Operations Management Chapter 3 Flashcards
The management of projects involves three phases:
1) Planning - This phase includes goal setting, defining the project, and team organization.
2) Scheduling - This phase relates people, money, and supplies to specific activities and relates activities to each other.
3) Controlling - Here the firm monitors resources, costs, quality, and budgets. It also revises or changes plans and shifts resources to meet time and cost demands.
Project organization
An organization formed to ensure that programs (projects) receive the proper management and attention.
The project organization works best when:
1) Work can be defined with a specific goal and deadline.
2) The job is unique or somewhat unfamiliar to the existing organization.
3) The work contains complex interrelated tasks requiring specialized skills.
4) The project is temporary but critical to the organization.
5) The project cuts across organizational lines.
Project managers are responsible for making sure that:
1) all necessary activities are finished in proper sequence and on time
2) the project comes in within budget
3) the project meets its quality goals
4) the people assigned to the project receive the motivation, direction, and information needed to do their jobs
Project managers often deal with:
1) offers of gifts from contractors
2) pressure to alter status reports to mask the reality of delays
3) false reports for charges of time and expenses
4) pressures to compromise quality to meet bonus or penalty schedules
Work Breakdown Structure (WBS)
Defines the project by dividing it into its major subcomponents (or tasks), which are then subdivided into more detailed components, and finally into a set of activities and their related costs
Gantt Charts
Planning charts used to schedule resources and allocate time. They are a low cost means of helping managers make sure that:
1) activities are planned
2) order of performance is documented
3) activity time estimates are recorded
4) overall project time is developedN
Project scheduling serves several purposes:
1) It shows the relationship of each activity to others and to the whole project
2) It identifies the precedence relationships among activities
3) It encourages the setting of realistic time and cost estimates for each activity
4) It helps make better use of people, money, and material resources by identifying critical bottlenecks in the project
Computerized PERT/CPM reports and charts produce a broad variety of reports including:
1) detailed cost breakdowns for each task
2) total program labor curves
3) cost distribution tables
4) functional cost and hour summaries
5) raw material and expenditure forecasts
6) variance reports
7) time analysis reports
8) work status reports
Program Evaluation and Review Technique (PERT)
A program management technique that employs three time estimates for each activity
Critical Path Method (CPM)
A project management technique that uses only one time factor per activity
Critical path
The computerized longest time path(s) through a network
Starts at first activity in the project
Terminates at the last activity in the project
Includes only critical activities
PERT and CPM both follow six basic steps:
1) Define the project and prepare the work breakdown structure.
2) Develop the relationships among the activities. Decide which activities must precede and which must follow others.
3) Draw the network connecting all the activities.
4) Assign time and/or cost estimates to each activity.
5) Compute the longest time path through the network.
6) Use the network to help plan, schedule, monitor, and control the project.
Activity-on-node (AON)
A network diagram in which nodes designate activities.
Activity-on-arrow (AOA)
A network diagram in which arrows designate activities.
Dummy activity
An activity having no time that is inserted into a network to maintain the logic of the network
Critical Path Analysis
A process that helps determine a project schedule
Earliest start (ES)
earliest time at which an activity can start, assuming all predecessors have been completed
Earliest finish (EF)
Earliest time at which an activity can be finished
Latest start (LS)
Latest time at which an activity can start so as to not delay the completion time of the entire project
Latest finish (LF)
Latest time by which an activity has to finish as to not delay the completion time of the entire project
Forward Pass
A process that identifies the ES and EF
Backward Pass
A process that identifies the LS and LF
Earliest Start Time Rule
The maximum of all EF values of its predecessors
Earliest Finish Rule
The sum of its ES and it’s activity time
Latest Finish Time Rule
The minimum of all LS values of all activities that immediately follow it
Latest Start Time Rule
The difference of its latest finish time and its activity time
Slack Time
the length of time an activity can be delayed without delaying the entire project
Slack = LS - ES
or
Slack = LF - EF
Total slack
Time shared among more than one activity
Optimistic Time
Time an activity will take if everything goes as planned
Pessimistic Time
Time an activity will take assuming very unfavorable conditions
Most Likely Time
Most realistic estimate of the time required to complete an activity
Optimistic Time (a)
Pessimistic Time (b)
Most Likely Time (m)
What is the expected activity time?
t = (a + 4m + b) / 6
Crashing
The process by which we shorten the duration of a project in the cheapest manner possible
4 Steps in Crashing a Project
1) Compute the cost per week (or other time period) for each activity in the network.
2) If there is only one critical path, then select the activity on this critical path that (a) can still be crashed and (b) has the smallest crash cost per period. Crash this activity by one period.
If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed and (b) the total crash cost per period of all selected activities is the smallest. Crash each activity by one period.
3) Update all activity times. If the desired due date has been reached stop. If not, return to step 2.
Crash Cost Per Period
(Crash cost - Normal Cost) / (Normal time - Crash Time)
Advantages of PERT
1) Especially useful when scheduling and controlling large projects.
2) Straightforward concept and not mathematically complex.
3) Graphical networks help highlight relationships among project activities.
4) Critical path and slack time analyses help pinpoint activities that need to be closely watched.
5) Project documentation and graphs point out who is responsible for various activities.
6) Applicable to a wide variety of projects.
7) Useful in monitoring not only schedules but costs as well.
Limitations of PERT
1) Project activities have to be clearly defined, independent, and stable in their relationships.
2) Precedence relationships must be specified and networked together.
3) Time estimates tend to be subjective and are subject to fudging by managers who fear the dangers of being overly optimistic or not pessimistic enough.
4) There is the inherent danger of placing too much emphasis on the longest, or critical, path. Near-critical paths need to be monitored closely as well.
a = Optimistic Time
b = Pessimistic time
What is the Variance of Activity Completion Time
[(b - a)/6]²
