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1 3 Project Management 3 SCM Pearson Education, Inc. publishing as Prentice Hall

2 Boeing 787 Dreamliner Delays are a natural part of the airplane supply business. They promise an unreasonable delivery date to lock up customers before a competitor can deliver an aircraft. The trick is to not have too long of a delay that it impacts your credibility. Steve Swenson Wall Street Journal January 19, 11

3 Outline Global Company Profile: Bechtel Group Importance of Project Management Project Planning Work Breakdown Structure Project Scheduling Project Management Techniques: PERT and CPM

4 Bechtel Projects Building 6 massive distribution centers in just two years for the internet company Webvan Group ($1 billion) Constructing 3 high-security data centers worldwide for Equinix, Inc. ($1. billion) Building and running a rail line between London and the Channel Tunnel ($4.6 billion) Developing an oil pipeline from the Caspian Sea region to Russia ($85 million) Expanding the Dubai Airport in the UAE ($6 million), and the Miami Airport in Florida ($ billion) Building a new subway for Athens, Greece ($.6 billion) Building a natural gas pipeline in Thailand ($7 million) Building a highway to link the north and south of Croatia ($33 million) 11 Pearson Education, Inc. publishing as Prentice Hall

5 Strategic Importance Bechtel Project Management: Iraq war aftermath International workforce, construction professionals, cooks, medical personnel, security Millions of tons of supplies Boeing paid more than $5 billion in penalties and delay concessions to airlines that were forced to wait for their planes, resulting in older aircraft being kept in service and new routes designed specifically for the Dreamliner being added. (1/19/11, WSJ) Las Vegas Monorail Cost overruns and penalties 11 Pearson Education, Inc. publishing as Prentice Hall

6 Boeing 787 Dreamliner Timeline %3DBOEING11_shell%6articleTabs%3Dinteractive

7 Project Characteristics Single unit Many related activities Difficult operations planning and inventory control General purpose equipment High labor skills Building Construction 11 Pearson Education, Inc. publishing as Prentice Hall Research Project

8 Planning the Project Figure 3.1 Before Start of project During project Timeline project 11 Pearson Education, Inc. publishing as Prentice Hall

9 Scheduling the Project Figure 3.1 Before Start of project During project Timeline project 11 Pearson Education, Inc. publishing as Prentice Hall

10 Controlling the Project Figure 3.1 Before Start of project During project Timeline project 11 Pearson Education, Inc. publishing as Prentice Hall

11 Planning, Scheduling, Controlling Figure 3.1 Before Start of project During project Timeline project 11 Pearson Education, Inc. publishing as Prentice Hall

12 Planning, Scheduling, Controlling Time/cost estimates Budgets Engineering diagrams Cash flow charts Material availability details Budgets Delayed activities report Slack activities report CPM/PERT Gantt charts Milestone charts Cash flow schedules Before Start of project During project Timeline project 11 Pearson Education, Inc. publishing as Prentice Hall Figure 3.1

13 Project Management Techniques Gantt chart Critical Path Method (CPM) Program Evaluation and Review Technique (PERT) 11 Pearson Education, Inc. publishing as Prentice Hall

14 A Simple Gantt Chart Design Prototype Test Revise Production Time J F M A M J J A S 11 Pearson Education, Inc. publishing as Prentice Hall

15 CPM and PERT Network techniques Developed in 195 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 11 Pearson Education, Inc. publishing as Prentice Hall

16 Questions PERT/CPM can answer 1. When will the entire project be completed?. What are the critical activities or tasks in the project? 3. Which are the non-critical activities? 4. What is the probability the project will be completed by a specific date? 5. Is the project on target, behind, or ahead of schedule? 6. Is the money spent equal to, less than, or greater than the budget? 7. Are there enough resources available to finish the project on time? 8. If the project must be finished in a shorter time, what is the way to accomplish this at least cost? 11 Pearson Education, Inc. publishing as Prentice Hall

17 Determining the Project Schedule 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 11 Pearson Education, Inc. publishing as Prentice Hall

18 Determining the Project Schedule Perform a Critical Path Analysis Time Immediate Activity Description (weeks) Predecessors A Build internal components B Modify roof and floor 3 C Construct collection stack A D Pour concrete and install frame 4 A, B E Build high-temperature burner 4 C F Install pollution control system 3 C G Install air pollution device 5 D, E H Inspect and test F, G Total Time (weeks) 5 11 Pearson Education, Inc. publishing as Prentice Hall

19 Determining the Project Schedule Perform a Critical Path Analysis Earliest start (ES) = earliest time at which an activity can Activity Description start, assuming all predecessors Time (weeks) have A Build internal been completed components Earliest Bfinish (EF) Modify = earliest roof and time floor at which an activity can 3 C Construct be finished collection stack Latest D start (LS) Pour = concrete latest time and at install which frame an activity can 4 E Build high-temperature start so as to not delay burnerthe completion 4 F Install time pollution of the control entire project system 3 Latest Gfinish (LF) Install = latest air pollution time by device which an activity has 5 to be finished so as to not delay the H Inspect and test completion time of the entire project Total Time (weeks) 5 11 Pearson Education, Inc. publishing as Prentice Hall

20 Determining the Project Schedule Perform a Critical Path Analysis Activity Name or Symbol Earliest Start ES A EF Earliest Finish Latest Start LS LF Latest Finish Figure 3.1 Activity Duration 11 Pearson Education, Inc. publishing as Prentice Hall

21 Forward Pass Begin at starting event and work forward Earliest Start Time Rule: If an activity has only a single immediate predecessor, its ES equals the EF of the predecessor If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors ES = Max. {EF of all immediate predecessors} 11 Pearson Education, Inc. publishing as Prentice Hall

