PROJECT MANAGEMENT

CPM & PERT TECHNIQUES

 LEARNING OUTCOMES
• Define project and project management.
• Describe the different methods of network planning.
• Differentiate the two types of networks diagrams
• Describe and apply the PERT and CPM techniques
 FLOW OF PRESENTATION

 INTRODUCTION
 NETWORK PLANNING
 ESTIMATING TIME
 CPM
 PERT
 Project Management

Project
• A project is an interrelated set of activities that has a definite
starting and ending point and that results in a unique product
or service.

Project management
• Project management is a scientific way of planning, implementing,
monitoring & controlling the various aspects of a project such as time,
money, materials, manpower & other resources.
 Network Planning Methods

 Methods used for network planning are:

CPM
PERT

 Managing a project with network planning methods involves four steps:

1. Describing the Project.

2. Diagramming the Network.
3. Estimating time of completion.
4. Monitoring Project Progress.
 Network Diagram

Concepts
• Activity
• Precedence relationship
• Successor
• Event
 Guidelines for network diagram

1. Before an activity can begin, its preceding

activities must be completed.
2. Arrows indicate logical precedence.
3. Flow of the diagram is from left to right.
4. Arrows should not intersect.
5. Dangling should be avoided.
 APPRAOCHES FOR
NETWORK DIAGRAM

ACTIVITY ON ARC(AOA):
• Uses arcs to represent activities and nodes
to represent events.
• It is Event Oriented.
3

1 2 6 7 8

4 5
 DUMMY ACTIVITY

AOA approach requires the addition of a Dummy

Activity to clarify the precedence relationships between
the two activities. It is a zero time activity and
consumes no resources.

Dummy Activity is used in two situations:

1) When two or more activities start and end at the same
nodes
1 3

2
2) When two or more activities share the same
precedence activity but not all the precedence are
shared.
1 3 5

2 4 6
 ACTIVITY ON NODE(AON):

Uses nodes to represent activities and arcs indicate

precedence relationships between them.
It is Activity Oriented.
 ESTIMATING TIME
OF
COMPLETION

Planning the schedule of the project

Time estimates include:

1) Total time for completion.
2) ES- Earliest start time: the earliest time at which the activity
can start given that its precedent activities must be completed first.

3) EF-Earliest finish time: equals to the earliest start time for the activity
plus the time required to complete the activity.

4) LF- Latest finish time: the latest time in which the activity can be
completed without delaying the project.

5) LS- Latest start time: equal to the latest finish time minus the time
required to complete the activity.
6) FORWARD PASS:
The early start and early finish times are calculated by
moving forward through the network and considering the
predecessor activities Considers maximum

7) BACKWARD PASS:
The latest start and finish times are calculated by moving backward through the
network.
Considers minimum

8) SLACK TIME:
Slack time for an activity is the difference between its earliest and latest start
time or between the earliest and latest finish time.
Critical path is the path of activities having zero Slack time.
 A Simple Project

Activity Immediate Expected

Predecessor Time
A - 5
B - 6
C A 4
D A, B 2
Precedence Diagram
ES Earliest Starting (time)
EF Earliest Finishing
LS Latest Starting
LF Latest Finishing
Slack Difference Time
 CRITICAL PATH
METHODS(CPM)

HISTORY :
It was developed by J.E.KELLY of REMINGTON-RAND
and M.R.WALKER of DU PONT and the emphasis was
on the trade-off between the cost of project and its overall
completion time. The first test was made in 1958,when CPM
was applied to the construction of a new chemical plant.

DEFINITION:
Critical path is the sequence of activities between a project’s
start and finish that takes the longest time to complete.
 STEPS IN DETERMINING
CRITICAL PATH

• Specify the individual activities.

• Determine the sequence of the activities.
• Draw the network diagram.
• Estimate the activity completion time.
• Identify the critical path.
• Update the CPM diagram.
Activit Preceden Normal time Normal
y ce (week) Cost (Rs)
A - 3 300
B A 3 30
C A 7 420
D A 9 720
E D 5 250
F B,C,E 6 320
G F 4 400
H F 13 780
I G 10 1000
Total 4220
 4 7

1 2 5 6

3
8
Overhead cost as per the given data- Rs.50
Paths in the network diagram :
A-D-F-G-I = 32
A-D-F-H = 31
A-C-F-H = 29
A-C-F-G-I = 30
A-B-E-F-H = 30
A-B-E-F-G-I = 31
Critical path – A-D-F-G-I = 32
4 7

1 2 6
5

3
8
 PERT
Project Evaluation and Review Technique
–US Navy, Booz, Allen & Hamilton
–Multiple task time estimates
–Activity-on-arrow network construction
 STEPS IN PERT

