Project Management - CPM-PERT

Project Management - CPM/PERT
Dr. M Varaprasada Rao

DEAN - ACADEMICS
GIET RAJAHMUNDRY
What exactly is a project?

PM 1 A building supervisor is in-charge for construction of a retail
development in the centre of Rajahmundry. There are 26 retail units and
a super market in the complex. The main responsibilities are to coordinate the work of the various contractors to ensure that the project is
completed to specification, within budget and on time.
PM 2 Dr. Rao directing a team of research scientists. They are
running trials on a new analgesic drug on behalf of a pharmaceutical
company. It is the responsibility to design the experiments and make
sure that proper scientific and legal procedures are followed, so that the
results can be subjected to independent statistical analysis.
PM 3- The international aid agency which employs me is sending me to
New Delhi to organize the introduction of multimedia resources at a
teachers training college. My role is quite complex. I have to make sure
that appropriate resources are purchased- and in some cases developed
within the college. I also have to encourage the acceptance of these
5/10/2016
Dr. Varaprasada
Rao GGSESTC
2
resources
by lecturers and students
within
the college.
Project is not defined by the type of outcome it is set up to achieve

PM 1 A building supervisor is in-charge for construction of a retail
development in the centre of Rajahmundry. There are 26 retail units and
a super market in the complex. The main responsibilities are to coordinate the work of the various contractors to ensure that the project is
completed to specification, within budget and on time.
PM 2 Dr. Rao directing a team of research scientists. They are
running trials on a new analgesic drug on behalf of a pharmaceutical
company. It is the responsibility to design the experiments and make
sure that proper scientific and legal procedures are followed, so that the
results can be subjected to independent statistical analysis.
PM 3- The international aid agency which employs me is sending me to
New Delhi to organize the introduction of multimedia resources at a
teachers training college. My role is quite complex. I have to make sure
that appropriate resources are purchased- and in some cases developed
within the college. I also have to encourage the acceptance of these
5/10/2016
Dr. Varaprasada
Rao GGSESTC
3
resources
by lecturers and students
within
the college.
Project
A project is an endeavour involving a connected sequence of
activities and a range of resources, which is designed to achieve
a specific outcome and which operates within a time frame,
cost and quality constraints and which is often used to
introduce change.
Characteristic of a project
A unique, one-time operational activity or effort
Requires the completion of a large number of
interrelated activities
Established to achieve specific objective
Resources, such as time and/or money, are limited
Typically has its own management structure
Need leadership
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Dr. Varaprasada Rao GGSESTC
Examples
constructing houses, factories, shopping malls,
athletic stadiums or arenas
developing military weapons systems, aircrafts,
new ships
launching satellite systems
constructing oil pipelines
developing and implementing new computer
systems
planning concert, football games, or basketball
tournaments
introducing new products into market
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What is project management

The application of a collection of tools and
techniques to direct the use of diverse resources
towards the accomplishment of a unique,
complex, one time task within time, cost and
quality constraints.
Its origins lie in World War II, when the
military authorities used the techniques of
operational research to plan the optimum use
of resources.
One of these techniques was the use of networks
to represent a system of related activities
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Project Management Process

Project planning - Project scheduling - Project control
Project team
made up of individuals from various areas and departments within a
company
Matrix organization
a team structure with members from functional areas, depending on skills
required
Project Manager
most important member of project team
Scope statement
a document that provides an understanding, justification, and expected result
of a project
Statement of work
written description of objectives of a project
Organizational Breakdown Structure
a chart that shows which organizational units are responsible for work items
Responsibility Assignment Matrix
shows who is responsible for work in a project
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Work breakdown structure

A method of breaking down a project into individual
elements ( components, subcomponents, activities and
tasks) in a hierarchical structure which can be scheduled
and cost
It defines tasks that can be completed independently of
other tasks, facilitating resource allocation, assignment
of responsibilities and measurement and control of the
project
It is foundation of project planning
It is developed before identification of dependencies and
estimation of activity durations
It can be used to identity the tasks in the CPM and PERT
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Work Breakdown Structure for Computer Order

Processing System Project
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Project Planning
Resource Availability and/or Limits
Due date, late penalties, early completion
incentives
Budget
Activity Information
Identify all required activities
Estimate the resources required (time) to complete
each activity
Immediate predecessor(s) to each activity needed
to create interrelationships
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Project Scheduling and Control Techniques

Gantt Chart
Critical Path Method (CPM)

Program Evaluation and Review Technique (PERT)
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Gantt Chart
Graph or bar chart with a bar for each project activity that shows
passage of time
Provides visual display of project schedule
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History of CPM/PERT
Critical Path Method (CPM)
E I Du Pont de Nemours & Co. (1957) for construction of new
chemical plant and maintenance shut-down
Deterministic task times
Activity-on-node network construction
Repetitive nature of jobs
Project Evaluation and Review Technique (PERT)
U S Navy (1958) for the POLARIS missile program

