Management Planning and Operations Scheduling

The timing of costs--that is, when various expenses will be incurred--often is a critical factor in financial management decisions. The coordination of the various cost components involved in the conduct of a program or project often requires the orchestration of multiple tasks or activities, carried out by different staff members or work crews, which may have significant interdependencies.

If a program or project is to be implemented successfully, three diverse and often contradictory elements must be coordinated into a management plan and operations schedule that will permit the work to be completed in the "best" time, at the least cost, and with the smallest degree of risk and uncertainty:

(1) Operations: things that must be done (tasks, activities, or jobs), each with a sequential relation to other operations and each requiring resources for some time period.

(2) Resources: things utilized in a program or project, often reduced to a common standard of cost, but including personnel, equipment, materials, and time.

(3) Constraints: conditions imposed by outside factors, i. e., budgetary limits, completion deadlines, availability of staff resources, inputs from other units, and so forth.

Two basic requirements for the development of an effective management plan are: (1) the ability to clearly state a work program (including the delineation of tasks into specific activities, jobs, or work elements) direct toward one or more defined objectives; and (2) the skill to attach cost and other resource requirements/constraints to each activity in the work program. An operations schedule must reflect the availability of resources, the sequence of activities or jobs, the resource requirements, and possible starting times for each activity. An efficient schedule must establish a duration for each activity with varying levels of resources to be utilized so that the program/project will remain within the limits of peak efficiency. This approach should yield a minimum cost for each activity and presumably, for the total program or project.

The techniques of network analysis provide a useful and straight-forward approach by which to "map" the various steps required to implement a project or program. Network analysis provides a basis for determining the order in which activities should be undertaken--either their sequence or priority--and the critical linkages among activities. Even the most detailed and apparently complex networks are merely composites of a number of relatively simple networks. By understanding the basic techniques of network analysis, the public manager should be able to convey specific assignments to those responsible for carrying out activities.

Activities are the basic building blocks of a network analysis. An activity may represent a process, task, procurement cycle, or waiting time or may simply represent a connection or interdependency between two events (nodes) on the network. If an activity is denoted as a direct link between two nodes in a network, an arrow (symbolizing the activity) indicates the direction of dependency and time flow from one node to another. A dependency relationship is assumed to mean that, before the dependent activity can be initiated, other related activities must be completed.

Since the nodes in the arrow diagrams represent the completion of an activity, more than one arrow can designate the same activity. For example, two arrows that terminate at the same node represent the same activity. This approach has certain advantages in determining time durations and in delimiting the critical path, as will be subsequently illustrated.

An arrow diagram is composed of a series of sequential relationships or paths. Each path should be completed in the indicated sequence in order for the various activities to be carried out in proper relation one to another and for the overall project to be successfully implemented. Once the various connections have been drawn, a critical route can be determined and progress can be more easily measured against key check points or milestones.

Associated with each arrow (activity) in the network is a time estimate called its duration--the amount of time required to complete the activity represented by the arrow. These durations, in turn, have resource requirements and associated costs. The next step in the process, therefore, is to assign time estimates to each of the arrows. Each arrow (activity) leading to a given node is assigned the time duration for the designated activity. In this way, all of the possible paths to that node can be easily traced.

The following case study can be used to illustrate these procedures. The Rurbana Sewer and Water Utility Commission has approved the construction of a new water storage tank and pumping station to serve the needs of an expanding residential neighborhood. The pumping station will include facilities for treatment and testing of the water supply. A gas driven generator will also be installed a short distance from the building to provide emergency power to the pumps in the event of a power failure in the main electricity supply. The activity descriptions, linkages, and estimated durations are given in Exhibit 1.

Time durations for each of the 18 activities identified in this project have been loaded on to the arrows in the network in Exhibit 2. Beginning at "start." the time duration for each path should be summed to determine:

(1) The earliest possible time that an activity that terminates at a give node can be completed--known as the earliest possible occurrence or EPO.

(2) How long it will take to complete the entire project (project duration).

(3) Which activities establish and control the project duration (the critical path).

(4) How much leeway (float) exists for those activities that do not control the project duration.

