CPM/PERT

PAVAN KUMAR
ROLL NO-38
MBA-EVENING I Year
 INTRODUCTION

CPM (Critical Path Method) and PERT

(Programme Evaluation Review
Technique) are project
management techniques, which
have been created out of the need
of Western industrial and military
establishments to plan, schedule
and control complex projects.
 Brief History of CPM/PERT
 CPM was the discovery of M.R.Walker of E.I.Du Pont de
Nemours & Co. and J.E.Kelly of Remington Rand, circa 1957.
The computation was designed for the UNIVAC-I computer.
The first test was made in 1958, when CPM was applied to
the construction of a new chemical plant. In March 1959, the
method was applied to a maintenance shut-down at the Du
Pont works in Louisville, Kentucky. Unproductive time was
reduced from 125 to 93 hours.

 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, helped by the Lockheed Missile Systems
division and the Consultant firm of Booz-Allen & Hamilton.
The calculations were so arranged so that they could be
carried out on the IBM Naval Ordinance Research Computer
(NORC) at Dahlgren, Virginia.
 Concept
 CPM/PERT is based on the basis that a small set of
activities, which make up the longest path through
the activity network control the entire project. If
these "critical" activities could be identified and
assigned to responsible persons, management
resources could be optimally used by concentrating
on the few activities which determine the fate of the
entire project.

 Non-critical activities can be rescheduled and

resources for them can be reallocated flexibly,
without affecting the whole project.
 Usefulness
 CPM/PERT have been useful in planning
costs, scheduling manpower and
machine time.
CPM/PERT can answer the following
important questions:
 What will be the project duration? What are the risks/
dependencies/ assumptions involved?
 What are the critical activities which could delay the entire
project if they were not completed on time?
 What is the current status of the project i.e. 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 to do this at the least cost?
 Steps / Procedure
1. Specify the Individual Activities
2. Determine the Sequence of the
Activities
3. Draw the Network Diagram
4. Estimate Activity Completion Time
5. Identify the Critical Path
 Terminologies
 Earliest Start: The earliest time at which the activity can start given
that its precedent activities must be completed first. It is the value in
the rectangle near the tail of each activity.
 
 Earliest Finish: This is equal to the earliest start time for the
activity plus the time required to complete the activity i.e. Earliest
Start + Duration.

 Latest Finish: The latest time at which the activity can be

completed without delaying the project. It is the value in the diamond
at the head of each activity.

 Latest Start: It is equal to the latest finish time minus the time
required to complete the activity i.e. Latest Finish - Duration.

 Critical Path: The critical path is the path through the project
network in which none of the activities have slack, that is, the path
for which ES=LS and EF=LF for all activities in the path.

 Dummy arrows are used where required to avoid giving the same
numbering to two activities as one of the rules for constructing
network is that each activity must be unique.
 Float or Slack
1. Total Float is the spare time available when all
preceding activities occur at the earliest possible times
and all succeeding activities occur at the latest possible
times.
              Total Float = Latest Start - Earliest Start
Activities with zero Total float are on the Critical Path.

2. Free Float is the spare time available when all

preceding activities occur at the earliest possible times
and all succeeding activities occur at the earliest
possible times.

When an activity has zero Total float, Free float will also
be zero.
 CPM/PERT Network
 When preparing the network the things to be borne in mind are
which is the Start Activity, End Activity, Preceding Activity,
Successor Activity and Concurrent Activity.
 In some cases the second activity can begin only after the first
activity is completed. In certain cases, the activities are
independent of each other and can start simultaneously i.e.
concurrent activities.
 Each activity in a PERT/CPM Network is represented by an arrow
symbol.. This is called as Node.