Multiple task time estimates (probabilistic nature)
Activity-on-arrow network construction
Non-repetitive jobs (R & D work)
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Project Network
Event
Signals the beginning or ending of an activity
Designates a point in time
Represented by a circle (node)
Network
Shows the sequential relationships among activities using nodes
and arrows
Activity-on-node (AON)
nodes represent activities, and arrows show precedence

relationships
Activity-on-arrow (AOA)
arrows represent activities and nodes are events for points in

time
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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
Use of nodes and arrows
Arrows
An arrow leads from tail to head directionally
Indicate ACTIVITY, a time consuming effort that is required to perform a
part of the work.
Nodes
A node is represented by a circle
- Indicate EVENT, a point in time where one or more activities start and/or
finish.
Activity
A task or a certain amount of work required in the project
Requires time to complete
Represented by an arrow
Dummy Activity
Indicates only precedence relationships
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Does not require any time of effort
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AOA Project Network for House

Lay
foundation
3
Design house
and obtain
financing
3
2
Dummy
0
1
Order and
receive
materials
4
Select
paint
Build
house
Finish
work
3
1
Select
carpet
AON Project Network for House

Lay foundations
Build house
4
3
2
2
Start
7
1
1
3
Design house and

obtain financing
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Finish work
3
1
5
1
Order and
receive Rao GGSESTC
Dr. Varaprasada
Select paint
materials
6
1
Select carpet
24
Situations in network diagram

B
A must finish before either B or C can start

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

or D can start
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both A and C must finish before D can start

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Concurrent Activities
3
Lay foundation
Lay
foundation
3
2
Order material
0
1
Order material
(a) Incorrect precedence

relationship
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Dummy
(b) Correct precedence

relationship
26
Network example
Illustration of network analysis of a minor redesign of a product and
its associated packaging.
The key question is: How long will it take to complete this project ?
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For clarity, this list is kept to a minimum by specifying only

immediate relationships, that is relationships involving activities
that "occur near to each other in time".
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Questions to prepare activity network
Is this a Start Activity?

Is this a Finish Activity?
What Activity Precedes this?
What Activity Follows this?
What Activity is Concurrent with this?
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CPM calculation
Path
A connected sequence of activities leading from
the starting event to the ending event
Critical Path
The longest path (time); determines the project
duration
Critical Activities
All of the activities that make up the critical path
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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)
earliest time an activity can finish
earliest start time plus activity time
EF= ES + t
Backward Pass
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
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LS = minimum LS of immediate predecessors
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CPM analysis
Draw the CPM network
Analyze the paths through the network
Determine the float for each activity
Compute the activitys float
float = LS - ES = LF - EF
Float 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
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CPM Example:
CPM Network
f, 15
h, 9
g, 17
a, 6
i, 6
b, 8
d, 13
j, 12
c, 5
e, 9
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CPM Example
ES and EF Times
f, 15
h, 9
g, 17
a, 6
0 6
i, 6
b, 8
0 8
d, 13
j, 12
c, 5
0 5
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e, 9
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CPM Example
ES and EF Times
f, 15
6 21
h, 9
g, 17
a, 6
0 6
6 23
i, 6
b, 8
0 8
c, 5
0 5
d, 13
j, 12
8 21
e, 9
5 14
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CPM Example
ES and EF Times
f, 15
6 21
g, 17
a, 6
0 6
6 23
i, 6
23 29
h, 9
21 30
b, 8
0 8
c, 5
0 5
d, 13
8 21
e, 9
5 14
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j, 12
21 33
Projects EF = 33
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CPM Example
LS and LF Times
a, 6
0 6
b, 8
0 8
c, 5
0 5
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f, 15
6 21
g, 17
6 23
d, 13
8 21
i, 6
23 29
27 33
h, 9
21 30
24 33
j, 12
21 33
21 33
e, 9
5 14
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CPM Example
LS and LF Times
a, 6
0 6
4 10
b, 8
0 8
0 8
c, 5
0 5
7 12
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f, 15
6 21
9 24
g, 17
6 23
10 27
d, 13
8 21
8 21
e, 9
5 14
Dr. Varaprasada
Rao GGSESTC
12 21
i, 6
23 29
27 33
h, 9
21 30
24 33
j, 12
21 33
21 33
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CPM Example
Float
a, 6
0 6
3
3 9
b, 8
0 8
0
0 8
c, 5
7 0 5
7 12
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f, 15
3 6 21
9 24
g, 17
6 23
4
10 27
h, 9
3 21 30
24 33
i, 6
4 23 29
27 33
d, 13
0 8 21
8 21
e, 9
7 5 14
12
21
Dr. Varaprasada
Rao GGSESTC
j, 12
0 21 33
21 33
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CPM Example
Critical Path
f, 15
h, 9
g, 17
a, 6
i, 6
b, 8
d, 13
j, 12
c, 5
e, 9
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PERT
PERT is based on the assumption that an activitys duration
follows a probability distribution instead of being a single value
Three time estimates are required to compute the parameters of
an activitys duration distribution:
pessimistic time (tp ) - the time the activity would take if
things did not go well
most likely time (tm ) - the consensus best estimate of the
activitys duration
optimistic time (to ) - the time the activity would take if things
did go well
Mean (expected time):
te =
tp + 4 tm + to
6
2
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=2
Variance:
Vt GGSESTC
=
Dr. Varaprasada Rao
tp - to
6
41
PERT analysis
Draw the network.
Analyze the paths through the network and find the critical path.
The length of the critical path is the mean of the project duration
probability distribution which is assumed to be normal
The standard deviation of the project duration probability
distribution is computed by adding the variances of the critical
activities (all of the activities that make up the critical path) and
taking the square root of that sum
Probability computations can now be made using the normal
distribution table.
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Probability computation
Determine probability that project is completed within specified time
x-
Z=
where = tp = project mean time