22 Forward Pass Begin at starting event and work forward Earliest Finish Time Rule: The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time EF = ES + Activity time 11 Pearson Education, Inc. publishing as Prentice Hall

23 ES/EF Network for Milwaukee Paper Activity ES Start EF = ES + Activity time Activity time 11 Pearson Education, Inc. publishing as Prentice Hall

24 ES/EF Network for Milwaukee Paper A Activity Start ES of A EF of A = ES of A + A 11 Pearson Education, Inc. publishing as Prentice Hall Activity time

25 ES/EF Network for Milwaukee Paper A Activity Start B ES of B EF of B = ES of B + 3 B 3 11 Pearson Education, Inc. publishing as Prentice Hall 3 Activity time

26 ES/EF Network for Milwaukee Paper A C Activity Start EF = ES + B 3 ES = C 4 3 Activity time 11 Pearson Education, Inc. publishing as Prentice Hall

27 ES/EF Network for Milwaukee Paper A C 4 Activity Start B 3 ES = Max. (,3) D 3 D EF = ES Activity time 4 11 Pearson Education, Inc. publishing as Prentice Hall

28 ES/EF Network for Milwaukee Paper Completed Forward Pass A C 4 F Start E 4 8 H B 3 3 D G Pearson Education, Inc. publishing as Prentice Hall Figure 3.11

29 Backward Pass Begin with the last event and work backwards Latest Finish Time Rule: If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it LF = Min. {LS of all immediate following activities} 11 Pearson Education, Inc. publishing as Prentice Hall

30 Backward Pass Begin with the last event and work backwards Latest Start Time Rule: The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time LS = LF Activity time 11 Pearson Education, Inc. publishing as Prentice Hall

31 LS/LF Times for Milwaukee Paper Backward Pass A C 4 4 F 7 3 Start E H B 3 3 LS = LF Activity time D G LF = EF of Project Pearson Education, Inc. publishing as Prentice Hall

32 LS/LF Times for Milwaukee Paper LS = LF Activity time Next A C 4 4 F Start E H LF = Min. (LS of following activity) B 3 3 D G Pearson Education, Inc. publishing as Prentice Hall

33 LS/LF Times for Milwaukee Paper LS = LF Activity time Next LF = Min. (4, 1) A C 4 4 F Start E H B 3 3 D G Pearson Education, Inc. publishing as Prentice Hall

34 LS/LF Times for Milwaukee Paper Complete Network A C 4 4 F Start E H B 3 3 D G Pearson Education, Inc. publishing as Prentice Hall

35 Computing Slack Time After computing the ES, EF, LS, and LF times for all activities, compute the slack or free time for each activity Slack is the length of time an activity can be delayed without delaying the entire project Slack = LS ES or Slack = LF EF 11 Pearson Education, Inc. publishing as Prentice Hall

36 Computing Slack Time Earliest Earliest Latest Latest On Start Finish Start Finish Slack Critical Activity ES EF LS LF LS ES Path A Yes B No C 4 4 Yes D No E Yes F No G Yes H Yes 11 Pearson Education, Inc. publishing as Prentice Hall Table 3.3

37 LS/LF Times for Milwaukee Paper Critical Path A C 4 4 F Start E H B 3 3 D G Pearson Education, Inc. publishing as Prentice Hall

38 PERT Activity Times CPM assumes we know a fixed time estimate for each activity and there is no variability in activity times PERT uses a probability distribution for activity times to allow for variability 3 time estimates Optimistic time (a) if everything goes according to plan Most-likely time (m) most realistic estimate Pessimistic time (b) assuming very unfavorable conditions Time estimates follow beta distribution Expected time: t = (a + 4m + b)/6 Variance of times: v = [(b a)/6] 11 Pearson Education, Inc. publishing as Prentice Hall

39 PERT with 3 Activity Time Estimates Immediate Task Predecesors Optimistic Most Likely Pessimistic A None B None 4 1 C A D A 5 8 E C F D G B H E,F I G,H Pearson Education, Inc. publishing as Prentice Hall

40 Expected Time Task Optimistic Most Likely Pessimistic Expected A B C D E F G H K Expected Time = Optimistic + 4(Most Likely) + Pessimistic 6 11 Pearson Education, Inc. publishing as Prentice Hall

41 Critical Path C 7 1 E 1 3 Start A D 1 1 F H B G K Pearson Education, Inc. publishing as Prentice Hall Duration = 54 weeks

42 Example What is the probability of finishing this project in less than 53 weeks? p(t < D) T E = 54 D = 53 Z = D - T E σ cp t 11 Pearson Education, Inc. publishing as Prentice Hall

43 Variance Along Critical Path σ ( Activity variance, = Task Optimistic Most Likely Pessimistic Variance A B 4 1 C D 5 8 E F G H K (Sum of variance along critical path) = σ = Pearson Education, Inc. publishing as Prentice Hall Pessimistic - Optimistic ) 6

44 p(t < D) T E = 54 t Z = D = 53 D -T σ E cp = = p(z<-.156) = =.436, or 43.6% (Appendix 1, A3) 11 Pearson Education, Inc. publishing as Prentice Hall

45

46 p(t < D) T E = 54 t Z = D = 53 D - T σ E cp = = p(z<-.156) = =.436, or 43.6% (Appendix 1, A3) There is a 43.6% probability that this project will be completed in less than 53 weeks. 11 Pearson Education, Inc. publishing as Prentice Hall

47 Thank You Questions??

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