1. Identify the specific activities.

2. Determine proper sequence of the activities.
3. Construct the network diagram.
4. Estimate the time required for each activity.
5. Determine the critical path.
6. Update the PERT chart.
 TIME ESTIMATES

o Optimistic time (to) – It is the shortest time in which the

activity can be completed.
o Most likely time (tm) – It is the probable time
required to perform the activity.
o Pessimistic time (tp) – It is the longest estimated time
required to perform an activity.
o Expected time
te = to + 4tm + tp
6
 Activity Start Times

Start at 5 months

2 4
Finish at 9 months
2 3
7 Finish
Start 1 1
3

3 6
1 5 1
1 Start at 6 months
Start at 3 months

27
 Mode Configuration

Activity number Earliest start

Earliest finish
1 0 3

3 0 3
Latest finish

Activity duration Latest start

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 Forward Pass

• Start at the beginning of CPM/PERT network to

determine the earliest activity times
• Earliest Start Time (ES)
– earliest time an activity can start
– ES = maximum EF of immediate predecessors
• Earliest finish time (EF)
– earliest time an activity can finish
– earliest start time plus activity time
• EF= ES + t
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 Earliest Activity Start and Finish
Times
Lay foundations
Build house
2 3 5
Start
4 5 8
2
3

1 0 3 7 8 9
1 1
Design house
Finish work
and obtain 6 6 7
financing 3 3 4
1
1 5 5 6
Select carpet
Order and receive 1
materials Select pain

30
 Backward Pass

• Determines latest activity times by starting at the end

of CPM/PERT network and working forward
• Latest Start Time (LS)
– Latest time an activity can start without delaying critical path
time
LS= LF - t
• Latest finish time (LF)
– latest time an activity can be completed without delaying
critical path time
– LS = minimum LS of immediate predecessors

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 Latest Activity Start and Finish
Times
Lay foundations
Build house
2 3 5
Start
4 5 8
2 3 5
3 5 8

1 0 3 7 8 9
1 0 3 1 8 9
Design house
Finish work
and obtain 6 6 7
financing 3 3 4
1 7 8
1 4 5 5 5 6
Select carpet
Order and receive 1 6 7
materials Select pain

32
 Activity Slack

Activity LS
LS ES LF EF
EF Slack S
*1
*1 00 00 33 33 00
*2
*2 33 33 55 55 00
33 44 33 55 44 11
*4
*4 55 55 88 88 00
55 66 55 77 66 11
66 77 66 88 77 11
*7
*7 88 88 99 99 00
** Critical
Critical Path
Path

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 Probabilistic Time Estimates
• Beta distribution
– a probability distribution traditionally used in CPM/PERT

a + 4m + b
Mean (expected time): t =
6
2
b-a
Variance:  = 2
6
where
a = optimistic estimate
m = most likely time estimate
b = pessimistic time estimate
34
 Examples of Beta Distributions
P(time)

P(time)
a m t b a t m b
Time Time
P(time)

a m=t b
Time

35
Project Network with Probabilistic
Time Estimates: Example
Equipment
installation Equipment testing
and modification
1 4
6,8,10 2,4,12 System Final
training debugging
System 10
development 8
Manual 3,7,11 1,4,7
Start 2 testing Finish
3,6,9
5 11
Position 2,3,4 9 1,10,13
recruiting 2,4,6
Job Training System
3 6 System changeover
1,3,5 3,4,5 testing

Orientation
7
2,2,2

36
 Activity Time Estimates

TIME ESTIMATES (WKS) MEAN TIME VARIANCE

ACTIVITY a m b t б2
1 6 8 10 8 0.44
2 3 6 9 6 1.00
3 1 3 5 3 0.44
4 2 4 12 5 2.78
5 2 3 4 3 0.11
6 3 4 5 4 0.11
7 2 2 2 2 0.00
8 3 7 11 7 1.78
9 2 4 6 4 0.44
10 1 4 7 4 1.00
11 1 10 13 9 4.00

37
Activity Early, Late Times, and Slack

ACTIVITY t б ES EF LS LF S
1 8 0.44 0 8 1 9 1
2 6 1.00 0 6 0 6 0
3 3 0.44 0 3 2 5 2
4 5 2.78 8 13 16 21 8
5 3 0.11 6 9 6 9 0
6 4 0.11 3 7 5 9 2
7 2 0.00 3 5 14 16 11
8 7 1.78 9 16 9 16 0
9 4 0.44 9 13 12 16 3
10 4 1.00 13 17 21 25 8
11 9 4.00 16 25 16 25 0

