2.At least one of the nodes is a supply node.

3.At least one of the other nodes is a demand

node. 4.All the remaining nodes are transshipment

nodes.

5.Flow through an arc is allowed only in the direction indicated by the arrowhead,
where the maximum amount of flow is given by the capacity of that arc. (If flow
can occur in both directions, this would be represented by a pair of arcs pointing
in opposite directions.)

6.The network has enough arcs with sufficient capacity to enable all the flow
generated at the supply nodes to reach all the demand nodes.

7.The cost of the flow through each arc is proportional to the amount of that flow,
where the cost per unit flow is known.

8.The cost of the flow through each arc is proportional to the amount of that flow,
where the cost per unit flow is known.

9.The objective is to minimize the total cost of sending the available supply through
the network to satisfy the given demand. (An alternative objective is to maximize
the total profit from doing this.)

5.6 PERT/CPM Models for Project Management

A project such as construction of a bridge, highway, power plant, repair and

maintenance of an oil refinery or an air plane design, development and marketing a new
product, re- search and development etc., may be defined as a collection of interrelated
activities (or tasks) which must be completed in a specified time according to a
specified sequence and require resources such as personnel, money, materials, facilities
etc.
 The growing complexities of todays projects had demanded more systematic and
more effective planning techniques with the objective of optimizing the efficiency of
executing the project. Efficiency here implies effecting the utmost reduction in the time
required to complete the project while accounting for the economic feasibility of using
available resources.

Project management has evolved as a new field with the development of two ana-
lytic techniques for planning, scheduling and controlling projects. These are the Critical
Path Method (CPM) and the Project Evaluation and Review Technique (PERT).
PERT and CPM are basically time-oriented methods in the sense that they both lead
to the determination of a time schedule.

5.6.1 Basic difference between PERT and CPM

Though there are no essential differences between PERT and CPM as both of them
share in common the determination of a critical path and are based on the network
representation of activities and their scheduling that determines the most critical
activities to be controlled so as to meet the completion date of the project.

PERT (Program Evaluation Review Technique)

1.Since PERT was developed in connection with R and D work, it had to cope with
the uncertainties associated with R and D activities. In PERT, total project
duration is regarded as a random variable and therefore associated probabilities
are calculated so as to characterise it.

2. It is an event-oriented network because in the analysis of network emphasis is

given an important stages of completion of task rather than the activities
required to be performed to reach to a particular event or task.
 3. PERT is normally used for projects involving activities of non-repetitive nature
in which time estimates are uncertain.

4. It helps in pin pointing critical areas in a project so that necessary adjustment

can be made to meet the scheduled completion date of the project.

CPM (Critical Path Method)

1.Since CPM was developed in connection with a construction project which

consisted of routine tasks whose resource requirements and duration was known
with certainty, it is basically deterministic.

2.CPM is suitable for establishing a tradeoff for optimum balancing between

schedule time and cost of the project.

3.CPM is used for projects involving activities of repetitive nature.

5.6.2 PERT/CPM Network Components And Precedence Re-

lationship

PERT/CPM networks consists of two major components as discussed below:

Events: which are points in time that signifiy the completion of some activities and
the beginning of new ones. The beginning and end points of an activity is thus
described by 2 events usually known as the Tail and head events. Events are
commonly represented by nodes in the network diagram. They do not consume
time and Resource.

Activities: which represent project operations or tasks to be conducted. An arc is

commonly used to represent an activity, with its head indicating the direction of
progress in the project. Activities originating from a certain event cannot start
until the activities terminating at the same event have been completed. They
consume time and Resource.
Events in the network diagram are identified by numbers. Numbers are given to events
such that arc head number must be greater than arc tail number. Activities are
identified by the numbers of their starting (tail) event and ending (head) event. An arc
(i, j) extends between two events, the tail event i representing the start and the head
event j represents the completion of the activity as shown below.

Activity
I J

The figure below shows another example, where activities (1, 3) and (2, 3) must be
com- pleted before activity (3, 4) can start.

3 4

The rules for constructing the network diagram are as follows:

1.Each activity is represented by one and only one arrow in the

network. 2.No two activities can be identified by the same head and tail

events.

3.To ensure the correct precedence relationship in the arrow diagram, the following
questions must be answered as every activity is added to the network:

(a) What activities must be completed immediately before these activity can start
?
(b) What activities must follow this activity ?
 (c) What activity must occur concurrently with this activity ?

Example 5.1. VIVA company is planning to move their operations from Nairobi to
Kisumu. The manager in charge of planning the move, wants to ensure that everything
comes off according to plan, and making sure that the deadline is met. Table 5.2 shows
a list of all the activities the manager plans.

Table 5.2: VIVA Company Example

IMMEDIATE ACTIVITY
ACTIVITY DESCRIPTION PREDECESSORS TIME RESOURCES
A Select Office Site - 3
B Create Organizational and - 5
Financial Plan
C Determine Personnel Requirements B 3
D Design Facility A, C 4
E Construct Interior D 8
F Select Personnel to Move F 2
G Hire New Employees F 4
H Move Records, Key Personnel, etc. F 2
I Make Financial Arrangements B 5
with Institutions in Kisumu
J Train New Personnel H, E, G 3

NOTE The numbers assigned to the nodes are arbitrary. They are simply used to iden-
tify events and do not imply anything about precedence relationships. In the network
diagram each activity must start at the node in which its immediate predecessors
ended. Dummy activities can also be included to avoid problems of hanging events
when drawing the network diagram. A dummy activity in a project network analysis
has zero duration.
The network diagram is as below:
 D E [8] const.
[4]design 5 7
2

A [3] select sight H [2] move

dummy J [3] train
dummy
F [2] select per.
1 4 6 G [4] hire

8 9
C [3]
B [5] plan
I [5] fin. arrgt.

