the benefits of

global-scale efficiencies with the benefits of local
responsiveness
 Management of any Project
Requiring Coordination
• Planning - goal setting, project definition, team
organization
• Scheduling - relating people, money, and supplies
to specific activities and activities to one and other
• Controlling - monitoring resources, costs, quality,
and budgets; revising plans and shifting resources
to meet time and cost demands
• Leading – The humanistic elements!
 Project Management Activities
Planning Scheduling
 Objectives  Project

 Resources activities
 Work break-down  Start & end

schedule times
 Organization  Network

Controlling
 Monitor, compare, revise,

action
 Project Planning
• Establishing objectives
• Defining project
• Creating work breakdown
structure
• Determining resources
• Forming organization

© 1995 Corel Corp.

 Project Organization
• Often temporary structure
• Uses specialists from entire company
• Headed by project manager
– Coordinates activities
– Monitors schedule Eng.
& costs Eng.
Mkt.
• Permanent Acct.
structure called
‘matrix organization’ Mgr.

© 1995
Corel Corp.
 Matrix Organization
Mkt Oper Eng Fin
Project 1  
Project 2    
Project 3  
Project 4   
 The Role of
the Project Manager
Project Plan
and Schedule

Revisions and
Updates

Project Project
Manager Team
Information
regarding times, Performance
costs, problems, Reports
delays Feedback Loop

Top
Resources
Management
 Work Breakdown Structure

• 1. Project
• 2. Major tasks in the project
• 3. Subtasks in the major tasks
• 4. Activities (or work packages)
to be completed
 Project Scheduling
• Identifying precedence
relationships
• Sequencing activities © 1995 Corel Corp.

• Determining activity
times & costs
• Estimating material &
worker requirements
• Determining critical PERT

activities
Tes J
t J
Buil M
d A
Des Mo M
ign nth F
J
Acti
ity v
 CRITICAL THINKING
EXERCISE
• Critical Thinking Exercise
– Chapter 3 - Pg 88
– Form into teams of 3-4
– List in actual order - Present to class
– 30 minutes
 CRITICAL THINKING
EXERCISE
1. March 13, 1991 Lower downtown site selected
2. December 31, 1991 Largest portion of land
purchased
3. February 13, 1992 Final lease negotiations start
4. April 1, 1992 Schematic design of ballpark starts
5. April 21, 1992 Contractor selected
6. October 8, 1992 Architect presents exterior
elevations of ballpark to the public
7. October 16, 1992 Constructions starts
 CRITICAL THINKING
EXERCISE
8. November 30, 1992 Mass excavation commences
9. February 2, 1993 Agreement on final terms of lease
10. February 15, 1993 Caissons and foundation start
11. July 14, 1993 Last parcel of land purchased
12. September 24, 1993 First steel raised
13. October 6, 1993 Final seating capacity set
14. March 11, 1994 First bricks placed
15. September 19, 1994 Scoreboard installed
 CRITICAL THINKING
EXERCISE
16. October 25, 1994 Sod transplanted to playing
field
17. February 27, 1995 Sports lighting turned on at
night
18. March 31, 1995 Field ready for opening day
Project Management Techniques
• Gantt chart
• Critical Path Method (CPM)
• Program Evaluation & Review
Technique (PERT)

© 1984-1994 T/Maker Co.

 Gantt Chart
Time Period
Activity
J F M A M J J
Design
Build
Test
Service Activities for A Delta Jet
During a 60 Minute Layover
 PERT and CPM
• 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 and
interdependencies
• Each uses a different estimate of activity times
The Six Steps Common to PERT &
CPM
 Define the project and prepare the work breakdown
structure,
 Develop relationships among the activities.
(Decide which activities must precede and which
must follow others.)
 Draw the network connecting all of the activities
 Assign time and/or cost estimates to each activity
 Compute the longest time path through the
network. This is called the critical path
 Use the network to help plan, schedule, monitor,
and control the project
A Comparison of AON and AOA
Network Conventions
 AON Network for Milwaukee
General Hospital
F
A C

Start F H

B D G
s ho w
r ro w s
A de n ce
prece ships
e lat ion
r
 AOA Network (With Dummy
Activities) for Milwaukee
General
C
2 Construct 4
stack Ins
en al

tal F
on rn
co ild i A

lc
ts
mp nte

Dummy on

Build burner
tr o
Bu

Activity ls H
1 6 7
E
ol Inspect/Test
B t r
M
roo od G n con
f/fl ify l utio e
oo D ol evic
r l p
3 Pour concrete/ 5 ts al d
In
Install frame
 Critical Path for
Milwaukee General Hospital
F
A C

