Chapter 5

PROJECT MANAGEMENT AND

NETWORK MODEL

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PROJECT MANAGEMENT
What is project
A project is a temporary effort to create a unique product or
service. Projects usually include constraints/limitations and
risks regarding cost, schedule or performance outcome.
Project management is the application of
knowledge, skills, tools, and techniques to project
activities in order to meet or exceed stakeholder
needs and expectations from a project.
Meeting or exceeding stakeholder needs and
expectations invariably involves balancing
competing demands among:
 Scope/capacity, time, cost, and quality
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 Stakeholders with differing needs and
expectations
BRIEF HISTORY OF CPM/PERT
CPM/PERT or Network Analysis as the technique is
sometimes called, developed along two parallel
streams, one industrial and the other military.
CPM was the discovery of M.R. Walker and J.E.
Kelly in 1957.
 The first test was made in 1958, when CPM was
applied to the construction of a new chemical plant.
 Projects for which activity times were known.
PERT was devised in 1958 for the POLARIS
missile program by the Program Evaluation
Branch of the Special Projects office of the U.S.
Navy.
 PERT was developed to handle uncertain activity times.
Both use same calculations, almost similar
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Main difference is deterministic and
probabilistic in time estimation
 BY USING PERT/CPM, MANAGERS ARE ABLE
TO OBTAIN:

1. A graphical display of project activities

2. An estimate of how long the project will take.

3. An indication of which activities are the most critical to

timely completion of the project.

4. An indication of how long any activity can be delayed

with out lengthening the project (slack).
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BASIC DIFFERENCES BETWEEN PERT & CPM

 PERT: It assumes a probability distribution for the

duration of each activity
 It is used for one-time projects involving activities of
non-repetitive nature.
 CPM: was developed in connection with a construction
and maintenance project in which duration of each
activity was known with certainty.
 It is used for completion of projects involving activities
of repetitive nature.

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THE PROJECT NETWORK

Network analysis is the general name given to

certain specific techniques which can be used
for the planning, management and control of
projects.
Network:- Shows the sequential relationships
among activities using nodes and arrows.
Use of nodes and arrows

Arrows an arrow leads from

tail to head directionally. Indicate Activity.
 Activity:- A task or a certain amount of work

required in the project which requires time to

complete
Nodes A node is represented by 6
a circle
Indicate EVENT, a point in time where
 SITUATIONS IN NETWORK DIAGRAM
B
A
A must finish before either B or C can start
C

A
C both A and B must finish before C can start

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B

A
C both A and B must finish before either of C or
B D can start
D

A
B
A must finish before B can start both A and C must
Dummy finish before D can start

C
D
 NETWORK EXAMPLE
Illustration of network analysis for shopping center expansion plan

The key question is: How long will it take to complete this project ?

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FORWARD PASS
 Earliest Start Time (ES)
 earliest time an activity can start
 ES = maximum EF of immediate
predecessors
 Earliest finish time (EF)

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 earliest time an activity can finish
 earliest start time plus activity time
BACKWARD PASS EF= ES + t
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
LF = minimum LS of immediate predecessors
CPM ANALYSIS
 Draw the CPM network
 Analyze the paths through the network
 Determine the float for each activity
 Compute the activity’s float
float = LS - ES = LF - EF

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 Float/Slack is the maximum amount of time
that this activity can be delay in its completion
before it becomes a critical activity, (i.e.,
delays completion of the project)
 Find the critical path is that the sequence of

activities and events where there is no “slack”

i.e.. Zero slack
 Longest path through a network
 Find the project duration is minimum project

completion time
CPM CALCULATION
 Path
A connected sequence of activities leading from
the starting event to the ending event

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 Critical Path
 The longest path (time); determines the project
duration
 Critical Activities
 All of the activities that make up the critical path
EXAMPLE: LISTED BELOW ARE ACTIVITIES TO BE
IMPLEMENTED FOR SHOPPING CENTER EXPANSION PLAN TO
MODERNIZE AND EXPAND THE CURRENT SHOPPING CENTER
COMPLEX.
Table 5.1. list of activities for shopping center project

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EXAMPLE ...CONT’D

CPM analysis answers the following questions

1. What is the total time to complete the project?

2. What are the scheduled start and finish dates for each
specific activity?
3. Which activities are “critical” and must be completed
exactly as scheduled to keep the project on schedule?
4. How long can “noncritical” activities be delayed before
they cause an increase in the total project completion
time?

