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CHAPTER- 3: PROJECT MANAGEMENT

1. What is a project?
a. Project is an interrelated set of activities that has a definite
starting and ending point resulting in to an unique product. few
examples of project are-
 Constructing a bridge, dam, highway or building.
 Producing an aeroplane, missile or rocket.
 Introducing a new product.
 Installation of a large computer system.
 Construction of a ship.
 Maintenance of major equipment/plant.
 Commissioning of a power plant.
 Conducting national election.
2. Basic steps in project management
Managing a project (regardless of its size and complexity) requires
identifying every activity to be undertaken and planning- when
each activity must begin and end in order to complete the overall
project in time. typically all projects involve the following steps:
 Description of the project.
 Development of network diagram.
 Insertion of time of starting/ending of each activity.
 Analysis of the network diagram.
 Development of the project plan
 Excetion of the project.
 Periodically assessment of the progress of project.
3. Terminologies used in network diagram
(i) Activity: An activity means work/job. it is a time consuming
process. it is represented by an arrow (→) in the network diagram.
as shown below.
Tail → head
(ii) Event : An event is a specific instant of time  marks the "start"
and "end" of an activity.
(iii) Critical path: It is the sequence of activities which decides the
total project duration. Ex.
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(iv) Duration (d) : Duration is the estimated or actual time required to

complete a task or an activity.

To J-e..J._
·~ ; .(JZ ff vV'd- -rd:

r--~ J .
,'.-1,-__,.,...,0·.
CvCJfH-7
Evettt/
I

(v) Total project time: time to complete the project. In other words,
it is the duration of critical path.
(vi) Earliest start time (Ei): It is the earliest possible time at which an
activity can start. it is calculated by moving from 1st to last event
in the network diagram.
(vii) Latest start time (Li) : It is the latest possible time by which an
activity can start.
(viii) Earliest finish time (Ej) : It is the earliest possible time at which an
activity can finished/end.
(ix) Latest finish time (Li) : It is the last event time of the head event.
It is calculated by moving backward in the network diagram.
(x) Float/slack : Slack is with reference to an event. Float is with
reference to an activity.
(xi) Total float : (Latest finish time- Earliest start time) - Activity
duration (Su fig. above)
(xii) Free float : (Earliest finish time- Earliest start time) – Activity
duration.
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(xiii) Independent float : (EST of head event – LST of tail event) –

Activity duration.
(xiv) Optimistic time (to) : Time estimate for fast activity completion.
(xv) Pessimistic time (tp.) : Maximum time duration. that an activity
can take.
(xvi) Most likely time (tm) : best guess of activity completion time.
(xvii) Expected time (te) :
(xviii) Variance of an activity time : 6e2 = ( )2
(xix) CPM – Critical path method
(xx) PERT- Program evaluation & review technique.

© Project management through PERT/CPM.

Project scheduling using Gantt chart was done from 1917. Till 1956.
Between 1956-58 two new scheduling techniques were developed.
(i) PERT
(ii) CPM

Both are based on the use of a network/graphical model to depict the

work tasks being scheduled. The popularility of network based scheduling can
be attributed to its many benefits, especially its ease of use. Other benefits
include the following.

(1) It provides a visual display of needed task and their temporal ordering
which makes it easy to see how the tasks should be sequenced as shown
below.

This assist communication and cooperation among task teams because

each team can see how its work affect other team.
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(2) It provides relatively accurate estimate of the time required to complete

the project at the proposed resource level.
(3) It identifies and highlights the tasks that are critical to keep the project
on schedule.
(4) It provides a method for evaluating the time-cost trade-offs resulting
from reallocating resources among tasks.
(5) It provides a method for monitoring the project throughout its life cycle.
as the project progresses, PERT/CPM easily identifies changes in which
tasks are critical and how the expected completion date is affected.
(6) It provides a convenient method for incorporating uncertainty regarding
task times into the schedule and it helps to evaluate the effect of this
uncertainty on project completion time.