In Exhibit 2, for example, the path from "start" to A (clear site) to C (prepare site for construction) to E (erect tower for storage tank) to H (install storage tank) to J (connect water tower to pump station) would take 80 days, whereas the path from "start" to A to C to D (lay foundation) to F (construct pump station) to K (install electrical service) to O (connect generator to pump station) is estimated to take 105 days . Therefore, the EPO for the completion of activity L (install water treatment equipment), which is linked to both J and O and has a duration of 20 days, is 125 days. Other activities dependent on the completion of this activity (for example, complete finish work on the building) cannot begin until 25 weeks into the project.

The EPO of the final activity node has added significance--it is the earliest possible completion time for the entire project. Thus, activity R (inspection) cannot begin until 150 days into the project and has a duration of 5 days. Therefore, the project duration is 155 days or 31 weeks.

The float of a given activity is the amount of time that the activity can be delayed or its duration extended without affecting the EPO of any other activity. To determine this operational leeway, calculations must be made by taking the EPO of the final activity node and subtracting the time durations back to the nodes that lead to this final activity. This process is repeated for each node, in turn, back to "start." These calculations determine the latest possible occurrence or LPO, that is, the latest time that all of the activities terminating at a given node can finish without causing the project to exceed the originally determine duration.

Whereas the EPO is the longest path from "start" to a given node, the LPO is the shortest path from the termination of the project back to a given node. The difference between the EPO and LPO represents the float for that activity (see Exhibit 3).

It should be clear that no activity with a positive float can control the duration of the entire project. The durations of these activities can be extended by an amount equal to the float that they possess without affecting the EPO of any other activity. This means that the EPO of the last activity node will not be affected and hence, that the project duration will not be altered. This characteristic of float limits the search for "critical" activities to those that have a float of zero.

Not all activities with zero float control the project duration, however. The activities that do control are those that have zero float and form a continuous path, starting at the first activity and ending at the last one. This path is made up of the links between A, C, D, F, K, O, L, P, Q, and R. If any of these activities are delayed, the project completion time will increase by the amount of that delay. This sequence of activities defines the critical path.

Once the actual program or project is implemented, the critical path can be continuously monitored so that potential delays can be identified before they occur. Such delays can be avoided by shifting personnel, materials, or other resource inputs to the critical path from those paths that have "float." Therefore, the identification of the critical path also provides the manager with a dynamic control mechanism.

The management plan/operations schedule can also be used to develop a first approximation of an overall project budget and a cash flow budget (see Exhibit 5). In addition to the efforts of a contractor whose crew will erect the water tower and install the storage tank, four work crews have been identified to (1) prepare the site and construct the pump station, (2) carry out the electrical work, (3) complete the plumbing, and (4) paint the facility. An estimated daily rate for each of these crews is shown in Exhibit 4, which when multiplied by the number of work days, yields an estimated cost for each activity. When the estimated costs of the contractor and inspection is added to these activity costs, a total project cost of $207,125 can be derived.

Use of the arrow network to display work force assignments can also help to identify potential problems of overlapping assignments, where the "float" available for an activity off the critical path might be applied to avoid delays. For example, the plumbing crew is scheduled to work on both the installation of treatment equipment (L), which is on the critical path, and the installation of the pump (I), which is not on the critical path. Both activities must be completed before the finish work on the building (P) can begin. Activity I has 30 days float, however, and this leeway permits the two activities to be completed sequentially rather than concurrently.

Management--and especially fiscal management--has been defined as the judicious allocation of resources to accomplish agreed-upon objectives according to a plan and schedule. Effective management also requires the ability to forestall the development of unfavorable situations by reacting quickly to deviations between predicted and actual results . Of necessity, management involves a balance between subjective ability and objective (or scientific) methods.

The complexities of government and increased demands for more effective utilization of limited public resources give rise to the need for a new breed of public management personnel. Today's public manager must be willing to understand and to use all the management techniques at his or her disposal. A new project cannot be launched, a new facility built, or any public program successfully initiated and operated unless there is a plan and a schedule of work--one which permits public managers to exercise dynamic control throughout the program.

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