PROJECT MANAGEMENT

PROJECT MANAGEMENT

We have seen how operations could be classified into product focused (continuous), process focused (intermittent) and many hybrids between them.  (If you do not remember these, please read the section “Manufacturing Process structuring page 129 of the text.) So far, our focus has been the challenges and coping methods for the continuous, intermittent and other hybrid traditional operations.  Although these traditional types are distinct from one another there are still large doses of commonality among them in terms of many management activities.  In particular, the differences between these manufacturing types don’t become very pronounced until we come down to the short-term day-to-day production planning, production activity control. As we will see project type operations are very different from these traditional types and present unique challenges for management.

Conceptually, project type operations share a lot of characteristics with job-shop type operations-- a form of process focused operation, in that they both tend to be highly customized to the requirements of a given customer or client.  Therefore, both job-shops and project type operations are characterized by high degree of customization. Yet this similarity is pretty much confined to conceptual aspects but in practice does not allow a common management approach to the challenges of job-shops and projects.  We have, therefore, seen management techniques developed specifically for project types that are quite different than those for more traditional job-shop type operations.  In other words, in job-shops and project type operations the actual problems and solution techniques are quite different but they are conceptually related, at least in terms of high degree of customization.

The most important properties of projects which distinguish them from other types of traditional operations are (1) uniqueness, (2) large scale, (3) specific beginning and end, and (4) intimate customer or client involvement.  Most production activities, whether continuous or intermittent are somewhat repetitious, hence they can capitalize on learning effects.  These effects are usually negligible for pure projects, which are one-shot deals.  In most project environments there is limited past experience (from perhaps similar projects in the past) to be utilized for its management.  There are no standard hours of capacity requirements, no routing sheets, no inventories of parts, no standard work methods.  Basically everything has to be tailor made for the particular job on hand.

Furthermore, most projects are large undertakings; they consume very large amounts of resources often belonging to more than one company (consortiums) and usually last for months or even years.

These aspects make project management unique and a challenging job compared to other more familiar forms of production.  We therefore, have an entirely unique approach to the problem of managing this type of operation.  Examples of projects encompass both manufacturing and non-manufacturing operations such as consummating mergers, installing a new computer system, developing and launching a new product, completing a major plant overhaul, constructing new facilities, building weapon systems, space crafts, running a political campaign, undertaking  Olympics, conducting research, etc.

Important challenges of project management challenges are described briefly below:

Organizing

From an organizational perspective one can distinguish between two types of project situations.  On the one hand, there is the staffing and organizing problem faced by a company which normally engages in some form of repetitive operation, such as a drug manufacturer but occasionally needs to carry out a large project, e.g., the installation of an MRP system.  On the other hand,  there are those organizations whose main business are in the form of projects, e. g. a division of Boeing which bids on and undertakes government defense projects, or a construction company which bids on and constructs civil engineering projects. 

In the first type of project situation one usually uses a temporary project team drawing personnel from needed departments for the duration of the project.  Sometimes, these people relinquish their normal jobs during the course of the project but sometimes they divide their time between the project and day-to-day activities. The managerial challenge here is to balance the manager’s day-to-day responsibilities with the requirements of the temporary project.

In a project type company, such as a construction company, the traditional static organizational structure symbolized by the familiar organizational chart is too rigid to be appropriate for the changing requirements of whatever projects are being carried out.  Sometimes an organizational model, called matrix organization might be useful.

                                                Proj1                            Proj2                            Proj3

Skill group1
Skill group2
Skill group3

At any point in time the members belonging to a skill group who report to a supervisor are assigned and perhaps reassigned to projects consistent with the prevailing needs of the ongoing projects for the type of skill.  A criticism levied on this type of arrangement is the violation of one of the main principles of management—the unity of command, since under this arrangement each employee reports to two heads—the supervisor of the skill group and the leader of the project.

Other managerial functions of Project management

In managing a project the first step is the formation of a project steering committee so that a project plan can be developed, schedules can be drawn budgets can be prepared and the actual progress can be monitored. These functions roughly comprise the most significant challenges of project management.

Project planning is a set of managerial activities undertaken prior to the commencement of the project. It establishes the general character and direction of the project.  Generally speaking, project planning determines the major project objectives, major resources needed, the type of organization used, the criteria such as time, cost, quality against which actual progress should be measured. An important function of this pre project planning is to assess the objectives and perceived benefits of the project against the resources needed to determine the feasibility of the project. Perhaps at this point if the project is deemed infeasible it might be terminated or significantly modified.

The second major managerial function is project scheduling where the project plan is specified in more detail.  This is probably the most important of the managerial activities relative to projects. It breaks down the large project into a relatively large number of work units called activities, and schedules these activities by allocating to them the needed resources including time and financial resources (budgeting).

