Chapter 17 – Project Management
CHAPTER 17
PROJECT MANAGEMENT
Teaching Notes
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. 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 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 the Olympics, sports festivals,
the NCAA basketball tournament, etc.
Project management involves planning, controlling, and directing the non-typical activities facing the
firm. In managing projects, project managers are assigned 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 within the company involved in the
project and from other outside companies (e.g., a consulting firm). Depending on the size and type of the
project, an internal project manager and possibly project team members may receive full or partial release
from their regular duties. This duty release is given because it would be very difficult for an employee to
manage the responsibilities of a time consuming project and 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
Projects progress through a life cycle consisting of five phases:
1. Initiating: Outlining the expected costs, benefits, and risks associate with a project. It also
includes defining major project goals and choosing a project manager.
2. Planning: Providing details on deliverables, the scope of the project, the budget, the schedule and
3. Executing: the actual work of the project is carried out. The project is managed as activities are
completed, resources are consumed, and milestones are reached.
9. A probabilistic estimate of a project’s completion time based solely on the variance of the critical
path might be misleading because near-critical paths can have distributions that overlap the
10. a. Expected activity time is a weighted average of optimistic, most–likely, and pessimistic time
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Taking Stock
1. The trade-offs associated with time and cost estimates for a proposed project involve the
2. When assessing the cost of a project, the project manager, specialized project personnel dedicated
3. Two ways that technology has had an impact on project management:
a. Project management software: As project management software becomes more sophisticated,
the ability of a project manager to manage, direct, and control different aspects of the project
becomes easier.
Critical Thinking Exercises
1. Project management techniques are designed to handle unusual or atypical activities. They do not
lend themselves very well to managing the day-to-day activities of organizations. Projects by
definition are different from normal operations of the firm. They are usually not repeated and
2. Three examples of unethical conduct involving projects include any of three of the following:
a. If a p project manager understated costs to get a project approved, this action would violate
the Virtue Principle.
b. If a project manager compromised workers’ safety to complete a project on time, this action
would violate the Utilitarian Principle and the Virtue Principle.
c. If a project manager approved substandard work, this action would violate the Utilitarian
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Solutions
1. Use the network diagrams given in the text to determine both the critical path and the expected
project duration. The critical path and the expected project duration are indicated below with an
“*”. Expected duration for each path equals the sum of the activity times on the path.
a.
Path
Expected Duration
1–2–4–7–10–12
4 + 9 + 5 + 2 + 3 = 23
1–2–5–8–10–12
4 + 8 + 7 + 2 + 3 = 24
1–3–6–9–11–12
10 + 6 + 4 + 5 + 6 = 31*
b.
Path
Expected Duration
1–2–4–6–8–9
5 + 18 + 3 + 4 + 9 + 2 = 41
1–2–5–6–8–9
5 + 18 + 10 + 4 + 9 + 2 = 48
1–2–5–7–8–9
5 + 18 + 10 + 11 + 9 + 2 = 55*
1–3–7–8–9
5 + 13 + 11 + 9 + 2 = 40
c.
Path
Expected Duration
1–2–5–12–16
10 + 14 + 13 + 7 = 44*
1–3–6–13–16
14 + 15 + 6 + 4 = 39
1–3–7–14–16
14 + 11 + 13 + 3 = 41
1–4–8–9–10–11–15–16
3 + 8 + 1 + 0 + 7 + 6 + 10 = 35
1–4–8–10–11–15–16
3 + 8 + 4 + 7 + 6 + 10 = 38
d.
Path
Expected Duration
A-D
7 + 8 = 15
B-E
3 + 4 = 7
C-F-E
5 + 7 + 4 = 16
C-F-G
5 + 7 + 6 = 18*
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Blank forms to distribute to students if desired:
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