Differences bet PERT & CPM

Sl PERT CPM
No.
1. PERT is a probabilistic model 1. CPM is a deterministic model
with uncertainty in activity with well known activity duration
duration. activity duration is
calculated from to, tp &tm by
relation te =
2. It is an event oriented approach 2. It is an activity oriented
approach
3. PERT terminology uses word like 3. CPM terminology sues word like
network diagram event and arrow diagram nodes and floats
slack
4. The use of dummy activity is 4. No dummy activity
required for representing the
proper sequencing
5. PERT basically does not 5. CPM maks the critical activity
demarcate between critical and
noncritical activity
6. PERT is applied in projects 6. CPM in applied to projects where
where resources are always minimum overall cost is the
available prime importance.
7. PERT is suitable in defence 7. Suitable for plant maintenance,
project & R &D, where activity civil construction projects etc.
time can't be readily predicted where activity duration is known.
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Rules for Network Construction

1. The network should have a unique starting node (tail event) and unique
completion node (head event).
2. No activity should be represented by more than one arrow (→) in the
network.
3. No two activities should have the same starting node and same ending
node.
4. Dummy activity is an imaginary activity indicating precedena relationship
only. duration of dummy activity is zero.
5. The length of arrow bear no relationship to activity time.
6. The arrow in a network identifies the logical condition of dependence.
7. The direction of arrow indicates the direction of work flow.
8. All networks are constructed logically or based on the principal of
dependency.
9. No event can be reached in a project before the completion of
precedence activity.
10.Every activity in the network should be completed to reach the
objective.
11.No set of activities should form a circular loop.
 Network construction, CPM network calculation. (with the help of diff.
types of problems)

Prob- 1: A project consists of the following activities and time estimates

Activity Least Greatest Most likely time

time/optimistic time/Pessimistic (tm), days
time (to), days time (tp), days
1-2 3 15 6
1-3 2 14 5
1-4 6 30 12
2-5 2 8 5
2-6 5 17 11
3-6 3 15 6
4-7 3 27 9
5-7 1 7 4
6-7 2 8 5
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Construct the network. determine the expected task time. show the
critical path. what is the project duration?

Solutions

The network diagram is presented in the following

The formula for expected task time (te) =

Accordingly the expected task times for different activities are as

follows:

Activity (te) values, days

1-2 → 7

1-3 → 6

1-4 → 14

2-5 → 5

2-6 → 11

3-6 → 7

4-7 → 11

5-7 → 4

6-7 → 5
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The expected task times are shown on the network diagram to

determined the critical path & project duration.

From this network diagram 1-4-7 represents the critical path and the
duration for project completion = total time along the critical path = 14+11 =
25 days

Problem-2

A project consists of the following activities and time estimates.

Optimistic time (t0), Pessimistic time (tp), Most likely time (tm),
Activity
day day day
1-2 3 15 6
1-3 2 14 5
1-4 6 30 12
2-5 2 8 5
2-6 5 17 11
3-6 3 15 6
4-7 3 27 9
5-7 1 7 4
6-7 2 8 5

a) What is the project duration?

b) What is the probability that the project will be completed in 27 days?

Solution:

In order to find out the project duration, the expected task time for each
activity is to be determined using the formula → te =
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In order to find out the probability of completion in a given day,

standard deviation ( ) for the critical path is to be determined using the
formula

=( )

So the required data are presented in the following

Activity t0 tp tm te
1-2 3 15 6 7 4
1-3 2 14 5 6 4
1-4 6 30 12 14 16
2-5 2 8 5 5 1
2-6 5 17 11 11 6
3-6 3 15 6 7 4
4-7 3 27 9 11 16
5-7 1 7 4 4 1
6-7 2 8 5 5 1

Using the expected time (te) value, the network is drawn as shown below.

a) 1-4-7 is critical path. The duration of project = 14+11= 25 days.

b) The sum of variances along the critical path = 16+16 = 32.

Now the standard deviation, = √ = √32 = 5.656

Expected project duration, Te = 25 days,

Given D = 27 days,
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With reference to Normal Distribution Curve

Z= = = 0.35
.