Project control is maintained by monitoring each activity as the work progresses in terms of time, cost and quality.  When significant discrepancies are found, corrective action should be taken by revising the schedule, reallocating resources, shifting personnel etc.  Revision of the schedule to reflect the current realities as a matter of routine is imperative in order to keep it up to date and feasible.

Although the study of project management should include coverage of all of these functions—planning, scheduling and control; including both behavioral and technical issues we will focus primarily on scheduling methods.

Scheduling Techniques

In the late 1950’s a simple idea independently developed by Du Pont Company for the overhaul of their factories and by the U. S. Navy (in cooperation with Booze Allen and Hamilton Co.) to manage the development of Polaris Missiles provided a breakthrough in the scheduling and control of large projects.  The method of Du Pont was called CPM – The Critical Path Method whereas the Navy called its version PERT – Project Evaluation and Review Technique.  In their initial stages they did use different conventions and assumptions.  However, since the technique has evolved over the years, it is difficult to label a particular modern application CPM or PERT, as they incorporate various aspects of both.  It is therefore unnecessary to talk about two distinct methods, except perhaps in historical terms.

The idea that gave rise to the development of both PERT and CPM was the use of a mathematical construct, called network for modeling a project.  In the abstract, a network consists of points (called nodes) and denoted by O and lines drawn among these nodes (called arcs) and are denoted by →. 

Network Representation of Projects

The first step, in the application of these techniques, is work break-down which analyzes the project into its component work units.  These are called activities; they require time and other resources.  A network diagram is then drawn to represent these activities and any precedence relationships among them. 

            Example of work Break-down

	Construction of an Apartment Building

 

                                   

 

                                                           

           

			T6:Finishing

 

                                                           

	T21:Chimneys		T22:Piers		T23:Exterior Walls

 

                                                           

	T241:Forms		T242:Mix Concrete		T243:Pour Concrete		T244:Remove Forms

 

As implied by this example there is no one correct way of defining activities as units of analysis.  Breaking the project down to too many minute activities will increase the number of activities to inordinate number reducing the usefulness of the technique, whereas failing to define the activities in sufficient detail will cause the representation to be too aggregate for detailed scheduling purposes.  A practical rule of thumb is to define a work element as an activity (i.e., stop dividing it any further) when it is obvious that the best way to perform that work element is as a unit without interruption.

Typically there are certain ordering relations among some of the activities (such as, concrete has to be mixed before it can be poured). These are called the precedence relationships and must be very carefully listed.  The next step is to estimate the needed resources (manpower, money, equipment etc.) and the amount of time for completion for each activity.

The next step is the preparation of the network to represent the project with all of its activities and the precedence requirements among them.  There are two alternative conventions for this purpose:  AON (activity on the node) which uses nodes to represent activities and arcs to depict precedence interdependencies and AOA (activity on the arc) which uses the arcs to denote activities.

Example:

 Activity        Precedence                    AON                                                   AOA

        a                -                                             

        b                -

        c              a, b

        d              a                     

Notice the use of a special kind of an activity, denoted by → in AOA representation.  This is a dummy activity created for the purpose of correctly representing the precedence requirements:  they are artificial activities consuming no time or any other resources.  In the example we see that the set of precedence activities for d is a subset of the precedence activities for c.  In this case the dummy activity separates the beginning of activities c and d to key them to the finish of activity b (for d) and to both b and a (for c).

When using AOA the nodes are interpreted as events which designate points in time at which specific activities have been performed. For instance, in the example event (2) designates the time at which activity a has been performed and hence activity c can start, whereas (3) represents the event that both activities a, and b are performed, required for d.  In the AON representation the events are implicit but not explicitly shown.  Another advantage of AOA over AON is that by drawing the arc lengths in proportion to activity duration a visual perspective for the project could be obtained.

Here are some scheduling terminology.

1.         Activity Duration – Time estimate (point) of each activity from start to finish ( t_j)_.

2.         Early Start – Earliest date an activity, j can start considering all of its precedent                 activities (ES_j)_.

        3_.            Early Finish – Earliest date, an activity, j  can be finished (EF_j) notice EF_j  = ESj  + tj

        4_.            Late Start _– Latest date an activity’s start can be delayed without delaying the target date of the project completion (LSj)

      5.         Late Finish - Latest date an activity can be finished without jeopardizing the target finish date of the project (LFj) notice LFj  = LSj  + tj

      6.         Total Slack – Amount of time between the earliest and latest start of an activity. It represents the amount of flexibility there is in scheduling an activity TSj = LSj – ESj

                  or TSj = LFj = EFj.

      7.         Critical Path – The set of activities with the minimum amount of slack.  It defines a path from the beginning to the end of the project. Its length is equal to the project length and is the longest among all the paths in the project.