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. ( showing the direction of
flow of the activity)

Nodes A node is represented by a circle

- Indicate EVENT, a point in time where one or more
activities start and/or finish.
- (Each activity is preceded and succeeded by an event,
represented as a circle and numbered)
 The PERT (Probabilistic)
Approach
So far we have talked about projects, where there is high certainty about
the outcomes of activities. In other words, the cause-effect logic is
well known. This is particularly the case in Engineering projects.
However, in Research & Development projects, or in Social Projects
which are defined as "Process Projects", where learning is an
important outcome, the cause-effect relationship is not so well
established.
In such situations, the PERT approach is useful, because it can
accommodate the variation in event completion times, based on an
expert's or an expert committee's estimates.
For each activity, three time estimates are taken
 Most Optimistic Time: When everything goes as planned
 Most Likely Time: When something goes as planned as some not as
much according to plan i.e. some gap in actual versus planned
 Most Pessimistic Time: When nothing goes as planned
 x

Event to tm tp te ES EF LS TF S.D Var.

1-3 3 12 21 12 0 12 0 0 3 9
te = (to+4tm+tp) / 6 3-5 6 15 30 16 12 28 12 0 4 16
SD = (tp - t0) / 6 2 5 14 6 0 6 5 5 2 4
1-2
2-4 5 14 17 13 6 19 11 5 2 4

3-4 2 5 8 5 12 17 13 7 1 1

4-5 1 4 7 4 19 23 24 5 1 1
Each activity (or sub-project) in a PERT/CPM Network is represented by an arrow symbol. Each activity is
preceded and succeeded by an event, represented as a circle and numbered.
Early start :-At Event 4,
1. Activity path 1-2 and 2-4,
which takes 17 weeks (12+5).
2. other activity path is 1-3 and 3- 4
which takes 19 weeks (6+13).
( The rule is to take the longer (bigger) of the two Earliest Starts.)
So the Earliest Start at event 4 is 19.

Early Finish : for event 4, early start + time to reach activity 5

EF = 19 + 4 = 23 weeks
Critical Path :- longest path through the network. It will take 28 weeks along activities
1-3, 3-5
Latest Finish :- At event 4 (represented in Diamonds)
critical weeks – time taken to complete activity 4
LF = 28-4 = 24 weeks
At event 3 is
1. critical weeks – time taken to complete activity 4 and 3
LF = 28-(4+5) = 19 weeks
2. critical weeks – time taken to complete activity 3
LF = 28 – 16 = 12 weeks
So latest finish will be taken as 12 weeks (min of 2 calculations)
Total Float :- At activity 2 is
latest finish – actual weeks req. to complete the activity
TF= 11-6 = 5 weeks
Variance :- square of standard deviation
 Conclusion from Standard deviation
Length of project :- The summation of all the te's along the critical path

variance of the activity times along the critical path = (9+16) = 25.
Standard deviation = square root of variance = 5

The higher the standard deviation, the greater the uncertainty that the project
will be completed on the due date.

Although the te's are randomly distributed, the average or expected project length Te
approximately follows a Normal Distribution.
we can make several statistically significant conclusions from these calculations and
Normal Distribution.

1. A random variable drawn from a Normal Distribution has 0.68 probability of falling
within one standard deviation of the distribution average. Therefore, there is a
68% chance that the actual project duration will be within one standard deviation,
ST of the estimated average length of the project, te.
(In our case, the te = (12+16) = 28 weeks and the ST = 5 weeks. Assuming te to be
normally distributed, we can state that there is a probability of 0.68 that the
project will be completed within 28 ? 5 weeks, which is to say, between 23 and 33
weeks.)
2. Since it is known that just over 95% (.954) of the area under a Normal Distribution
falls within two standard deviations,
(we can state that the probability that the project will be completed within 28 ?
10 is very high at 0.95.)
 Probability of Project
Completion by Due Date
Now, although the project is estimated to be completed within 28
weeks (te=28)

 what is the probability that the project might be completed

within

25 weeks (i.e. Due Date or D=25).

For this calculation, we use the formula for calculating Z, the
number of standard deviations that D is away from te
Z = (D- te)/ SD = (25 - 28)/5 = -0.6
By looking at the following extract from a standard normal
table, we see that the probability associated with a Z of -0.6 is
0.274.
33 weeks
Z = (33 - 28)/5 = 1
The probability associated with Z= +1 is 0.84134.
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