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STEPS IN CPM
 Develop a list of the activities that make up the project
 Identify immediate predecessor(s) and the activity time (in

weeks) for each activity

 Activities that must be completed immediately prior to the start of
that activity
 Develop network of activities (find sequence of activities
with respective predecessor(s))
 Assign time (the number of weeks) required to complete

each activity.
 Determine total time required to complete the project
 Total project time is longest path time (critical path time)
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CPM EXAMPLE:
Figure 5.1. CPM Network for shopping center
project activities

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CPM EXAMPLE: …CONT’D

Figure 5.2. Shopping Center Project Network With Activity Times

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DETERMINING THE CRITICAL PATH
Forward Pass Network

 We begin by finding the

 earliest start (ES) time and a
 latest start (LS) time for all activities in the
network.
 Let
ES =earliest start time for an activity
EF =earliest finish time for an activity
t =activity time
EF = ES + t
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CRITICAL PATH…..CONT’D
 Activity A can start as soon as the project starts,
 So we set the earliest start time for activity A equal to 0. i.e.

 ESA= 0

 With an activity time of 5 weeks, the earliest finish time for activity

A is
EF A = ESA + t A = 0+5 = 5
 EF A = 5

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CRITICAL PATH…CON’D

We will write the earliest start and earliest finish times in the node to
the right of the activity letter. Using activity A as an example, we have

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CRITICAL PATH…CON’D

Figure 5.3. A Portion Of The Shopping Center Project Network, Showing

Activities A, B, C, And H

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CRITICAL PATH…CON’D

Figure 5.4. SHOPPING CENTER PROJECT NETWORK WITH EARLIEST

START AND EARLIEST FINISH TIMES SHOWN FOR ALL
ACTIVITIES

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CRITICAL PATH…CONT’D
Backward Pass Network
 We begin by finding the
 Latest start (LS) time and
 latest finish (LF) time for all activities in the
network.
 Let
LS =latest start time for an activity
LF =latest finish time for an activity
t =activity time
LS = LF – t
The latest finish time for an activity is the smallest of the latest
start times for all activities that immediately follow the
activity. 22
CRITICAL PATH…CONT’D

 Beginning the backward pass with activity I,

 we know that the latest finish time is
 LFI = 26 and
 activity time is tI = 2

 Thus, the latest start time for activity I is

 LS = LF - t
I I I
26 - 2 = 24.
 We will write the LS and LF values in the node directly

below the earliest start (ES) and earliest finish (EF)

times.
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 CRITICAL PATH…CONT’D
Thus, for node I, we have

† The latest finish time for activity H must be the latest

start time for activity I.
† Thus, we set LF = 24 for activity H.
† Using equation (for LS), we find that LS = LF - t
 24 -12 =12 as the latest start time for activity H. 24
CRITICAL PATH…CONT’D
Figure 5.5. SHOPPING CENTER PROJECT NETWORK WITH LATEST
START AND LATEST FINISH TIMES SHOWN IN EACH NODE

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 CRITICAL PATH…CONT’D
 Activity A requires a more involved application of the latest
start time rule.
 First, note that three activities (C, D, and E) immediately

follow activity A.
 latest start times for activities C, D, and E are:
 LS = 8, LS = 7, and LS = 5, respectively.
 The latest finish time rule for activity A states that the LF for
activity A is the smallest of the latest start times for
activities C, D, and E.
 With the smallest value being 5 for activity E,

we set the latest finish time for activity A to LF = 5.