Start F H

B D G
s ho w
r ro w s
A de n ce
prece ships
e lat ion
r
 AON Network for Milwaukee
General Hospital
A C FF
0 H 2 2 H 4 4 H 7
0 A 2 2 C4 10 13
2 2 3
Slack=0 E H
Slack=0 4 H 8 Slack=6 13 H 15
0 HStart0 F
0 4 8 13 15
0 4 2
0
BB DD Slack=0 G
Start 0 H 3 3 H 7 8 G Slack=0
H 13
1 4 4 8 8 13
3 4 5
Slack=1 Slack=1 Slack=0
 Gantt Chart
Earliest Start and Finish
Milwaukee General Hospital
1 2 3 4 5 6 7 8 9 10 1112 13 1415 16
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install
frame
E Build high-temperature
burner
F Install pollution control
system
G Install air pollution device
H Inspect and test
Factors: Consider when Crashing
a Project / Activity (Shortening time)
• The amount by which an activity is crashed
is, in fact, permissible to the outcomes or
legal or practical?
• Taken together, the shortened activity
durations will enable one to finish the
project by the due date.
• The total cost of crashing is as small as
possible.
Operations
Management
Forecasting
Chapter 4
 Learning Objectives

When you complete this chapter, you should be

able to :
Identify or Define:
– Forecasting
– Types of forecasts
– Time horizons
– Approaches to forecasts
 Types of Forecasts
• Economic forecasts
– Address business cycle, e.g., inflation rate,
money supply etc.
• Technological forecasts
– Predict rate of technological progress
– Predict acceptance of new product
• Demand forecasts
– Predict sales of existing product
 Seven Steps in Forecasting
• Determine the use of the forecast
• Select the items to be forecasted
• Determine the time horizon of the forecast
• Select the forecasting model(s)
• Gather the data
• Make the forecast
• (Many steps inserted here)
• Validate and implement results
 Realities of Forecasting
• Forecasts are seldom perfect
• Most forecasting methods assume that there
is some underlying stability in the system
• Both product family and aggregated
product forecasts are more accurate than
individual product forecasts
• http://www.asqpdx.com/index.html
 Delphi Method
• Iterative group
process Decision Makers
• 3 types of people (Sales?)
Staff (Sales will be 50!)
– Decision makers
– Staff (What will
sales be?
– Respondents survey)
• Reduces ‘group-
think’ Respondents
(Sales will be 45, 50, 55)
 Time Series Components
Trend Cyclical

Seasonal Random
 Trend Component
• Persistent, overall upward or downward
pattern
• Due to population, technology etc.
• Several years duration

Response

Mo., Qtr., Yr. © 1984-1994 T/Maker Co.

 Seasonal Component
• Regular pattern of up & down fluctuations
• Due to weather, customs etc.
• Occurs within 1 year

Summer
Response
© 1984-1994 T/Maker Co.

Mo., Qtr.
Common Seasonal Patterns
Period of “Season” Number of
Pattern Length “Seasons” in
Pattern
Week Day 7
Month Week 4–4½
Month Day 28 – 31
Year Quarter 4
Year Month 12
Year Week 52
 Cyclical Component
• Repeating up & down movements
• Due to interactions of factors influencing
economy
• Usually 2-10 years duration

Cycle
Response


Mo., Qtr., Yr.
 Random Component
• Erratic, unsystematic, ‘residual’ fluctuations
• Due to random variation or unforeseen events
– Union strike
– Tornado

• Short duration &

nonrepeating
 Regression
Actual
observation Deviation
Values of Dependent Variable

Deviation Deviation

Deviation
Deviation Point on
regression
Deviation line
Deviation

Yˆ  a  bx
Time
 Scatter Diagram

Primarily used to look for patterns

 Correlation

• Answers: ‘how strong is the linear relationship

between the variables?’
• Used mainly for understanding
Forecasting in the Service Sector
• Presents unusual challenges
– special need for short term records
– needs differ greatly as function of industry and
product
– issues of holidays and calendar
– unusual events
Forecast of Sales by Hour for
Fast Food Restaurant
20

15

10

0
+11-12 +1-2 +3-4 +5-6 +7-8 +9-10
11-12 12-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11