5.6.3 Critical Path Calculations

The application of PERT/CPM should ultimately yield a schedule specifying the start
and completion time of each activity. The arc diagram is the first step towards
achieving that goal. The start and completion times are calculated directly on the arc
diagrams using simple arithmetic. The end result is to classify the activities as critical
or non critical. An activity is said to be critical if a delay in the start of that course
makes a delay in the completion time of the entire project. A noncritical activity is
such that the time between its earliest start and its latest completion time is longer
than its actual duration. A noncritical activity is said to have a slack or float time.

5.6.4 Determination of the Critical Path

A critical path defines a chain of critical activities that connects the start and end
events of the arc diagram. In other words, the critical path identifies all the critical
activities of the project. The critical path calculations include two phases.
 The first phase is called the Forward Pass where all calculations begin from the
start node and move to the end node. At each node a number is computed representing
the earliest occurrence time of the corresponding event. These numbers are shown in
squares
. In forward pass we note the number of heads joining the event. We take the
maximum earliest timing through these heads.

The second phase called the Backwards Pass, begins calculations from the
“end”node and moves to the “start”node. The number computed at each node is shown
in a triangle near end point which represent the latest occurrence time of the
corresponding event.

Let ESi be the earliest start time of all the activities emanating from event i, i.e.
ESi represents the earliest occurrence time of event i, if i = 1 is the “start”event then
conventionally, for the critical path calculations, ESi = 0. If Dij be the duration of the
activity (i, j). Then the forward pass calculations are given by the formula:

ESi = max ESi + Dij

for all defined (i, j) activities with ESi = 0. Thus in order to compute ESj for event
j, ESi for the tail events of all the incoming activities (i, j) must be computed first.
With the computation of all ES j , the forward pass calculations are completed.

The backward pass starts from the “end”event. The objective of this phase to
calculate LCi, the latest completion time for all the activities coming into the event i.
Thus if i = n is the end event LCn = ESn initiates the backward pass. In general for any
node i,

LCi = min LCj − Dij

for all defined activities are calculated, which ends the calculation of backward pass.

The critical path activities can now be identified by using the results of the forward
and backward passes. An activity (i, j) lies on the critical path if it satisfies the
following conditions.

1. ESi = LCi

2. ESj = LCj

3. ESj − ESi = LCj − LCi = Dij

These conditions actually indicate that there is no float or slack time between the
earliest stand and the latest start of the activity. Thus the activity must critical.

Example 5.2. Consider a network which stands from node 1 and terminate at node 6,
the time required to perform each activity is indicated on the arcs.

2 7 5

1 3 6
2 dummy 5 6

3 3 2

Let us start with forward pass with ES1 = 0.

Since there is only one incoming activity (1, 2) to event 2 with D12 = 3.

ES2 = ES1 + DS2 = 0 + 3 = 3.

Let us consider the end 3, since there is only one incoming activity (2, 3) to event 3, with
D23 = 3
ES3 = ES2 + D23 = 3 + 3 = 6.
To obtain ES4, since there are two activities (3, 4) and (2, 4) to the event 4 with D24 = 2
and D34 = 0.

ES4 = maxi=2,3 {ESi + De4}

= max {ES2 + D24, ES3 + D34}

= max {3 + 2, 6 + 0} = 6

Similary ES5 = 13 and ES6 = 19 Which completes the first phase.

In the second phase we have

LC6 = 19 = ES6

LC5 = 19 − 6 =

13

LC4 = minj=5,6 {LCj − D4j} = 6

LC3 = 6, LC2 = 3 and LC1 = 0 and hence activities (1, 2), (2, 3) (3, 4) (4, 5) (5, 6) are
critical and (2, 4) (4, 6), (3, 6), are non-critical. Thus the activities (1, 2), (2, 3) (3, 4)
(4, 5) (5, 6) define the critical path which is the longest possible time to complete the
project.

5.6.5 Project Management PERT

The analysis in CPM does not take into the case where time estimates for the different
activities are probabilistic. Also it does not consider explicitly the cost of schedules.
Here we will consider both probability and cost aspects in project scheduling.
Probability considerations are incorporated in project scheduling by assuming that the
time estimate for each activity is based on 3 different values. They are:-

a= The optimistsic time, which will be required if the execution of the project goes
 extremely well.

b= The pessimistic time, which will be required if everything goes bad.

m= The most likely time, which will be required if execution is normal.

The expected duration of each activity

a + b + 4m
D¯ = 6

This estimate can be used to study the single estimate D in the critical path calculation.
The variance of each activity denoted by V is defined by
. Σ2
b−a
V=
6

The earliest expected times for the node i denoted by E(µi) for each node i is obtained
by taking the sum of expected times of all activities leading to the node i, when more
than one activity leads to a node i, then greatest of all E(µi) is chosen. Let µi be the
earliest occurrence time of the event i, we can consider µi as a random variable.
Assuming that all activities of the network are statistically independent, we can
calculate the mean and the variance of the µi as follows:- E[µi] = ESi and V ar[µi] =
Σ
Vk, Where K defines the
k
activities along the largest path leading to i. For the latest expected time, we consider
the last node.

Note: The probability distribution of times for completing an event can be approxi-
mated by the normal distribution due to central limit theorem. Since µi represents the
earliest occurrence time, event will meet a certain schedule time STi (specified by an
analyst) with probability

. Σ
prob (µi ≤ STi) = prob √ E [µi] ≤ STi − E[µi]
µi −
V √
i Vi
= prob (Z ≤ Ki)

where
Z ∼ N (0, 1) and Ki STi − E[µi]
=
 √
Vi