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CRITICAL PATH…CONT’D

 After we complete the forward and backward passes, we can

determine the amount of slack associated with each activity.
 Slack is the length of time an activity can be delayed

without increasing the project completion time.

 The amount of slack for an activity is computed as follows:
 Slack = LS - ES = LF – EF
 For example,
 the slack associated with activity C is LS - ES = 8 -5 = 3 weeks.

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TABLE 5.2. ACTIVITY SCHEDULE FOR THE WESTERN HILLS
SHOPPING CENTER PROJECT

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 PROJECT SCHEDULING WITH UNCERTAIN
ACTIVITY TIMES
The preceding analysis on CPM assumed that
activity times were known and not subject to
variation. Although that assumption is
appropriate in some situation, there are many
other in which it is not.
Consequently, those situations require a
probabilistic approach. PERT uses this
approach.
The probabilistic approach involves three time
estimates for each activity instead of one:
1.Optimistic time: - the length of time require
under optimum condition. It is represented by
the letter “a”.
2.Pessimistic time: - the amount of time that
will be required under the worst condition. It is
represented by the letter “b”. 29
3.Most likely time: - the most probable
amount of time required. It is represented by
PERT …CONT’D

The important issue in network analysis is the

average of expected time for each
activity, te and the variance of each activity
time, δ2 . 30
 Tofind the expected activity time (t), the beta
distribution weights the estimates as follows
a + 4m + b
t=
6
 To
compute the dispersion or variance of activity
completion time, we use the formula
2
b a
Variance =  
 6  31
 EXAMPLE:
A SMALL IS COMPOSED OF 8 ACTIVITIES WHOSE TIME
ESTIMATES ARE LISTED IN THE TABLE BELOW

Estimated Duration (Weeks)

Activity Predecessors
Optimistic Most Likely Pessmistic
A - 1 1 7
B - 1 4 7
C - 2 2 8
D A 1 1 1
E B 2 5 14
F C 2 5 8
G D, E 3 6 15
H F, G 1 2 3

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CONT……….

REQUIRED:
a) Draw the project network and identify all the
paths.
b) Compute the expected time for each activity
and the expected duration for each path.
c) Determine the expected project length.

d) Identify the critical path and critical activities.

e) Compute the variance for each activity and the

variance for path .

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PERT CRITICAL PATH…CONT’D
SOLUTION
A)

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CONT…..
Solution B): Expected time calculation

Times te = a+4m+b
Path
Path Activity a m b 6
total

a 1 3 4 2.83
1-2-5-8 d 3 4 5 4.00 10.16
g 2 3 6 3.33
b 2 4 6 4.00
1-3-6-8 e 3 5 7 5.00 15.00
h 4 6 8 6.00
c 2 3 5 3.17
1-4-7-8 f 5 7 9 7.00 14.34
i 3 4 6 4.17 35
 CONT…..
Solution C): Variance calculation
Times
δ=activity=(b-
Path
Activit a m
a)2 δ2 path
δ
b path
y 36

1 3
4
a (4-1)2/36=9/36
3 4
1-2-5-8 d (5-3)2/36=4/36 29/36=0.80
5 0.898
g (6-2)2/36=16/36 55
2 3
6
2 4
6
b (6-2)2/36=16/36
3 5
1-3-6-8 e (7-3)2/36=16/36
7 48/36=1.33 1.155
h (8-4)2/36=16/36
4 6
8 36

2 3
5
2
SOLUTION B:
EXPECTED TIME (TE) AND VARIANCE (2)
CALCULATIONS

1
 
2
Times 1 
Activity Activity te 6 to  4tm  t p 
2
   
 6 t p t o 
Sequenc
e to tm tp
1-2 A 1 1 7 2 1
1-3 B 1 4 7 4 1
1-4 C 2 2 8 3 1
2-5 D 1 1 1 1 0
3-5 E 2 5 14 6 4
4-6 F 2 5 8 5 1
5-6 G 3 6 15 7 4 37

6-7 H 1 2 3 2 0.33
PROBABILITY FOR PERT/UNCERTAIN TIME
PROJECT

 Variability leading to a longer-than-expected total time for the

critical activities will
always extend the project completion time, and
 Conversely, variability that results in a

shorter-than-expected total time for the critical activities will

reduce the project completion
time, unless other activities become critical.
 Let us now use the variance in the critical activities to

determine the variance in the project completion time.

