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PRODUCT MANAGEMENT

OM. CHAPTER 18. PRODUCT MANAGEMENT. DAVID A. COLLIER AND JAMES R. EVANS. Chapter 18 Project Management.

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PRODUCT MANAGEMENT

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  1. OM CHAPTER 18 PRODUCT MANAGEMENT DAVID A. COLLIER AND JAMES R. EVANS

  2. Chapter 18 Project Management Aprojectis a temporary and often customized initiative that consists of many smaller tasks and activities that must be coordinated and completed to finish the entire initiative on time and within budget. Project managementinvolves all activities associated with planning, scheduling, and controlling projects. Olympic games provide a good example of the importance of project management and obtaining good time and cost estimates to meet due dates.

  3. Chapter 18 Project Management • The Scope of Project Management • Define: clearly understand the goal of the project, responsibilities, deliverables, and what must be accomplished. • Plan: determine the steps needed to execute the project, delegate tasks, and identify start and completion dates. • Organize: coordinating the resources to execute the plan cost-effectively.

  4. Chapter 18 Project Management • The Scope of Project Management • Control: collecting and assessing status reports and managing changes to baselines. • Close: compiling statistics, reassigning people, and preparing a “lessons learned” list.

  5. Chapter 18 Project Management • All project management decisions involve three factors: time, resources, and cost. • Key steps to help plan, schedule, and control projects are: • Project definition: identifying the activities that must be completed and the sequence to perform them. • Resource planning: determining resource needs for each activity. • Project scheduling: specifying a time schedule for the completion of each activity. • Project control: establishing controls for determining progress and responding to problems.

  6. Project Activities and Precedence Relationships Exhibit 18.3 Project Definition The first step is to define project objectives and deliverables. Next, list the specific activities required to complete the project and sequence in which they must be performed, as shown below.

  7. Project Network for the Software Integration Project Exhibit 18.4 The activities and sequences of a project are represented graphically below using a project network, which consists of nodes(circles) representing activities and arcs (arrows) which define the precedence relationships between activities.

  8. Chapter 18 Project Management • Resource Planning & CPM • Resource planning includes developing time estimates for each activity and allocating resources that will be required. • Cost control is a vital part of project management, and resource planning aids in good budgeting. • Bottom-up budgeting starts with lowest-level tasks, converting labor and material estimates into dollar figures and aggregating them into higher-level activities, until a total project budget is developed.

  9. Project Work Activities and Costs Exhibit 18.5 The chart below represents the cost estimates for each activity of the project.

  10. Chapter 18 Project Management • Critical Path Method (CPM) • CPM is an approach to scheduling and controlling project activities. • Thecritical path is the sequence of activities that takes the longest time and defines the total project completion time. • Rule 1: EF = ES + T • Rule 2: the ES time for an activity equals the largest EF time of all immediate predecessors. • Rule 3: LS = LF – T • Rule 4: the LF time for an activity is the smallest LS of all immediate successors.

  11. Activity-on-Node Format and Definitions Exhibit 18.6 The terms below help to define the variables used in computing the critical path. Nodes in the project network are replaced with boxes that provide the following information:

  12. Activity-on-Node Project Network Exhibit 18.7

  13. Chapter 18 Project Management • Project Control • Because of uncertainty of task times, unavoidable delays, or other problems, projects rarely progress on schedule. • Gantt charts graphically depict the project schedule so that a project manager knows exactly what activities should be performed at a given time. • Project management software can assist in allocating limited resources, such as labor and equipment that are shared among all the activities.

  14. Early Start Schedule Gantt Chart Exhibit 18.9

  15. Chapter 18 Project Management • Crashing a projectrefers to reducing the total time to complete the project to meet a revised due date. • Crash timeis the shortest possible time the activity can realistically be completed. • Crash costis the total additional cost associated with completing an activity in its crash time rather than in its normal time. • Crash cost per unit of time = • Crash Cost – Normal Cost • Normal Time – Crash Time [18.1]

  16. Pert Data Including Crash Times and Costs Exhibit 18.11

  17. Chapter 18 Solved Problem CPM Time/Cost Draw the project network to determine the earliest completion time for the project.

  18. B D A F C E Chapter 18 Solved Problem CPM Time/Cost • What is the critical path? • Solution: there are 2 critical paths: • Path A-B-D-F • Path A-C-D-F • Both paths take 19 weeks to complete. Only activity E has a slack time of 1 week.

  19. Chapter 18 Project Management • Uncertainty in Project Management • PERT (project evaluation and review technique) is another approach to project management. • PERT was developed to handle uncertainties in activity completion times. • In contrast, CPM assumes that activity times are constant (no uncertainty or probability distributions here).

  20. Chapter 18 Project Management • Uncertainty in Project Management • Three PERT estimates are obtained for each activity: • Optimistic time (a): activity time under ideal conditions, • Most probable time (m): most likely activity time under normal conditions, • Pessimistic time (b): activity time if breakdowns or serious delays occur.

  21. Chapter 18 Project Management • Uncertainty in Project Management – PERT • Expected Time = (a + 4m + b)/6 [18.2] • Variance = (b – a)2/36 [18.3] • where: • a is the optimistic time estimate, • m is most likely or probable, • b is the pessimistic time estimate, and • assumes a beta probability distribution.

  22. Activity Time Estimates for Pert Exhibit 18.16

  23. Chapter 18 Project Management Uncertainty in Project Management – PERT PERT allows the flexibility to answer many “what if” type questions, such as: Although they expect completion in 22 weeks, the project manager wants to know the probability that they will meet the 25-week deadline? What is the probability that we could finish the project early? In 20 weeks? In 18 weeks?

  24. Probability of Completing a Project within 25 Weeks Exhibit 18.17

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