PROJECT MANAGEMENT

PERT/CPM
MANAGEMENT SCIENCE
By
K. Venkaiah Babu MBA., (Ph D)
Science & Humanities Dept.,

Sri Sarathi
Institute of Engineering & Technology
 LECTURE OUT LINE
 Introduction to Project Management
 To understand the project Life Cycle
1. Project Planning 2. W B S
3. Project Scheduling 4. Project Control
 To apply tools and technique's
 Gantt chart /& Mail stone chart
 CPM
 PERT & Probabilistic Activity Times
 Project Crashing and Time-Cost Trade-off
 Describe how CPM / PERT have developed
and merged together to provide a useful
technique for managing projects.
 What is Project?
 Definition:
 “Set of inter-related activities”
Unique, one-time operation activity or effort
 to plan, implement, and control the management of
large, one time projects
 Application:
 Used in Construction, Shipbuilding, Weapons,
Systems Development, etc.
 Applies to uncertain technology projects
 Applies to variable cost resource allocation
 Project Characteristics
 Set of Activities

 Single unit

 Money & Time related

 General purpose

 High labor skills required

 Project Elements
 Objective of Project Management
 Scope (Limitations / Boundary)
 Contract requirements
 Schedules
 Resources (Physical)
 Personnel (Psychological)
 Control
 Risk and problem analysis
Generic Project Life Cycle
EXAMPLES
EXAMPLES OF
OF
PROJECTS
PROJECTS
 Examples
Examples of
of Projects
Projects

 Building construction
✿
✿
 Examples
Examples of
of Projects
Projects

 Building construction
 New product introduction New!
New!
Improved!
Improved!
9” Nude Sandalfoot
Medium to Tall (B)

No nonsense

Sheer
to
waisthos
panty
e
 Examples
Examples of
of Projects
Projects

 Building construction
 New product introduction
 Training seminar
 Examples
Examples of
of Projects
Projects

 Building construction
 New product introduction
 Training seminar
 Research project
 Examples of Projects

 Building construction
 New product introduction
 Training seminar
 Research project
 S/W development
 Planning concert, football games, or basketball
tournaments
 Project Scope
 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
 Work breakdown structure
 breaks down a project into components,
subcomponents, and activities
What is Project Management? (PM)
 PM is the application of knowledge, skills,
tools and techniques to project activities in
order to meet project requirements.
Project Management…
 is an art.
 is a science.

 has a set of tools and methods.

 Effective Project Managers
Qualities of Project Manager:
Project Manager is the most important member of project team
 Lead by example  Good motivators
 Visionaries  Stand up to exert
 Technically when necessary
competent  Support team
 Decisive/pivotal members
 Encourage new
 Good
ideas
communicators
Process of Project Management
 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
 Mechanism of Planning
 Define project objective (SMART)
 Define work breakdown structure (WBS)
 Identify tasks and subtasks -- deliverables
 Lowest element – stand alone work package
 Identify tasks relationship
 Identify possible risks
 Estimate work packages (people, time, etc.)
 Create initial schedule
 Iterate plan (Procedure)
 Document
 Benefits of the Planning

 Framework for communication

 Clients and coworkers
 Allocate resources
 Personnel, equipment and facilities, budget
 Benchmark to measure progress
 OBJECTIVES OF
PROJECT MANAGEMENT
 Objectives of Project
Management
 To complete project within elapsed time
 To ensure optimum utilization of available resources

without delay
 To complete a project with a minimum of capital

investment.
PROJECT MANAGEMENT
PROCESS
 Project Management Process

Planning
● Objectives
● Resources

● Work break-

down sched.
● Organization
 Project Management Process

Planning Scheduling
● Objectives ● Project
● Resources activities
● Work break- ● Start &

down sched. end times

● Organization ● Network
 Project Management Process

Planning Scheduling
● Objectives ● Project
● Resources activities
● Work break- ● Start &

down sched. end times

● Organization ● Network

Controlling
● Monitor, compare,
revise, action
PROJECT PLANNING
 Project Planning

 Establishing objectives
 Defining project
 Creating work breakdown
structure (WBS)
 Determining resources
 Forming organization
 Work Breakdown Structure
(WBS)
 First Step in Project Management
 Begins with a Work Breakdown
 Lists the “WHAT’ of a Project
 Begins with Finished Project
 Consists of Tree Chart, with Each Branch Listing the “WHAT’s” at that Level
 Then List Each Task that Must Be Completed to Accomplish the
“WHAT”
 Start at top, progressively break work down into work packages
 Roll up the packages for bottom up estimating
 Packages give clear work assignments
 Splits work into manageable, logical packages
 Make sure packages can be tested for completeness
 Ex: WBS Buy a House
` BUY A HOUSE