 Let T denote the total time required to complete the project.

The expected value of T, which is the sum of the expected

times for the critical activities, is
 E(T) =tc + tf + ti 38
=3.17+ 7+4.17 = 14.34weeks
 PROBABILITY FOR PERT…CONT’D
 The variance in the project completion time is the sum of the
variances of the critical path activities.
 Thus, the variance (2) for this project completion time is

2 = 2c +2f +2i

= 0.25+0.44+0.25 = 0.94
Where: 2c , 2f , and 2i are variances of critical activities

 Knowing that the standard deviation is the square root of the

variance, we compute the standard deviation () for this
project completion time as

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PROBABILITY FOR PERT…CONT’D
 In order to obtain the probability of completing the project
for less or equal to 20 weeks is

 From standard normal distribution table probability of Z =

+5.83 i.e. p(Z≤+5.83) is more than 0.999
 Therefore, we have more than 0.999 or 99.9% probability to
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complete the project within 20 weeks
PROBABILITY FOR PERT…CONT’D
 Assuming that the distribution of the project completion time
T follows a normal, or bell-shaped, distribution
 With this distribution, we can compute the probability of

meeting a specified project completion date.

 For example, suppose that management allotted 20 weeks for

the project under analysis. What is the probability that we will

meet the 20-week deadline?
 Using the normal probability distribution from statistical

probability distribution table

 We are asking for the probability that T ≤ 20; this

probability is the area of z-value for the normal

cumulative probability for less than or equal to 20
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CONT….

Knowledge of the expected path time and their

standard deviation enables a manager to make
probabilistic estimate of the project
complementation time.

It is assumed that the path time is of

independent to each other. This requires two
things:
Activity times are independent of each other,

and each activity is only on one path

A project is not completed until all of its
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activities, not just those on the critical path,
have been completed.
 TIME-COST TRADE-OFFS
_CRUSHING:
 In
many situations it is possible to reduce the length of a
project by injecting additional resources.
 Managers often have certain options at their disposal that
allow them to shorten, or crush, certain activities.
 Among the most obvious options are using additional
personnel or more efficient equipment and relaxing work
specifications.

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CONTD
…
a project manager may be able to shorten a project,
there by realizing a savings on indirect project cost by
increasing direct expenses to speed up the project.

 The goal in evaluating time-cost trade-offs is to identify

a plan that will minimize the sum of the indirect and
direct project costs.

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 In order to make a rational decision about which
activities (If any) to crush and the extent of crushing
desirable, a manager needs the following
information:

1. Regular time and crushing time estimates for each

activity
2. Regular cost and crush cost estimates for each activity
3. A list of activities that are on the critical path

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 Activities on the critical path are potential candidates for
crushing because shortening non critical activities would not
have an impact on total project duration.

Cost Shorten
Total cost
Shorten

Cumulative
cost of crushing

crush
Expected
indirect cost

Shorten
Project
length
Optimum
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THE GENERAL PROCEDURE FOR
CRUSHING IS:

1. Obtain estimates of regular and crush times and

costs for each activity.
2. Determine the length of all paths and path slack
times.
3. Determine which activities are on the critical path.
4. crush critical activities, in order of increasing costs,
as long as crushing costs do not exceed benefits.

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CRUSHING COST CALCULATION

Table 5.2. NORMAL AND CRUSH ACTIVITY DATA FOR THE TWO- MACHINE
MAINTENANCE PROJECT

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