Project ManagementHow Project Management fits the Operations Management PhilosophyBechtel Group, INC.ProjectsSlide 5Project Scope and ObjectivesProject TeamOrganizational StructurePlanning ProjectsDefining the Work Breakdown StructureSlide 11Diagramming the NetworkPrecedence RelationshipsActivity RelationshipsSlide 15Slide 16St. Adolf’s Hospital Example 3.1Slide 18St. Adolf’s Hospital Diagramming the NetworkSt. Adolf’s HospitalSlide 21Application 3.1Application 3.1 SolutionSt. Adolf’s Hospital Developing the ScheduleSlide 25What AON Nodes look likeSlide 27Slide 28Slide 29Slide 30Project ScheduleSlide 32Slide 33Slide 34Slide 35Application 3.2Application 3.2 Critical Path and Project DurationAnalyzing Cost-Time Trade-OffsProject CostsCost to CrashCost to Crash per PeriodSlide 42Slide 43Slide 44Slide 45Slide 46Slide 47Slide 48Slide 49Slide 50Slide 51Slide 52Slide 53Application 3.3Slide 55Slide 56Slide 57Slide 58Slide 59Assessing RisksCategories of Project RiskStatistical AnalysisSlide 63Slide 64Slide 65Slide 66Slide 67Application 3.4Slide 69Slide 70Slide 71Application 3.5Slide 73Resource-Related ProblemsSlide 75The Critical Chain ApproachSlide 77Slide 78Slide 79Slide 80Slide 81Slide 82Slide 83Slide 84© 2007 Pearson EducationProject ManagementProject ManagementChapter 3Chapter 3© 2007 Pearson EducationHow Project Management fits the Operations Management Philosophy Operations As a Competitive WeaponOperations StrategyProject ManagementProcess StrategyProcess AnalysisProcess Performance and QualityConstraint ManagementProcess LayoutLean SystemsSupply Chain StrategyLocationInventory ManagementForecastingSales and Operations PlanningResource PlanningScheduling© 2007 Pearson EducationBechtel Group, INC.Bechtel is a $16.3 billion-a-year construction contractor that specializes in large projects.It is successful because it is able to bring large projects in quickly and on time.For each major project it organizes a project team and provides it with the supporting information systems and resources.It utilizes a web-based communications system that provides access to project information electronically.Team members have instant access to schedules, progress reports, drawings and messages.© 2007 Pearson EducationProjectsA project is an interrelated set of activities with a definite starting and ending point, which results in a unique outcome for a specific allocation of resources.The three main goals of project management are…1. Complete the project on time or earlier.2. Do not exceed the budget.3. Meet the specifications to the satisfaction of the customer.© 2007 Pearson EducationProject ManagementProject management is a systemized, phased approach to defining, organizing, planning, monitoring, and controlling projects.A collection of projects is called a program, which is an interdependent set of projects with a common strategic purpose.A cross-functional effort: Even though a project may be under the overall purview of a single department, other departments likely should be involved.© 2007 Pearson EducationProject Scope and ObjectivesDefining a project’s scope, time frame, allocated resources and objective, is essential.A Project Objective Statement provides the objectives and essence of the project.Time frame should be specific for start and ending of the project.Necessary resources are also defined, either in dollar terms or in personnel allocation.© 2007 Pearson EducationProject TeamSelecting the right project manager is critical and specific skills are needed.Facilitator: Able to resolve conflicts, have leadership skills and a systems view.Communicator: Ability to keep senior management informed, communicate progress, and work with team members.Decision Maker: Able to organize members and make difficult decisions.Team members need to be technically competent, dedicated, and able to work well with other team members.© 2007 Pearson EducationOrganizational StructureThe relationship of a project manager to the team is determined by the firm’s organizational structure.Functional Structure: The team is housed in a specific functional area. Assistance from other areas must be negotiated.Pure Project: Team members work exclusively for the project manager, which is best for large projects.Matrix Structure: A compromise between the functional and project structures. Members remain in various functional areas and the project manager coordinates across functional areas. Dual authority can cause problems.© 2007 Pearson EducationPlanning ProjectsPlanning projects involves five steps:1. Defining the work breakdown structure -- a statement of all work that has to be completed.2. Diagramming the network -- a graphical network3. Developing the schedule -- specifying start times for each activity4. Analyzing cost-time trade-offs5. Assessing risks© 2007 Pearson EducationDefining the WorkBreakdown StructureA Work Breakdown Structure is simply a statement of all work that has to be completed.Major work components are identified and then broken down into smaller tasks by the project team.This process may involve a hierarchy of work levels.An Activity is the smallest unit of work effort consuming both the time and resources that the project manager can schedule and control.Task Ownership: Each activity must have an owner who is responsible for doing the work.© 2007 Pearson EducationA Work Breakdown Structure (three levels) A Work Breakdown Structure (three levels) for a new businessfor a new business© 2007 Pearson Education© 2007 Pearson EducationDiagramming the NetworkA Network Diagram visually displays the interrelated activities using nodes (circles) and arcs (arrows) that depict the relationships between activities.Two network planning methods (PERT & CPM) were originally distinctive, but today the differences are minor and will be jointly referred to as PERT/CPM.PERT (Program Evaluation and Review Technique) was utilized when activity times involved risk.CPM (Critical Path Method) was used when activity times were certain.© 2007 Pearson EducationPrecedence Precedence RelationshipsRelationships Precedence relationships determine a sequence for undertaking activities, and specify that any given activity cannot start until a preceding activity has been completed.In the In the AON approachAON approach, the , the nodes (circles) represent nodes (circles) represent activities, and