FIND
LOCATION FINANCING
HOUSE

- Determine - Type of
1 - Criteria 3 6
affordability House

- Determine - Find Real

- Visit
2 4 mortgage 7 Estate
Locations
provider Agent

- Lockup
- Look for
5 mortgage 8
House
commitment

- Make
9 Offer, P&S
Agreem't

10 - Closing

Top
Top Down
Down Decomposition,
Decomposition, Elemental
Elemental Tasks
Tasks
Project Organization
 Project Organization
 Often temporary structure
 Uses specialists from entire company
 Headed by project manager
 Coordinates activities

 Monitors schedule

& costs
Eng. Eng.
 Permanent Mkt.
structure called Acct.
‘matrix organization’
Mgr.
PROJECT SCHEDULING
 Project Scheduling
 Sequencing activities
 Identifying precedence
relationships
 Determining activity times
& costs
 Estimating material &
worker requirements
 Determining critical PERT

activities Des
Tes
Buil
ign
d
t

J
Mo
A
nth
M
M

F
J
J

Acti
vity
Project
Project Scheduling
Scheduling Techniques
Techniques

 Gantt chart
 Critical Path Method

(CPM)
 Program Evaluation &

Review Technique (PERT)

 Project
Project Scheduling
Scheduling Techniques
Techniques
More popular Techniques of Network are:
 CPM Critical Path Method
 PERT Programme Evaluation and Review Method
 LCS Least Cost Method
 RAMS Resource Allocation and Multi-project Scheduling
 MAP Manpower Allocation Procedure
 RPSM Resource Planning and Scheduling Method
 GERT Graphical Evaluation and Review Technique
PROJECT CONTROL
 Project Control
Periodical check list concerned with:
 Time management

 Cost management

 Quality management

 Performance management
 Earned Value Analysis
 a standard procedure for numerically measuring
a project’s progress, forecasting its completion
date and cost and measuring schedule and
budget variation
 Communication
 Enterprise project management
GANTT CHART
 Gantt Chart
Gantt Chart was developed by…
 Henry Laurence Gantt (1861-1919) was a mechanical
engineer and management consultant who is most famous
for developing the ‘Gantt chart’ in the 1910s. These
Gantt charts were employed on major infrastructure
projects including the Hoover Dam and Interstate
highway system. He refined production control and cost
control techniques.
 Example of Gantt Chart
Month
0 | 2 | 4 | 6 | 8 | 10
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials

Build house

Select paint

Select carpet

Finish work

1 3 5 7 9
Month
 Gantt Chart
Activities in Buy a House
` BUY A HOUSE

FIND
LOCATION FINANCING
HOUSE TASK PREDECESSOR
1-criteria 3
1 - Criteria 3
- Determine
6
- Type of 2-visit loc. 1
affordability House 3-affordability
4-mortgage co 3
- Determine - Find Real 5-mortg lock 4
- Visit
2 4 mortgage 7 Estate
Locations 6-type of hse 1
provider Agent
7-real est agent 2, 6
- Lockup 8-look for hse 7
- Look for
5 mortgage 8 9-offer, P&S 5, 8
House
commitment
10-closing 9
- Make
9 Offer, P&S
Agreem't

10 - Closing
 Gantt Chart
Buy a House
ek 1 Week 2 Week 3 Week 4
ID Task Name M T W T F S S M T W T F S S M T W T F S S M T W T
1 BUY HOUSE TASK PREDECESSOR
2/5
1-criteria 3
2 LOCATION 2/5 2-visit loc. 1
3-affordability
3 Determine location criteria
4-mortgage co 3
4 Visit key locations 5-mortg lock 4
6-type of hse 1
5 FINANCING 2/5 7-real est agent 2, 6
6 Determine affordability 8-look for hse 7
9-offer, P&S 5, 8
7 Assess Mortagg Provider 10-closing 9
8 Secure Mortagg Commitmt 2/14
9 FIND HOUSE 2/5
10 Type of House

11 Find RealEstate Agent

12 Look for House

13 Make Offer, P&S Agreement

14 Closing 2/24

Simple
Simple Gantt
Gantt Chart
Chart View
View
Limitations of Gantt Chart
CPM & PERT
 CPM & PERT
• Network techniques
• Developed in 1950’s
• CPM by DuPont for chemical plants In 1957 suitable for
Civil & Mechanical Projects
• PERT by U.S. Navy for Polaris missile in 1958
consulting with M/s Booz, Allen & Hamilton
• Consider precedence relationships &
interdependencies
• Each uses a different estimate of activity times
 CPM & PERT Steps
• Identify activities
• Determine sequence
• Create network
• Determine activity times
• Find critical path
• Earliest & Latest start times
• Earliest & Latest finish times
• Slack or Float
 Questions Answered by
PERT & CPM
• Completion date?
• On schedule? Within budget?
• Probability of completing by ...? (Duration)
• Critical activities?
• Enough resources available?
• How can the project be finished early at the
least cost?
Constructing Networks
 Graphical Representation of
Events and Activities
 Flow Charting - Uses Nodes and Arrows
 Arrows
 An arrow leads from tail to head directionally
 Nodes
 A node is represented by a circle or any
mathematical symbol
Node Arrow
 Activity On Node (AON)

