Filled Notes for Chapter 17: Project Management

Key Concepts:
In managing operations, we are often faced with activities that do not fit into the usual day-to-day
operations of the firm. These non-typical, unusual activities of the firm are called projects. Therefore
typical daily, weekly or monthly activities of a firm involving scheduling, quality control, purchasing, etc.
are not categorized as projects. Due to their unique nature, projects require different management
approaches and techniques. A list of project examples is given below:
1.
Installation of a new bar coding system
2.
Installation of a new computerized production and inventory control system
3.
Design and development of a product prototype
4.
Feasibility study to decide whether to buy new machinery
5.
Acquisition and installation of a new CNC (Computer Numerically Controlled) machinery
6.
Conversion of the plant layout from process layout to group technology layout.
7.
Selection of a new plant site
8.
Construction of a new facility
9.
Planning, organizing and managing a professional conference or a trade show
10.
Planning organizing and managing major sports events such as Olympics, sports festivals, NCAA
basketball tournament, etc.
Project Management involves planning, controlling and directing the unusual activities facing the firm. In
managing projects, temporary project teams are formed to schedule the work, to adhere to a given budget,
and to monitor the progress of the work through its various stages. For larger projects, project teams are
formed. These project teams may include workers from the company involved in the project as well as
other external companies (i.e. consulting firm). Depending on the size and type of the project, an internal
project leader and possibly project team members may receive full or partial release from their regular
duties. The duty release is given because it would be very difficult for an employee to manage the
responsibilities of a time consuming project and also to fulfill the responsibilities of normal day-to-day
activities.
Projects are not necessarily single-time events. They can be repeated in similar settings. In managing a
project, the project team is usually responsible for managing and controlling the following four factors:
1.
The length of project completion time
2.
Resources
3.
Quality
4.
Cost
The project plan is generally prepared well before actual project work begins. The first phase of the
project needs to include a clear statement of goals and objectives of the project. The next phase involves
composing a detailed definition of the project. Then, using the Work Breakdown Structure, the project is
decomposed into tasks or activities. Once all of the unique tasks making up the project are identified,
specific time, cost and resource estimates are obtained for each task.

In planning and controlling the project, the project teams major duty is to ensure timely progression of
the project through various stages without exceeding the approved cost standards while achieving the
desired level of quality. The project team usually prepares progress reports during different stages of the
project for upper management and possibly for external sources playing a major role in the project. The
interim project progress report assists in ensuring that the project teams actions are consistent with the
original goals and objectives of the project and the project is continuing according to plan. If the project is
delayed or major changes had to be made, the interim progress report also allows the project manager to
explain the reasons for deviations from the original plan. In addition, the interim progress report also
gives upper management a chance to consider and possibly approve the proposed changes.

Answers to Discussion and Review Questions

1.

To effectively manage a project, a project manager must employ a certain set of skills. For
projects that involve fairly well-defined work, the project manager must be able to
a. motivate his or her team.
b. direct team members in specific work areas of the project.
c. solve specific project related problems.
d. resolve issues and problems between co-workers.
e. communicate certain problems to upper management.
f. expedite work when necessary.
g. coordinate work among the team members and among the appropriate outside contractors.
h. make the necessary project trade-off decisions involving cost, time, quality and resources.
However, if the work is not well defined, there is usually more uncertainty involved. In projects
involving a higher degree of uncertainty, in addition to being able to perform the functions listed
above, the project leader must also demonstrate strong leadership skills. The more ill-defined the
work, the higher the need for leadership skills. Leadership skills are less tangible than the skills
listed above and may include the following:
a. ability to deal with change.
b. deciding what type of changes are needed and when to make the change or changes.
c. working with the project team to make the necessary change or changes.
d. the ability to handle undesirable or unexpected consequences of making the change.
e. ability to manage people with varying background and skills who may also be reporting to
other managers in their respective functional areas.
f. ability to persuade and cooperate with others to fulfill project goals since the project manager
may not have the formal authority to accomplish some of the goals of the project.