= project standard mean time
x = (proposed ) specified time
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Normal Distribution of Project Time

Probability
= tp
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Time
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PERT Example
Immed. Optimistic Most Likely Pessimistic
Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.)
A
B
C
D
E
F
G
H
I
J
K
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--A
A
A
B,C
B,C
E,F
E,F
D,H
G,I
4
6
1
4.5
3
3
4
5
0.5
1
3
4
1
1.5
5
6
2
5
2.5
2.75
3
5
8
5
3
6
1.5
5
5
7
8
4.5
7
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PERT Example
PERT Network
D
C
B
I
F
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PERT Example
Activity
A
B
C
D
E
F
G
H
I
J
K
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Expected Time
6
4
3
5
1
4
2
6
5
3
5
Variance
4/9
4/9
0
1/9
1/36
1/9
4/9
1/9
1
1/9
4/9
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PERT Example
Activity ES
A
B
C
D
E
F
G
H
I
J
K
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0
0
6
6
6
9
9
13
13
19
18
EF
LS
LF
6
4
9
11
7
13
11
19
18
22
23
0
5
6
15
12
9
16
14
13
20
18
6
9
9
20
13
13
18
20
18
23
23
Slack
0 *critical
5
0*
9
6
0*
7
1
0*
1
0*
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PERT Example
Vpath = VA + VC + VF + VI + VK
= 4/9 + 0 + 1/9 + 1 + 4/9
= 2
path = 1.414
z = (24 - 23)/(24-23)/1.414 = .71
From the Standard Normal Distribution table:
P(z < .71) = .5 + .2612 = .7612
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PROJECT COST
Cost consideration in project

Project managers may have the option or requirement to crash the
project, or accelerate the completion of the project.
This is accomplished by reducing the length of the critical path(s).
The length of the critical path is reduced by reducing the duration
of the activities on the critical path.
If each activity requires the expenditure of an amount of money to
reduce its duration by one unit of time, then the project manager
selects the least cost critical activity, reduces it by one time unit,
and traces that change through the remainder of the network.
As a result of a reduction in an activitys time, a new critical path
may be created.
When there is more than one critical path, each of the critical
paths must be reduced.
If the length of the project needs to be reduced further, the
process is repeated.
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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
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Activity crashing
Crash
cost
Crashing activity
Slope = crash cost per unit time
Normal Activity
Normal
cost
Normal
time
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Crash
time
Activity time
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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
Time-Cost Tradeoff
Min total cost =
optimal project
time
Total project cost

Indirect
cost
Direct cost
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time
54
Project Crashing example
2
8
12
7
4
1
12
3
4
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5
4
6
4
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Time Cost data

Activity Normal
time
1
12
2
8
3
4
4
12
5
4
6
4
7
4
Normal
cost Rs
3000
2000
4000
50000
500
500
1500
75000
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Crash
time
7
5
3
9
1
1
3
Crash
cost Rs
5000
3500
7000
71000
1100
1100
22000
Allowable
crash time
5
3
1
3
3
3
1
slope
400
500
3000
7000
200
200
7000
110700
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R7000
R500
Project duration = 36
2
8
R700
12
From..
7
4
1
12
R400
3
4
R3000
6
4
5
4
R200
R200
R7000
R500
2
8
To..
R700
12
7
4
1
Project
duration = 31
Additional cost = R2000
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R400
3
4
5
4
R3000Rao GGSESTC
Dr. Varaprasada
R200
6
4
R200
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Benefits of CPM/PERT
Useful at many stages of project management

Mathematically simple
Give critical path and slack time
Provide project documentation
Useful in monitoring costs
CPM/PERT can answer the following important

questions:
How long will the entire project take to be completed? What are the
risks involved?
Which are the critical activities or tasks in the project which could
delay the entire project if they were not completed on time?
Is the project on schedule, behind schedule or ahead of schedule?
If the project has to be finished earlier than planned, what is the best
way 5/10/2016
to do this at the least cost?
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Limitations to CPM/PERT
Clearly defined, independent and stable activities

Specified precedence relationships
Over emphasis on critical paths
Deterministic CPM model
Activity time estimates are subjective and depend on judgment
PERT assumes a beta distribution for these time estimates, but
the actual distribution may be different
PERT consistently underestimates the expected project
completion time due to alternate paths becoming critical
To overcome the limitation, Monte Carlo simulations can be

performed on the network to eliminate the optimistic bias
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Computer Software
for Project Management
Microsoft Project (Microsoft Corp.)