- VIZ- -

From Normal Distribution Table, for Z = 0.35, the fraction of (shadow)

area = 0.637 i.e., 63.7%

So probability of completion of project in 27 days is 63.7%

[Note: If probability of completion of project will be given and the due

date (D) will be asked to find out, then backward calculation can give the
result].

Problem-3:

A project schedule has the following characteristics →

Activity 1-2 1-4 1-7 2-3 3-6 4-5 4-8 5-6 6-9 7-8 8-9
Duration,day 2 2 1 4 1 5 8 4 3 5 5

Construct the network and locate the critical path. Calculate the various
time estimates and floats.

Solution:
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--
£ofn

The earliest start time (EST), the latest start time (LST) the earliest finish
time (EFT) and latest finish time (LFT) are shown above at each node point by
square block in the network diagram.

The various floats can be calculated w.r.t. the following figure :-

l~.~~-ff oo.k -fo(._

f~· yvlj_ {I cJ:-1 cL
(J

'
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Activity Duration EST LST EFT LFT Total float Free float Independent
float
1-2 2 0 0 2 7 5 0 0
1-4 2 0 0 2 2 0 0 0
1-7 1 0 0 1 5 4 0 0
2-3 4 2 7 6 11 5 0 -5
3-6 1 6 11 11 12 5 4 -1
4-5 5 2 3 7 8 1 0 -1
4-8 8 2 3 10 10 0 0 -1
5-6 4 7 8 11 12 1 0 -1
6-9 3 11 12 15 15 1 1 0
7-8 5 1 5 10 10 4 4 0
8-9 5 10 10 15 15 0 0 0

(C) Crashing of Project Network

Crashing of a project network means intentionally reducing the duration

of project by allocating more resources to it. A project can be crashed by
crashing critical activities.

The cost associated with normal time → normal cost

The cost associated with crashed time → crash cost.

It is obvious that the crash cost should be more than the normal cost.
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I
I
C;, I- --
l

The slope of crashing an activity is given by :

Slope =

The activity on critical path selected for crashing should have minimum
slope and for compression limit = min [crash limit, free float limit]

Typical Example on Crashing

For a network shown below, normal time, crash time, normal cost, crash
cost are given in table. Contract the network by crashing it to optimum value
and calculate optimum project cost. Indirect cost = Rs 100/- per day.

Normal Crash
Activity
Time in days Cost in Rs Time in days Cost in Rs
1-2 3 300 2 400
2-3 6 480 4 520
2-4 7 2100 5 2500
2-5 8 400 6 600
3-4 4 320 3 360
4-5 5 500 4 520
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Solution:

By using the network diagram as shown below

The critical path → 1-2-3-4-5.

The project duration = 3+6+4+5+ = 18 days.

On this path, crash time = 2+4+3+4+ = 13 days

Normal cost = 300+480+2100+400+320+500 = Rs 4100/-

Crash cost = 400+520+2500+600+360+520 = Rs 4900

To contract the network in the 1st stage we should identify the activities
on the critical path having lowest cost slope. For this purpose, the cost slopes
are calculated as follows:

ΔC
Normal Crash ΔC ΔT
Activity ΔT
Time, days Cost, Rs Time, days Cost, Rs
1-2 3 300 2 400 100 1 100
2-3 6 480 4 520 40 2 20
2-4 7 2100 5 2500 400 2 200
2-5 8 400 6 600 200 2 100
3-4 4 320 3 360 40 1 40
4-5 5 500 4 520 20 1 20
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It is observed from the above table that, the critical path activities 2-3 &
4-5 have least cost slope. Therefore, these activities are 1st crashed. The
modified network is drawn in the following.

4 y
'3 t-
@- II

~?
\
=@
J1 a_
I
-e-r

This network shows that after crashing activity 2-3 by 2 days and activity
4-5 by 1 day, the critical path is same i.e. 1-2-3-4-5 and the project duration =
15days.

Now, in the 2nd stage, the least cost slope in the remaining activities is
for activity 3-4 on the critical path. By crashing this activity, the new network
diagram becomes:

Now 2 paths become critical path i.e. 1-2-4-5 and 1-2-3-4-5 and the
duration = 14days.
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Now we see that there is no other activity on both the critical paths
which has cost slope less than indirect cost (i.e., Rs 100/-). This shows that this
is the optimum network and hence optimum project duration = 14days.

