MGT 101

Project Management
PERT CPM

Dr. Gomolemo Gashiten

1
 Introduction
 Project management can be used to manage
complex projects.
 The first step in planning and scheduling a project
is to develop the work breakdown structure.
 This involves identifying the activities that must be
performed in the project. Each detail and each
activity may be broken into its most basic
components.
 The time, cost, resource requirements,
predecessors, and person(s) responsible are
identified.
2
 Project Management
Definition:

It is nothing more (or less) than

knowing what the status of a project is:
when it should be done,
how much (and if) it has slipped
from the original schedule,
what the bottlenecks are, and
what you might drop to save some
time.
3
 Project Management Models:
History
 One of the earliest techniques was the Gantt
chart (Used by US Navy).
 This type of chart shows the start and finish
times of one or more activities, as shown
below:

4
 Project Planning, Controlling and
Scheduling
Project Planning:
1. Setting goals.
2. Defining the project.
3. Tying needs into timed project activities.
4. Organizing the team.
Project Scheduling:
1. Tying resources to specific activities.
2. Relating activities to each other.
3. Updating and revising on regular basis.
Before Project
Project Controlling:
1. Monitoring resources, costs, quality
During Project and budgets.
2. Revising and changing plans.
3. Shifting resources to meet demands. 5
Project Scheduling: PERT/CPM

Project Scheduling with Known

Activity Times
Project Scheduling with Uncertain
Activity Times
Considering Time-Cost Trade-Offs

6
PERT/CPM
PERT
◦ Program Evaluation and Review Technique
◦ Developed by U.S. Navy for Polaris missile project
◦ Developed to handle uncertain activity times &
complex project during the ‘Cold War’.
CPM
◦ Critical Path Method
◦ Developed by Du Pont & Remington Rand
◦ Developed for industrial projects for which activity
times generally were known

7
PERT/CPM
Today’s project management software
packages have combined the best features
of both approaches.

8
PERT/CPM
PERT and CPM have been used to plan,
schedule, and control a wide variety of
projects:
◦ R&D of new products and processes
◦ Construction of buildings and highways
◦ Maintenance of large and complex equipment
◦ Design and installation of new systems

9
 PERT/CPM
PERT/CPM is used to plan the scheduling of
individual activities that make up a project.
Projects may have as many as several
thousand activities.
A complicating factor in carrying out the
activities is that some activities depend on
the completion of other activities before they
can be started.

10
 PERT/CPM
Projectmanagers rely on PERT/CPM to help
them answer questions such as:
◦ What is the total time to complete the project?
◦ What are the scheduled start and finish dates for
each specific activity?
◦ Which activities are critical and must be completed
exactly as scheduled to keep the project on
schedule?
◦ How long can noncritical activities be delayed
before they cause an increase in the project
completion time? 11
 Project Network
A project network can be constructed to model
the precedence of the activities.
The nodes of the network represent the
activities.
The arcs of the network reflect the precedence
relationships of the activities.
A critical path for the network is a path
consisting of activities with zero slack.

12
Example: Frank’s Fine Floats

 Frank’s Fine Floats is in the business of

building elaborate parade floats. Frank and his
crew have a new float to build and want to use
PERT/CPM to help them manage the project .
 The table on the next slide shows the activities
that comprise the project. Each activity’s
estimated completion time (in days) and
immediate predecessors are listed as well.

13
 Example: Frank’s Fine Floats
 Frank wants to know the total time to
complete the project, which activities are
critical, and the earliest and latest start
and finish dates for each activity.

14
 Example: Frank’s Fine Floats

Immediate Completion
Activity Description Predecessors Time (days)
A Initial Paperwork --- 3
B Build Body A 3
C Build Frame A 2
D Finish Body B 3
E Finish Frame C 7
F Final Paperwork B,C 3
G Mount Body to Frame D,E 6
H Install Skirt on Frame C 2
15
 Example: Frank’s Fine Floats
Project Network
B D
3 3 G
6
F
3
A
Start Finish
3 E
7
C H
2 2

16
Earliest Start and Finish Times

Step 1: Make a forward pass through the

network as follows: For each activity i
beginning at the Start node, compute:
◦ Earliest Start Time = the maximum of the
earliest finish times of all activities immediately
preceding activity i. (This is 0 for an activity
with no predecessors.)
◦ Earliest Finish Time = (Earliest Start Time) +
(Time to complete activity i ).
 The project completion time is the
maximum of the Earliest Finish Times at the
Finish node.
17
Example: Frank’s Fine Floats
Earliest Start and Finish Times

B 3 6 D 6 9
3 3 G 12 18
6
F 6 9
3
A 0 3
Start Finish
3 E 5 12
3 5 7
C H 5 7
2 2

18
Latest Start and Finish Times
Step 2: Make a backwards pass through the
network as follows:

Move sequentially backwards from the

Finish node to the Start node.
At a given node, j, consider all activities
ending at node j.