MacProject (Claris Corp.)
PowerProject (ASTA Development Inc.)
Primavera Project Planner (Primavera)
Project Scheduler (Scitor Corp.)
Project Workbench (ABT Corp.)
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Practice Example
A social project manager is faced with a project with the following
activities:
Activity Description
Duration
Social work team to live in village
5w
Social research team to do survey
12w
Analyse results of survey
5w
Establish mother & child health program
14w
Establish rural credit programme
15w
Carry out immunization of under fives
4w
Draw network diagram and show the critical path.

Calculate
project duration.
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Practice problem
Activity Description
1-2
Social work team to live in village
1-3
Social research team to do survey
Duration
5w
12w
3-4
2-4
Analyse results of survey

Establish mother & child health program
5w
14w
3-5
4-5
Establish rural credit programme

Carry out immunization of under fives
15w
4w
2
1
5
3
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Re-cap
Please try to understand various systems now
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ACTIVITY ON NODE
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Step 1-Define the Project: Cables By ITD is bringing a new product on line to be
manufactured in their current facility in existing space. The owners have identified 11
activities and their precedence relationships. Develop an AON for the project.
Activity
Description
A
Develop product specifications
B
Design manufacturing process
C
Source & purchase materials
D
Source & purchase tooling & equipment
E
Receive & install tooling & equipment
F
Receive materials
G
Pilot production run
H
Evaluate product design
I
Evaluate process performance
J
Write documentation report
K 5/10/2016
Transition to manufacturing
Immediate Duration
Predecessor (weeks)
None
4
A
6
A
3
B
6
D
14
C
5
E&F
2
G
2
G
3
H&I
4
J
65 2
Step 2- Diagram the Network for

Cables By ITD
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Step 3 (a)- Add Deterministic Time Estimates

and Connected Paths
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Step 3 (a) (Cont): Calculate the

Project Completion Times
Paths
Path duration
ABDEGHJK
40
ABDEGIJK
41
ACFGHJK
22
ACFGIJK
23
The longest path (ABDEGIJK) limits the
projects duration (project cannot finish in less
time than its longest path)
ABDEGIJK is the projects critical path
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ACTIVITY ON ARROW
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PERT
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Revisiting Cables By ITD Using Probabilistic Time

Estimates
Optimistic
time
Develop product specifications
2
Design manufacturing process
3
Source & purchase materials
2
Source & purchase tooling & equipment
4
Receive & install tooling & equipment
12
Receive materials
2
Pilot production run
2
Evaluate product design
2
Evaluate process performance
2
Write documentation report
2
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Transition to manufacturingDr. Varaprasada Rao GGSESTC
2
Activity
A
B
C
D
E
F
G
H
I
J
K
Description
Most likely
time
4
7
3
7
16
5
2
3
3
4
2
Pessimistic
time
6
10
5
9
20
8
2
4
5
6
74 2
Using Beta Probability Distribution to

Calculate Expected Time Durations
A typical beta distribution is shown below, note that it has
definite end points
The expected time for finishing each activity is a weighted
average
optimistic 4most likely pessimistic

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Exp.
time
6
Calculating Expected Task Times

optimistic 4most likely pessimistic
Expected time
6
Activity
A
B
C
D
E
F
G
H
I
J
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K
Optimistic
time
2
3
2
4
12
2
2
2
2
2
2
Most likely
Pessimistic
time
time
4
6
7
10
3
5
7
9
16
20
5
8
2
2
3
4
3
5
4
6
2
2
Expected
time
4
6.83
3.17
6.83
16
5
2
3
3.17
4
76
2
Network Diagram with Expected

Activity Times
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Estimated Path Durations through the

Network
Activities on paths
ABDEGHJK
ABDEGIJK
ACFGHJK
ACFGIJK
Expected duration
44.66
44.83
23.17
23.34
ABDEGIJK is the expected critical path &

the project has an expected duration of 44.83
weeks
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PROBABILITY IN PERT
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Estimating the Probability of

Completion Dates
Using probabilistic time estimates offers the advantage of predicting the
probability of project completion dates
We have already calculated the expected time for each activity by making
three time estimates
Now we need to calculate the variance for each activity
The variance of the beta probability distribution is:
po
where p=pessimistic activity time estimate
o=optimistic activity time estimate

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Project Activity Variance
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Activity
Optimistic
Most Likely
Pessimistic
Variance
0.44
10
1.36
0.25
0.69
12
16
20
1.78
1.00
0.00
0.11
0.25
0.44
0.00
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Variances of Each Path through the

