FARE CHAPTER 3
THE IMPORTANCE OF PROJECT MANGEMENT
Firms are facing modern phenomena: where growing project complexity and collapsing product/service life cycles
Scheduling projects is difficult challenge for operations mangers. The stakes in the project management are high. Cost overruns and unnecessary delays occur due to poor scheduling and poor controls.
Projects that take months or years are usually devolved outside the normal production system
Three phases in managing projects:
Planning- goal setting, defining the project, and team organization
Scheduling- This phase relates to people, money and supplies
Controlling- Here the firms monitor resources, cost, quality and budgets. It also revises and changes plans/shift resources
Project Organization- An organization formed to ensure that projects receive the proper management and attention
For companies with multiple large projects, such as a construction firm, project organization is an effective way of assigning the people and physical resources needed. It is a temporary organizational structure designed to achieve the results by using specialists from throughout the firm.
Project Organization works best when:
Work can be defined with a specific goal and deadline
The job is unique or unfamiliar to the organization
Work contains complex interrelated tasks requiring specialized skills
Project is temporary but critical to the organization
Project cuts across organizational lines
Ethical issues in project management
Contractors offer gifts/bribes
Pressure to alter status report to mask delays
False reports of charges, time and expenses
Pressure to compromise quality to meet bonus or penalty schedules
Work Breakdown Structure- a hierarchal description of a project into more and more detailed components. Typical breakdown shown below
Levels
Project
Major tasks
Subtasks
Activities to be completed
Project Scheduling- involves sequencing and allotting time to all project activities. At this stage, mangers decide how long each activity will take and compute how many people and materials will be needed at each stage of production.
One popular scheduling approach is the Gantt Chart (planning charts used to schedule resources and allocate time)
Gantt Chart are low cost means of helping mangers make sure that (1) activities are planned (2) order of performance is documented (3) activity time estimates are recorded (4) overall project time is developed
19050325120Horizontal bars are drawn for each project activity along a timeline
On simple projects, scheduling charts such as these permit mangers to observe the progress of each activity and to spot and tackle problems. Gantt charts however do not have the ability to illustrate the interrelationships between activities and resources.
PERT and CPM- two widely used network techniques, have the ability to consider precedence relationships and interdependency of activities
On complex projects PERT and CPM have advantage over Gantt charts. Gantt charts may be used to complement other approaches
Project scheduling serves many purposes:
It shows the relationship of each activity to others and to the whole project
It identifies the precedence relationship among activities
Encourages setting of realistic time and cost estimates
Helps make better use of people, money and resources
Project Controlling- involves close monitoring of resources, costs, quality and budgets. Control also means having a feedback loop to revise the project plan and having the ability to shift resources to where they are needed most.
Some popular project scheduling programs such as Microsoft Project produce a broad variety of reports
Detailed cost breakdowns
Total program labor curves
Cost distribution tables
Functional cost and hour summaries
Raw material and expenditure forecasts
Variance reports
Time analysis reports
Work status reports
Project Management Techniques: PERT and CPM
Program Evaluation and
