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APICS Operations Management Body of Knowledge Framework, Third Edition

7.2 Planning processes

Planning processes start with the project concept phase, in which a broad definition of the project is created. A detailed-definition phase is next, in which more specific parameters of the project are explored: what, who, how, when, and how much. Following this is an activities-and-targets phase, during which specific goals, milestones, and cost targets are established. Actual activities are then implemented in the performance phase. The last phase, the post-completion phase, is an ongoing state for the organization. In this stage, continual-goal assessments and other metrics are used by decision makers to track the level of success of the project.

  • Evaluation and selection of project. Projects often are selected from a portfolio of potential endeavors. They are evaluated based on potential impact to the firm, usually based on cost reduction or profit.
  • Alignment of projects with strategy. Project goals and objectives need to be determined to support the strategy of the firm.

7.2.1 Gantt chart

A Gantt chart represents the activities of the project, displaying start times and completion times on the horizontal axis. This simple presentation gives an overview of project status at a glance; however, it does not show the interaction of project activities.

7.2.2 Network diagrams

Network diagrams are graphical representations of the precedence linkages of tasks in a project, generally made up of nodes and arrows. Network diagrams are either activity-on-node or activity-on-arrow. In activity-on-node diagrams, which are more common, arrows linking nodes are indications of relationships rather than time.

7.2.3 Critical path method (CPM)

CPM is a technique for the analysis of a project's completion time used for planning and controlling a project's activities. The critical path, which identifies elements that constrain the total time for a project, can be determined by examining each activity and its associated discrete time. Early start, late start, early finish, and late finish times also are calculated for each activity.

7.2.4 Program evaluation and review technique (PERT)

PERT, also known as probabilistic scheduling, is a network analysis technique where each activity is assigned a pessimistic, a most likely, and an optimistic estimate of its duration. The critical path method is then applied, using a weighted average of the three times for each node. PERT computes a mean and standard deviation of the project duration, facilitating the assignment of probabilities for completion time.

7.2.5 Crashing

Crashing is adding resources to critical path or near-critical path activities on a project to shorten a project's duration after identifying the most cost-effective course of action. When the reallocation of resources towards the critical path will have no further effect on shortening overall project time, a project is considered fully “crashed.” Crashing may stop before all possible activities have been altered, based on the trade-off of the added expense to shorten the activity versus the opportunity cost of having the resources already committed.

7.2.6 Resource-limited scheduling

In this technique, activities are scheduled so that predetermined resource availability pools are not exceeded. Activities begin as soon as resources are available (with respect to logical constraints). When not enough of a particular resource exists to perform all tasks on a given day, a priority decision is made. Project completion may be delayed, if necessary, to alter schedules constrained by resource usage. Resource-limited scheduling also is referred to as resource-constrained scheduling.

7.2.7 Critical path/critical chain

There are many terms associated with the mechanics of project management, including node arrows, slack, and critical and non-critical paths. Critical paths and critical chains are among the most important. The critical path is the longest sequence of activities from the start to the completion of a project. The critical chain is a similar concept, but it includes resource constraints.