Network
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Path
Number
1
Activities on
Path
A,B,D,E,G,H,J,k
Path Variance
(weeks)
4.82
A,B,D,E,G,I,J,K
4.96
A,C,F,G,H,J,K
2.24
A,C,F,G,I,J,K
2.38
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Calculating the Probability of Completing the

Project in Less Than a Specified Time
When you know:
The expected completion time
Its variance
You can calculate the probability of completing the project in X
weeks with the following formula:
specifiedtime path expected time DT EF P
z

2
path standard time
P
Where DT = the specified completion date

EFPath = the expected completion time of the path
Path 2 variance of path

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Example: Calculating the probability of

finishing the project in 48 weeks
Use the z values in Appendix B to determine probabilities
48 weeks 44.66 weeks
e.g. probability for path 1 is
1.52
z
Path
Number
4.82
Activities on Path Path Variance z-value

(weeks)
Probability of
Completion
A,B,D,E,G,H,J,k
4.82
1.5216
0.9357
A,B,D,E,G,I,J,K
4.96
1.4215
0.9222
A,C,F,G,H,J,K
2.24
16.5898
1.000
A,C,F,G,I,J,K
2.38
15.9847
1.000
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Reducing Project Completion

Time
Project completion times may need to be
shortened because:
Different deadlines
Penalty clauses
Need to put resources on a new project
Promised completion dates
Reduced project completion time is

crashing
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Reducing Project Completion Time
Crashing a project needs to balance

Shorten a project duration
Cost to shorten the project duration
Crashing a project requires you to know

Crash time of each activity
Crash cost of each activity
Crash cost/duration = (crash cost-normal cost)/(normal time crash time)
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Reducing the Time of a Project (crashing)

Activity
Normal
Time (wk)
Normal
Cost
Crash
Time
Crash
Cost
8,000
11,000
3,000
30,000
35,000
5,000
6,000
6,000
24,000
28,000
2,000
14
60,000
12
72,000
6,000
5,000
6,500
1500
6,000
6,000
4,000
4,000
4,000
5,000
1,000
4,000
6,400
1,200
5,000
87
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5,000
Max. weeks Reduce cost

of reduction
per week
Crashing Example: Suppose the Cables By ITD project

manager wants to reduce the new product project from 41
to 36 weeks.
Crashing Costs are considered to be linear
Look to crash activities on the critical path
Crash the least expensive activities on the critical path first
(based on cost per week)
Crash activity I from 3 weeks to 2 weeks 1000

Crash activity J from 4 weeks to 2 weeks 2400
Crash activity D from 6 weeks to 4 weeks 4000
Recommend Crash Cost
7400
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A convenient analytical and visual technique of PERT and

CPM prove extremely valuable in assisting the managers in
managing the projects.
PERT stands for Project Evaluation and Review

Technique developed during 1950s. The technique was
developed and used in conjunction with the planning and
designing of the Polaris missile project.
CPM stands for Critical Path Method which was
developed by DuPont Company and applied first to the
construction projects in the chemical industry.
Though both PERT and CPM techniques have similarity in terms of
concepts, the basic difference is; CPM has single time estimate and PERT
has three time estimates for activities and uses probability theory to find
the chance of reaching the scheduled time.
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Project management generally consists of three phases.

Planning:
Planning involves setting the objectives of the project. Identifying
various activities to be performed and determining the requirement of
resources such as men, materials, machines, etc.
The cost and time for all the activities are estimated, and a network diagram is
developed showing sequential interrelationships (predecessor and successor)
between various activities during the planning stage.
Scheduling:
Based on the time estimates, the start and finish times for each
activity are worked out by applying forward and backward pass
techniques, critical path is identified, along with the slack and float for
the non-critical paths.
Controlling:
Controlling refers to analyzing and evaluating the actual
progress against the plan. Reallocation of resources, crashing and
review of projects with periodical reports are carried out.
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COMPONENTS of PERT/CPM NETWORK

PERT / CPM networks contain two major components
i. Activities, and
ii. Events
Activity: An activity represents an action and consumption of
resources (time, money, energy) required to complete a portion of a
project. Activity is represented by an arrow, (Figure 8.1).
Event: An event (or node) will always occur at the beginning

and end of an activity. The event has no resources and is
represented by a circle. The ith event and jth event are the
tail event and head event respectively, (Figure 8.2).
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Merge and Burst Events

One or more activities can start and end simultaneously at an
event (Figure 8.3 a, b).
Preceding and Succeeding Activities

Activities performed before given events are known as
preceding activities (Figure 8.4), and activities performed after
a given event are known as succeeding activities.
Activities A and B precede activities C and D

respectively.
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Dummy Activity
An imaginary activity which does not consume any resource and
time is called a dummy activity. Dummy activities are simply
used to represent a connection between events in order to
maintain a logic in the network. It is represented by a dotted line
in a network, see Figure 8.5.
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a.
ERRORS TO BE AVOIDED IN CONSTRUCTING A