2.

3.

4.
5.

6.

7.

Project champion is the person who is from within the company specifically designated to support
the project. The project champion can be instrumental in facilitating the work of the project
manager by promoting the project to other managers who might be asked to share resources with
the project team. The project champion also promotes the benefits of the project to employees
who may be asked to work on portions of the project. Since the project champion plays a very
important role in facilitating the project, both the project manager and the project team needs to
keep him or her informed and involved about the status of the project. Possible benefits of the
project need to be communicated to the project champion so that he or she is knowledgeable
about the project to be able to successfully promote it to others involved.
The steps in risk management are:
a. Identification of risks.
b. Assessment and evaluation of risks.
c. Risk reduction.
- Contingency plans.
- Risk sharing.
- Backup systems.
- Risk transfer.
- Early identification and elimination of problems.
Choose good people, model appropriate behavior, monitor team members behavior, and
investigate any allegations of unethical conduct.
The advantages of using project management software include the following:
a. It imposes a methodology and a common project management technology.
b. It provides a logical planning structure.
c. It can enhance communication among team members.
d. It can automatically flag the occurrence of constraint violations.
e. It automatically formats reports.
f. It can generate multiple levels of summary reports and detailed reports.
g. It enables what-if scenarios and what-if analysis.
h. It can generate various chart types, including basic Gantt charts.
Work Breakdown Structure (WBS) is a hierarchical listing of what must be done during the
project. It breaks down the entire project into manageable smaller portions called activities or
tasks. WBS is important because it establishes a logical framework for identifying the required
activities of the project.
a. A path

e. Beta distribution

b. The critical path

f. Normal distribution

c. Dummy activity

g. Crashing

d. Path slack
8.

The primary advantages of PERT are:

a.
b.
c.
d.

9.

10.

The PERT chart helps managers to visualize the project.

Planners must identify major activities and define sequential relationships.
Potential trouble spots become apparent.
Areas of weak or nonexisting information (e.g., time estimates) tend to be more easily
recognized with a formal technique like PERT.
e. Reallocation of resources to shorten project time is facilitated through computation of slack
times.
The primary limitations of PERT are:
a. Important activities may be overlooked when developing the project network.
b. Errors may occur in designating precedence relationships.
c. Time estimates may be incorrect.
d. Large networks require the use of a computer which might not be available.
Near-critical paths can have distributions which overlap the distribution of critical path time,
which may result in a lower probability of timely completion than that based solely on the time
distribution of the critical path. Where overlap is not a factor, probabilistic estimates based solely
on the critical path are acceptable.
a. Expected activity time is a weighted average of optimistic, most-likely, and pessimistic time
t o 4t m t p
for each activity: Te
6
b. Variance of an activity measures the extent of activity variability.

Variance

11.

12.

13.

(t p t o )2

36
c. The standard deviation of a paths time is a measure of the extent of variability of path time.
It is computed by summing the variances of activities which comprise the path and then
taking the square root of that sum.
The critical path generates more attention than other paths. Hence, those associated with activities
which are on the critical path are often in the spotlight. If they perform well, there is a good
possibility for recognition and reward. However, there can be an inordinate amount of pressure
associated with the critical path activities, and some would just as soon avoid that pressure.
Projects can offer a change of pace, a chance to do new work, meet new people and new
challenges. If the project is successful, certain rewards, recognition and perhaps new
opportunities may present themselves. Conversely, an unsuccessful project may bring an
unfavorable impression. In addition, after the project is terminated, it may be difficult to return to
ones former slot in the organization. And, if one is involved with the project on a part-time basis,
conflicts may arise between the regular work and project work.
Authority may not be commensurate with responsibility, time and funding pressures may be
large, the environment is often more dynamic than with more routine jobs, there may be a much
wider range of skills among subordinates, and conflicts may arise between project workers and
those not involved with the project (e.g., other projects, nonproject work).

14.

The project organization permits a narrower focus on activities related to a project than a more
traditional form of organization would.