19
Latest Start and Finish Times
For each of these activities, i, compute:
◦ Latest Finish Time = the minimum of the
latest start times beginning at node j. (For
node N, this is the project completion time.)
◦ Latest Start Time = (Latest Finish Time) -
(Time to complete activity i ).

20
 Example: Frank’s Fine Floats
Latest Start and Finish Times
B 3 6 D 6 9
3 6 9 3 9 12 G 12 18
6 12 18
F 6 9
3 15 18
A 0 3
Start Finish
3 0 3 E 5 12

3 5 7 5 12
C H 5 7
2 3 5 2 16 18

21
Determining the Critical Path
Step 3: Calculate the slack time for each
activity by:

Slack = (Latest Start) - (Earliest Start), or

= (Latest Finish) - (Earliest Finish).

22
 Example: Frank’s Fine Floats
 Activity Slack Time

Activity ES EF LS LF Slack
A 0 3 0 3 0 (critical)
B 3 6 6 9 3
C 3 5 3 5 0 (critical)
D 6 9 9 12 3
E 5 12 5 12 0 (critical)
F 6 9 15 18 9
G 12 18 12 18 0 (critical)
H 5 7 16 18 11

23
Example: Frank’s Fine Floats
Determining the Critical Path
◦ A critical path is a path of activities, from the
Start node to the Finish node, with 0 slack times.

◦ Critical Path: A – C – E – G

◦ The project completion time equals the

maximum of the activities’ earliest finish times.

◦ Project Completion Time: 18 days

24
 Example: Frank’s Fine Floats
Critical Path
B 3 6 D 6 9
3 6 9 3 9 12 G 12 18
6 12 18
F 6 9
3 15 18
A 0 3
Start 0 3 Finish
3 E 5 12

3 5 7 5 12
C H 5 7
2 3 5 2 16 18

25
Uncertain Activity Times

In the three-time estimate approach, the

time to complete an activity is assumed to
follow a Beta distribution.
An activity’s mean completion time is:

t = (a + 4m + b)/6 Where:

 a = the optimistic completion time estimate

 b = the pessimistic completion time estimate
 m = the most likely completion time estimate

26
 Uncertain Activity Times

 An activity’s completion time variance

is:
2 = ((b-a)/6)2

• a = the optimistic completion time

estimate
• b = the pessimistic completion time
estimate
• m = the most likely completion time
estimate
27
 Uncertain Activity Times
In the three-time estimate approach, the
critical path is determined as if the mean
times for the activities were fixed times.
The overall project completion time is
assumed to have a normal distribution
with mean equal to the sum of the means
along the critical path and variance equal
to the sum of the variances along the
critical path.

28
Example: ABC Associates

 Consider the following project:

Immed. Optimistic Most Likely Pessimistic
Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.)
A -- 4 6 8
B -- 1 4.5 5
C A 3 3 3
D A 4 5 6
E A 0.5 1 1.5
F B,C 3 4 5
G B,C 1 1.5 5
H E,F 5 6 7
I E,F 2 5 8
J D,H 2.5 2.75 4.5
K G,I 3 5 7
Example: ABC Associates
 Consider the following project:

Immed. Optimistic Most Likely Pessimistic

Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.)
A -- 4 6 8
B -- 1 4.5 5
C A 3 3 3
D A 4 5 6
E A 0.5 1 1.5
F B,C 3 4 5
G B,C 1 1.5 5
H E,F 5 6 7
I E,F 2 5 8
J D,H 2.5 2.75 4.5
K G,I 3 5 7
30
 Example: ABC Associates