NETWORK
Two activities starting from a tail event

must not have a same end event. To ensure
this, it is absolutely necessary to introduce a
dummy activity, as shown in Figure 8.6.
b.
Looping error should not be formed in a

network, as it represents performance of
activities repeatedly in a cyclic manner, as
shown below in Figure 8.7.
c. In a network, there should be only one
start event and one ending event as shown
below, in Figure 8.8.
d. The direction of arrows should
flow from left to right avoiding
mixing of direction as shown in
Figure 8.9.
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RULES IN CONSTRUCTING A NETWORK

1. No single activity can be represented more than once in a network. The
length of an arrow has no significance.
2. The event numbered 1 is the start event and an event with highest number is
the end event. Before an activity can be undertaken, all activities preceding it
must be completed. That is, the activities must follow a logical sequence (or
interrelationship) between activities.
3. In assigning numbers to events, there should not be any duplication of event
numbers in a network.
4. Dummy activities must be used only if it is necessary to reduce the complexity

of a network.
5. A network should have only one start event and one end event.
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Some conventions of network diagram are shown in Figure 8.10

(a), (b), (c), (d) below:
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PROCEDURE FOR NUMBERING THE EVENTS

USING FULKERSON'S RULE
Step1: Number the start or initial event as 1.
Step2: From event 1, strike off all outgoing activities. This would have
made one or more events as initial events (event which do not have
incoming activities). Number that event as 2.
Step3: Repeat step 2 for event 2, event 3 and till the end event. The end
event must have the highest number
Example 1:
Draw a network for a house construction project. The sequence of
activities with their predecessors are given in Table 8.1, below.
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CRITICAL PATH ANALYSIS

The critical path for any network is the longest path through the entire
network.
Since all activities must be completed to complete the entire project,
the length of the critical path is also the shortest time allowable for
completion of the project.
Thus if the project is to be completed in that shortest time, all activities
on the critical path must be started as soon as possible.
These activities are called critical activities.
If the project has to be completed ahead of the schedule, then the time
required for at least one of the critical activity must be reduced.
Further, any delay in completing the critical activities will increase the
project duration.
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The activity, which does not lie on the critical path, is called non-critical
activity.
These non-critical activities may have some slack time.
The slack is the amount of time by which the start of an activity may be
delayed without affecting the overall completion time of the project.
But a critical activity has no slack.
To reduce the overall project time, it would require more resources (at
extra cost) to reduce the time taken by the critical activities to complete.
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Scheduling of Activities: Earliest Time (TE) and Latest

Time(TL)
Before the critical path in a network is determined, it is necessary to

find the earliest and latest time of each event to know the earliest
expected time (TE) at which the activities originating from the event
can be started and to know the latest allowable time (TL) at which
activities terminating at the event can be completed.
Forward Pass Computations (to calculate Earliest, Time TE)

Step 1: Begin from the start event and move towards the end event.
Step 2: Put TE = 0 for the start event.
Step 3: Go to the next event (i.e node 2) if there is an incoming activity for
event 2, add calculate TE of previous event (i.e event 1) and activity time.
Note: If there are more than one incoming activities, calculate TE for all incoming
activities and take the maximum value. This value is the TE for event 2.
Step 4: Repeat the same procedure from step 3 till the end event.
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Backward Pass Computations (to calculate Latest Time TL)
Procedure :
Step 1: Begin from end event and move towards the start
event. Assume that the direction of arrows is reversed.
Step 2: Latest Time TL for the last event is the earliest
time. TE of the last event.
Step 3: Go to the next event, if there is an incoming activity, subtract
the value of TL of previous event from the activity duration time. The
arrived value is TL for that event. If there are more than one incoming
activities, take the minimum TE value.
Step 4: Repeat the same procedure from step 2 till the

start event.
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DETERMINATION OF FLOAT AND SLACK TIMES

As discussed earlier, the non critical activities have some slack
or float. The float of an activity is the amount of time available by
which it is possible to delay its completion time without
extending the overall project completion time.
tij = duration of activity
TE = earliest expected time
TL = latest allowable time
ESij = earliest start time of the activity
EFij = earliest finish time of the activity
LSij = latest start time of the activity
LFij = latest finish time of the activity

Total Float TFij: The total float of an activity is the difference between
the latest start time and the earliest start time of that activity.
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TFij = LS ij ESij ....................(1)

or
TFij = (TL TE) tij ..(ii)
102
Free Float FFij: The time by which the completion of an activity can
be delayed from its earliest finish time without affecting the
earliest start time of the succeeding activity is called free float.
FF ij = (Ej Ei) tij

....................(3)
FFij = Total float Head event
slack
Independent Float
IFij: The amount of time by which the start of an
activity can be delayed without affecting the earliest start time of
any immediately following activities, assuming that the preceding
activity has finished at its latest finish time.
IF ij = (Ej Li) tij

Where tail event slack = Li Ei
....................(4)
IFij = Free float Tail event slack
The negative value of independent float is considered to be zero.
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Critical Path:
After determining the earliest and the latest scheduled times for various
activities, the minimum time required to complete the project is
calculated. In a network, among various paths, the longest path which
determines the total time duration of the project is called the critical path.
The following conditions must be satisfied in locating the critical path of a
network.
An activity is said to be critical only if both the conditions are satisfied.