Total direct project cost for this optimum condition = Direct cost for all
activities on the network = Sum of costs of activities 1-2 , 2-3, 3-4, 4-5, 2-4, 2-5
= 300+520+360+520+2100+400 = Rs 4200/-

Indirect cost for 14 days = 14×100 = 1400/-

Total project cost after crashing = 4200+1400 = Rs 5600/-

Whereas, total cost with all normal activities = 4100+18×100 = Rs5900/-

So b crashing cost is reduced and time is also reduced.

(C) Project scheduling with limited resources

Usually the resources in project are:

 Manpower
 Equipments
 Money

These resources are limited. Hence the objective is to adjust noncritical

activities between their EST & LFT such that the peak resource requirement is
reduced. There are 2 types of problems under this category.

(1) Resource leveling (to minimize the peak requirement and smooth out
period to period variation).
(2) Resource allocation (adjust the noncritical activities such that the
resource requirement in each period is within the available range).

(1)Resource Leveling Technique

Ex: Consider the following problem of project scheduling to obtain a

schedule which will minimize the peak manpower requirement and smooth
out period to period variation of manpower requirement.
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Activity Duration Manpower requirement

1-2 6 8

1-3 10 4

1-4 6 9

2-3 10 7

2-4 4 6

3-5 6 17

4-5 6 6

Solution:

The project network is shown below

___ r

A better form of network will be obtained if event (3) will be above (2)
and it is shown below.
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Wu },(;p,_J_ f~ .Y I - 2 - 3 - -5

1Jvz_ EST L L FT ,hr

eo,,(>f, bl/~ vrre
/ru011_;;; ,>; box'~,

Critical path = 1-2-3-5

The EST & LFT for each event are presented in boxes.

The activities representation on a time state and corresponding

manpower requirements are presented on the top of arrow as follows:

~ __::i4~--~,~)- -·-·

(, _,D
9 "®// 6~.)-- - -

The corresponding manpower requirement histogram is as follows:

(shifting 4-5 towards right)

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-2£

3'+4+3 =~i) t'.f ,- 17-

!rch'vt'-h'er> lt'-itl{tlf
i?>
fdi'vt} '.I,,! (i 7-)
DfJ r-~ (i_- 3) r+6 d:13)
\_ ' 2-3Jf1-3) ft ch' vr'h'v, A ch'vi +y
G - 4)
(2-y; @--3) d:J- ~) (3-E)

Jo ri 22-

Ti· 17"'-i._A n

The peak manpower requirement is 21 and it occurs between 0-6 weeks.

The activities which are scheduled during this period are: (1-2),(1-3) and(1-4).
The activity 1-2 is a critical activity. So it should not be disturbed. Between
activities (1-3) and(1-4), the activity (1-3) has a slack of 6 weeks. Hence it
should be postponed to maximum extent (i.e., it can be started at the end of
6th week). The corresponding modification is shown in the following
histogram.

I 17-
A: cnvc1''e,s ~--3)
(2 -3)/ v- 3)
0
Q - 2) 2- [- 3) s. 0-5)
? 6-4) c 2 -tt) L (Lf-t;j

L
0
10
~ ~
G 16 22

The manpower requirement is now balanced/smothered throughout the

project duration.

(2) Resource Allocation Technique

The objective of resource allocation is to reschedule the project activities

so that the manpower requirement in each period of project execution is
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within the maximum manpower limit which is given as a constraints. Here we

should aim to maintain a limit on the manpower requirement throughout the
project duration. In order to achieve this, we may have to reschedule the
project activities. If necessary, the project completion will be extended to
satisfy the constraints on manpower limit.

Ex. Consider the following problem

Activity Duration in month Manpower requirement

1-2 4 10

1-3 5 4

2-3 8 5

2-4 8 2

3-4 4 7

Reschedule the activities of the project with a maximum limit on the

manpower requirement = 10

Solution:

The project network and the various time values are shown below.
W_ C{l,( f, · uJ__,f>Af/, ~/ I- 2 - 3 - 4-

.lJ...R_ llOY~ P7 fl.cl

[o 11"-f te. f,' o /V /,'/)'\.(?. "' Ib '1W ,..#,s; .