38
 Earliest, Latest, and Slack
8 13
Critical Path
1 0 4 8
8 1 9 5 16 21
10 13 17

16 1 0 3
8 9
Start 2 0 6 Finish
7 9 16
6 0 6 9
5 6 11 16 25
3 6 9 9 9 13
9 16 25
4 12 16
3 0 3 6 3 7
3 2 5 4 5 9

7 3 5
2 14 16

39
 Total project variance

s2 = б22 + б52 + б82 + б112

s = 1.00 + 0.11 + 1.78 + 4.00
= 6.89 weeks

40
Probabilistic Network
Determine probability Analysis
that project is
completed within specified time
x-
Z= 
where
= tp = project mean time
= project standard deviation
x= proposed project time
Z= number of standard deviations x
is from mean
41
Normal Distribution Of Project
ProbabilityTime

Z

 = tp x Time

42
 Southern Textile Example
What is the probability that the project is completed
within 30 weeks?

P(x  30 weeks)
x-
 2 = 6.89 weeks Z= 
 = 6.89 30 - 25
= 2.62
 = 2.62 weeks
= 1.91
 = 25 x = 30 Time (weeks)

From Table A.1, (appendix A) a Z score of 1.91 corresponds to a

probability of 0.4719. Thus P(30) = 0.4719 + 0.5000 = 0.9719
43
 Southern Textile Example
What is the probability that the project is completed
within 22 weeks?
x-
P(x  22 weeks)  2 = 6.89 weeks Z= 
 = 6.89 22 - 25
= 2.62
 = 2.62 weeks
= -1.14
x = 22  = 25 Time
(weeks)

From Table A.1 (appendix A) a Z score of -1.14 corresponds to a

probability of 0.3729. Thus P(22) = 0.5000 - 0.3729 = 0.1271
44
 Advantages of PERT

• Expected project completion time.

• Probability of completion before a specified date.

• The critical path activities that directly impact the completion

time.

• The activities that have slack time and that can lend resources
to critical path activities.

• Activity start and end dates.

 LIMITATIONS

• The PERT Formula Requires Too Much Work.

• The network charts tend to be large and unwieldy.
• Calculating the time estimates is very complex for all the
activities.
• Updating of the project is time consuming and requires high
costs.
• Emphasis is laid only on time factors and cost factors are
neglected.
 Difference between
CPM & PERT

CPM PERT
• CPM works with fixed • PERT works with probabilistic
deterministic time time
• CPM is useful for repetitive and • PERT is useful for non repetitive
non complex projects with a and complex projects with
certain degree of time estimates. uncertain time estimates.

• CPM includes time-cost trade off. • PERT is restricted to time

variable.

• CPM- for construction projects. • PERT- used for R&D programs.

 Project “crashing”
• Crashing
– reducing project time by expending additional resources
• Crash time
– an amount of time an activity is reduced
• Crash cost
– cost of reducing activity time
• Goal
– reduce project duration at minimum cost

49
Project Crashing: Example
2 4
12
8
7
1 4
12

3 6
4 5 4
4

50
Project Crashing: Example (cont.)

$7,000 –

$6,000 – Crash cost

Crashed activity
$5,000 –
Slope = crash cost per week
$4,000 –

$3,000 – Normal activity

Normal cost
$2,000 –

$1,000 – Crash time Normal time

| | | | | | |
–
0 2 4 6 8 10 12 14 Weeks
51
 Normal Activity and Crash Data
TOTAL
NORMAL CRASH ALLOWABLE CRASH
TIME TIME NORMAL CRASH CRASH TIME COST PER
ACTIVITY (WEEKS) (WEEKS) COST COST (WEEKS) WEEK

1 12 7 $3,000 $5,000 5 $400

2 8 5 2,000 3,500 3 500
3 4 3 4,000 7,000 1 3,000
4 12 9 50,000 71,000 3 7,000
5 4 1 500 1,100 3 200
6 4 1 500 1,100 3 200
7 4 3 15,000 22,000 1 7,000
$75,000 $110,700

52
 $500 $7000
Project Duration:
2 4
$700
36 weeks
8 12
7
1
12
4 FROM …

$400 3 6
4 5 4
4 $200
$3000
$200

$500 $7000

2 4
8 12 $700
7
1
TO… 7
4

Project Duration: $400 3 6

31 weeks 4 5 4
Additional Cost: 4 $200
$3000
$2000 $200
53
 Time-Cost Relationship
• Crashing costs increase as project duration decreases
• Indirect costs increase as project duration increases
• Reduce project length as long as crashing costs are less than indirect costs

54
 Time-Cost Tradeoff

Minimum cost = optimal project time

Total project cost

Indirect cost
Cost ($)

Direct cost

Crashing Time
Project duration
55
Thank You…