1. TL TE = 0
2. TLj tij TEj = 0
Example :
A project schedule has the following characteristics as shown in Table
i. Construct PERT network.

ii. Compute TE and TL for
each activity.
iii. Find the critical path.
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(i) From the data given in the problem, the activity network is
constructed as shown in Figure given below
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(ii) To determine the critical path, compute the earliest time TE

and latest time TL for each of the activity of the project. The
calculations of TE and TL are as follows:,
To calculate TE for all activities
To calculate TL for all activities
TE1 = 0
TE2 = TE1 + t1, 2 = 0 + 4 = 4
TE3 = TE1 + t1, 3 = 0 + 1 =1
TE4 = max (TE2 + t2, 4 and TE3 + t3, 4)
= max (4 + 1 and 1 + 1) = max (5, 2)
= 5 days
TE5 = TE3 + t3, 6 = 1 + 6 = 7
TE6 = TE5 + t5, 6 = 7 + 4 = 11
TE7 = TE5 + t5, 7 = 7 + 8 = 15
TE8 = max (TE6 + t6, 8 and TE7 + t7, 8)
= max (11 + 1 and 15 + 2) = max (12, 17)
= 17 days
TE9 = TE4 + t4, 9 = 5 + 5 = 10
TE10 = max (TE9 + t9, 10 and TE8 + t8, 10)

= max (10 + 7 and 17 + 5) = max (17, 22)
= 22 days
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TL10 = TE10 = 22
TL9 = TE10 t9,10 = 22 7 = 15
TL8 = TE10 t8, 10 = 22 5 = 17
TL7 = TE8 t7, 8 = 17 2 = 15
TL6 = TE8 t6, 8 = 17 1 = 16
TL5 = min (TE6 t5, 6 and TE7 t5, 7)
= min (16 4 and 15 8) = min (12, 7)
= 7 days
TL4 = TL9 t4, 9 = 15 5 =10
TL3 = min (TL4 t3, 4 and TL5 t3, 5 )
= min (10 1 and 7 6) = min (9, 1)
= 1 day
TL2 = TL4 t2, 4 = 10 1 = 9
TL1 = Min (TL2 t1, 2 and TL3 t1, 3)
= Min (9 4 and 1 1) = 0
106
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(iii) From the Table 8.6, we observe that the

activities 1 3, 3 5, 5 7,7 8 and 8 10 are
critical activities as their floats are zero.
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PROJECT EVALUATION REVIEW TECHNIQUE, (PERT)

In the critical path method, the time estimates are assumed to be
known with certainty. In certain projects like research and
development, new product introductions, it is difficult to estimate
the time of various activities.
Hence PERT is used in such projects with a probabilistic method using three time
estimates for an activity, rather than a single estimate, as shown in Figure 8.22.
Optimistic time tO:

It is the shortest time taken to complete the
activity. It means that if everything goes well
then there is more chance of completing the
activity within this time.
Most likely time tm:

It is the normal time taken to complete an activity,
if the activity were frequently repeated under the
same conditions.
Pessimistic time tp:

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It is the longest time that an activity would take to

complete. It is the worst time estimate that an
activity would take if unexpected problems are
faced.
109
Taking all these time estimates into consideration, the expected time
of an activity is arrived at.
The average or mean (ta) value of
the activity duration is given by,
The variance of the activity time
is calculated using the formula,
Probability for Project Duration

The probability of completing the project
within the scheduled time (Ts) or contracted
time may be obtained by using the standard
normal deviate where Te is the expected time
of project completion.
Probability of completing the project

within the scheduled time is,
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Example
An R & D project has a list of tasks to be performed whose time estimates are
given in the Table 8.11, as follows.
a. Draw the project network.

b. Find the critical path.
c. Find the probability that the project is completed in 19 days. If the
probability is less than 20%, find the probability of completing it in 24
days.
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Time expected for each activity is

calculated using the formula (5):
Similarly, the expected time is
calculated for all the activities.
The variance of activity time is
calculated using the formula (6).
Similarly, variances of all the activities
are calculated.
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Construct a network diagram:
calculate the time earliest