The critical path = 1-2-3-4

The normal project completion time = 16 months.

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The normal project scheduling with manpower requirement (on the top
of arrow) is shown below.

( Af-o/.e-' {frtif'ivfJ?'vf8Y
>"fvohf? ~) ,4--

°{iwlUL e-r: f Io lfr:J )

10 5

I
I
2 l.

z. 4 g lo 12-- I~ I~

rr •>"L-----rn '>'N)rd-/, ----7'

If the actual manpower allocated as per the project schedule is more

than the upper limit of 1, then the non-critical activities are postponed with
the most slack value so that the actual manpower on that month is less than or
equal to the maximum limit. Inspite of this if the total manpower goes beyond
the maximum limit, then the critical activity is to be postponed by some period
such that total manpower is within the maximum limit. It is shown in the
following.

4 8 ,J ID 12_ llf Il I 18

Now the manpower requirement with month is presented in the

following table.
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Month 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Manpower 10 10 10 10 9 9 9 9 9 7 7 7 2 9 9 9 9
requirement

It is seen that the project duration is changed from 16 months to 17

months due to limitation of resource.

(C) Line of Balance

For some products like boiler, aircraft, computers, the delivery of the
product is not at one point of time is spread over a time internal. For
scheduling and control of these products, a graphic technique called Line of
Balance (LOB) is quite essential.

For Line of Balance, the following information are required

i. Contracted schedule of delivery.

ii. Key operations in making the product (which need to be controlled).
iii. The sequence of key events.
iv. The expected/observed lead time with respect to delivery of final
product.

Based on the above information, a diagram is plotted which compress

pictorially between the planned progress and actual progress → Line of
Balance.

The various steps followed can be explained with the help of following
example.

Ex: ABC company has received order to deliver pumps to its customers
as per delivery schedule as shown in the following table.

Month 1 2 3 4 5 6

Quantity 100 200 200 200 300 400

The product structure explaining the subassemblies, inspection and test

procedure along with lead time details is presents in the following figure.
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.
l
1) (2,)
[. LT.::: 2-

l
r~ f.(z,J
L T.c: 3
J
c D / E. c ~ r-£,f •U &r.k 1tc
I

uimpo~ ~ump·

The above information is presented in tabular form as presented in the

following.

Sl. Process No. of Lead time in

Components/subassembly
No. stage components weeks

1 I E 2 3

2 II F 1 2

3 III C 4 3

4 IV D 2 2

5 V Assembly of pump. 1 1

6 VI Inspection 1 1

7 VII Final product 1 -

The production schedule is for 6 months. After 4 months of production

schedule, the cumulative number of units proceed at each process stage is
shown below.
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Cumulative production at the end of 4th month

Process I II III IV V VI VII

stage

Cumulative 1300 1200 1100 900 800 750 700

production

 Develop LOB chart

 Evaluate the status of production at process stage VII.

SOLUTION:

Step-1

The process plan for producing one unit of pump →

f
0
])

rr>Jhl\f f E

Step-2

The cumulative delivery schedule is computed as shown below.

Month Quantity Cumulative quantity

1 100 100

2 200 300

3 200 500

4 200 700

5 300 1000
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6 400 1400

The cumulative delivery chart can be plotted as shown below.

13<1'9

(MmU.
loJiv~
p'rf)1''
/~ ---- - -
~1~ - t-
•
·-

2. -3 5 6 r !IN
I
TV 2_ ~VT
S--~'2.-7
k:};{§)

Step-3

The LOB chart is constructed based on the cumulative no. of production

of various process stages at the end of 4th month is shown in fig(b).

Status of process stage VII after 4th month, in order to determine this, a
horizontal line is plotted corresponding to cumulative production volume at
4th month and producing this line on to the VII stage graph as shown in the
previous page. If it touches the tip of cumulative production of stage VII, then
it has perfect LOB.