 Project Network
DD JJ
5 3
HH
AA EE 6
6 1
II

Start
CC FF 5 Finish
Start Finish
3 4
KK
BB G
G 5
4 2
 Example: ABC Associates
 Activity Expected Times and Variances

t = (a + 4m + b)/6 2 = ((b-a)/6)2
Activity Expected Time Variance
A 6 4/9
B 4 4/9
C 3 0
D 5 1/9
E 1 1/36
F 4 1/9
G 2 4/9
H 6 1/9
I 5 1
J 3 1/9
K 5 4/9
32
 Example: ABC Associates
 Earliest/Latest Times and Slack

Activity ES EF LS LF Slack
A 0 6 0 6 0*
B 0 4 5 9 5
C 6 9 6 9 0*
D 6 11 15 20 9
E 6 7 12 13 6
F 9 13 9 13 0*
G 9 11 16 18 7
H 13 19 14 20 1
I 13 18 13 18 0*
J 19 22 20 23 1
K 18 23 18 23 0*

33
 Example: ABC Associates
Determining the Critical Path
◦ A critical path is a path of activities, from the
Start node to the Finish node, with 0 slack
times.

◦ Critical Path: A–C– F– I– K

The project completion time equals the
maximum of the activities’ earliest finish times.

◦ Project Completion Time: 23 hours

34
 Example: ABC Associates
Critical Path (A-C-F-I-K)
DD 6 11 JJ19 22
5 15 20 3 20 23
HH13 19
AA0 6 EE 6 7 6 14 20
6 0 6 1 12 13
II13 18
Start
Start
CC6 9 FF9 13 5 13 18 Finish
Finish
3 6 9 4 9 13
KK18 23
BB0 4 G
G 9 11 5 18 23
4 5 9 2 16 18

35
 Example: ABC Associates
 Critical Path (A-C-F-I-K)
DD 6 11 JJ19 22
5 15 20 3 20 23
HH13 19
AA0 6 EE 6 7 6 14 20
6 0 6 1 12 13
II13 18
Start
CC6 9 FF9 13 5 13 18 Finish
Start Finish
3 6 9 4 9 13
KK18 23
BB0 4 G
G 9 11 5 18 23
4 5 9 2 16 18
 Example: ABC Associates
 Probability the project will be completed within 24 hrs
 2 = 2 A + 2 C + 2 F + 2 I + 2 K
2 = 4/9 + 0 + 1/9 + 1 + 4/9
2 = 2.00 (Variance Critical Path Activities)

SD = √ 2 =  = √ 2.00 = 1.414

z = (24 - 23)/ z = (24-23)/1.414 = .71

From the Standard Normal Distribution table:
P(z < .71) = 0.7611
Q. What is the probability that the project will be completed
in i). 16 hours; ii) 26 hours & iii) 30 hours

37
 Example: EarthMover, Inc.
 EarthMover is a manufacturer of road construction
equipment including pavers, rollers, and graders.
The company is faced with a new project,
introducing a new line of loaders.
 Management is concerned that the project might
take longer than 26 weeks to complete without
crashing some activities.

38
 Example: EarthMover, Inc.

Immediate
Completion
Activity Description Predecessors Time (wks)
A Study Feasibility --- 6
B Purchase Building A 4
C Hire Project Leader A 3
D Select Advertising Staff B 6
E Purchase Materials B 3
F Hire Manufacturing Staff B,C 10
G Manufacture Prototype E,F 2
H Produce First 50 Units G 6
I Advertise Product D,G 8

39
Example: EarthMover, Inc.
 PERT Network

DD
6 II
BB
8
Start
AA 4 EE
Finish
Start Finish
6 3
CC G
G HH
3 FF 2 6
10

40
 Example: EarthMover, Inc.
 Earliest/Latest Times

Activity ES EF LS LF Slack
A 0 6 0 6 0*
B 6 10 6 10 0*
C 6 9 7 10 1
D 10 16 16 22 6
E 10 13 17 20 7
F 10 20 10 20 0*
G 20 22 20 22 0*
H 22 28 24 30 2
I 22 30 22 30 0*

41
 Example: EarthMover, Inc.
Critical Activities
DD10 16
6 16 22 II22 30
BB6 10 8 22 30
Start
AA0 6 4 6 10 EE10 13 Finish
Start Finish
6 0 6 3 17 20
CC6 9 G
G 20 22 HH22 28
3 7 10 FF 10 20 2 20 22 6 24 30
10 10 20

42
End

43