(TE) and time Latest (TL)
for all the activities.
From the network diagram Figure 8.24, the critical path
is identified as
1-4, 4-6, 6-7, with a project duration of 22 days.
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The probability of completing the project within 19 days is given by, P (Z< Z0)
To find Z0 ,
we know, P (Z <Z Network Model 0) = 0.5 z (1.3416) (from normal tables, z (1.3416) = 0.4099)
= 0.5 0.4099
= 0.0901
= 9.01%
Thus, the probability of completing the R & D project in 19 days is 9.01%.
Since the probability of completing the project in 19 days is less than 20% As in question, we
find the probability of completing it in 24 days.
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COST ANALYSIS
The two important components of any activity are the cost and time.
Cost is directly proportional to time and vice versa.
For example, in constructing a shopping complex, the expected time of completion can be
calculated using the time estimates of various activities. But if the construction has to be
finished earlier, it requires additional cost to complete the project. We need to arrive at a
time/cost trade-off between total cost of project and total time required to complete it.
Normal time:
Normal time is the time required to complete
the activity at normal conditions and cost.
Crash time:
Crash time is the shortest possible activity
time; crashing more than the normal time
will increase the direct cost.
Cost Slope
Cost slope is the increase in cost per unit of
time saved by crashing. A linear cost curve
is shown in Figure 8.27.
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Example
An activity takes 4 days to complete at a normal cost of Rs. 500.00. If it is
possible to complete the activity in 2 days with an additional cost of Rs.
700.00, what is the incremental cost of the activity?
Incremental Cost or Cost Slope
It means, if one day is reduced we have to spend Rs. 100/- extra

per day.
Project Crashing
Procedure for crashing
Step1: Draw the network diagram and mark the Normal time and Crash time.
Step2: Calculate TE and TL for all the activities.
Step3: Find the critical path and other paths.
Step 4: Find the slope for all activities and rank them in ascending order.
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Step 5: Establish a tabular column with required field.

Step 6: Select the lowest ranked activity; check whether it is a critical activity. If
so,crash the activity, else go to the next highest ranked activity.
Note: The critical path must remain critical while crashing.
Step 7: Calculate the total cost of project for each crashing
Step 8: Repeat Step 6 until all the activities in the critical path are fully
crashed.
Example
The following Table
8.13 gives the activities
of
a
construction
project and other data.
If the indirect cost is Rs. 20 per day, crash the activities to find the minimum
duration of the project and the project cost associated.
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Solution
From the data provided in the table, draw the network diagram (Figure 8.28)
and find the critical path.
From the diagram, we observe that the

critical path is 1-2-5 with project duration of
14 days
The cost slope for all activities and their rank

is calculated as shown in Table 8.14
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The available paths of the network are listed down in Table 8.15
indicating the sequence of crashing (see Figure 8.29).
The sequence of crashing

and the total cost involved
is given in Table 8.16 Initial
direct cost = sum of all
normal costs given
= Rs. 490.00
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Activity
Crashed
Project
Duration
Critical Path
Direct Cost in (Rs.)
Indirect
Cost in
(Rs.)
Total
Cost in
(Rs.)
14
1-2-5
490
14 x 20 =
280
770
1 2(2)
2 5(2)
2 4(1)
3 4(2)
10
125
1345
1245
490 + (2 x 15) + (2 x
100) + (1 x 10) + (2 x
20) = 770
10 x 20 =
200
970
It is not possible to crash more than 10 days, as all

the activities in the critical path are fully crashed.
Hence the minimum project duration is 10 days
with the total cost of Rs. 970.00.
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Assignment
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a. Draw the project network diagram.

b. Calculate the length and variance of the critical path.
c. What is the probability that the jobs on the critical path can be
completed in 41 days?
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Dr. M Varaprasada Rao

Director.ggsestc@gmail.com
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125

Project Management - CPM-PERT

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Project Management - CPM/PERT

Dr. M Varaprasada Rao

What exactly is a project?

Project is not defined by the type of outcome it is set up to achieve

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Dr. Varaprasada Rao GGSESTC

What is project management

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Project Management Process

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Work breakdown structure

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Work Breakdown Structure for Computer Order

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Project Scheduling and Control Techniques

Critical Path Method (CPM)

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Dr. Varaprasada Rao GGSESTC

Project Evaluation and Review Technique (PERT)

U S Navy (1958) for the POLARIS missile program

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nodes represent activities, and arrows show precedence

arrows represent activities and nodes are events for points in

Dr. Varaprasada Rao GGSESTC

Network analysis is the general name given to certain specific

Dr. Varaprasada Rao GGSESTC

Dr. Varaprasada Rao GGSESTC

Dr. Varaprasada Rao GGSESTC

Dr. Varaprasada Rao GGSESTC

Dr. Varaprasada Rao GGSESTC

Dr. Varaprasada Rao GGSESTC

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AOA Project Network for House

AON Project Network for House

Design house and

Situations in network diagram

A must finish before either B or C can start

both A and B must finish before C can start

A must finish before B can start

both A and C must finish before either of B

both A and C must finish before D can start

(a) Incorrect precedence

(b) Correct precedence

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For clarity, this list is kept to a minimum by specifying only

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Questions to prepare activity network

Is this a Start Activity?

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Latest Start Time (LS)

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LS = minimum LS of immediate predecessors

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Dr. Varaprasada Rao GGSESTC

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where = tp = project mean time

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