 Task is Represented by Node as the

Completion of an Activity
 Arrows Represent the Sequential Linkages
Between Activities
 For Example, Node 1 is Begin, Node 2 is
Complete Task 1, Node 3 is Complete Task 2

1 2 3
 Activity On Arrow (AOA)

 Task is Represented by an Arrow Bounded

on Either End by a Node (Event)
 Each Event is Identified by a Number
 The Activity is Designated by the Leading
Event Number and the Following Event
Number - i.e. Activity 1 - 2
1 2
 Designating Task
Relationships
 Sequential vs. Concurrent Activities
1 2 3

Sequential Task Relationship

2

1 4

Concurrent Task Relationships

 Designating “DUMMY”
Activities
 Represented by Dashed Arrows
 Show Sequential Relationships Among
Tasks, but Take No time or Resources
Dummy Activity 2-3
indicates that both 2
Activities 1-2 and 2-3 must
be Completed before
beginning Activity 3-4
1 4

3
 Network Terms

Project: Obtain a college degree - B. Tech.

Receive
Register
Attend class, degree
study etc.
1 4 Years
2

Activity
Event (Node) Event (Node)
(Arrow)
 Activity
Relationships
 Activity Relationships

1
 Activity Relationships

2
A
1
B
A & B can occur
3
concurrently
 Activity Relationships

A must be done
before C & D can
begin
2 D

A
C
1 4
B
3
 Activity Relationships

2 D

A
C
1 4
B
3 E
B & C must be done
before E can begin
 Activity Relationships

A must be done
before C & D can
begin
2 D

A
C
1 4
B
A & B can occur
3 E
B & C must be done
concurrently before E can begin
 Dummy Activities
 Activities are defined often by beginning &
ending events
 Example: Activity 2-3
 Every activity must have unique pair of
beginning & ending events
It is an imaginary activity
 Consume no Time or Resources

 Dummy activities maintain precedence or

logical sequence of activities.
Dummy Activities
Example
 Dummy Activities Example

Incorrect
2-3
1-2 3-4
11 22 33 44
2-3
 Dummy Activities Example

Incorrect 2-3
1-2 3-4
11 22 33 44
2-3
Different activities;
same designation
 Dummy Activities Example

Incorrect 2-3
1-2 3-4
11 22 33 44
2-3
Correct
1-2 2-4 4-5
11 22 44 55
2-3 3-4: Dummy
33 activity
 Some more Example of Dummy
Activities
Ex – I
A Printing invitation Cards
B Collection of Address
C Dispatching of Cards
A
22
2-3: Dummy
11 activity

B C
33 44
 Some more Example of Dummy
Activities
Ex – II
If A & E are concurrent
B
B is after A & E and
F is after E A

E F
 Labeling the Events by
Dr. Fulkerson’s Rules:
Numbering the events by DR. Fulkerson’s rules:
 There is a single initial event in the net work diagram. This
initial event will have arrows coming out of it and none entering
it. Number this initial event as 1.
 Neglect all the arrows emerging out of the initial event
numbered 1. Doing so, it will apparently provide one or more
new initial events.
 Number these apparently produced new initial events as 2, 3, 4
… etc.
 Again neglect all emerging arrows from these numbered events.
This will create few more initial evens.
 Follow rule – 3.

 Continue this operation until the last event, which has no

emerging arrows, is numbered.
 Numbering the Events

D
oo qq H
B
A J
A G ss tt
m
m nn I
C
F
pp rr
 Network Example
You’re a project manager for Bechtel. Construct
the network.
Activity Predecessors
A --
B A
C A
D B
E B
F C
G D
H E, F
 Network Example - AON

D
B G

A E Z

C H
F
 Network Example - AOA
Activity Predecessors
A --
B A
C A
D B
E B Rough arrow diagram
F C
G D
H E, F
D G
3 6 8
B E
A
1 2 5 H
7 9
C F
4
 Network Example - AOA

D
3 6 G
B E
A H 7
1 2 5
C F
4

Final Arrow Diagram

 C P M Technique - foretaste
 Activity oriented technique
 Single Time estimation
 Designed for repetitive projects
 Not Statistically analyzed
 Demarcates critical activities
 Dummy activities are not necessary
 Employs words like arrow diagram, nodes and
floats etc
 Suitable for industrial settings, plant
maintenance, civil construction projects etc.
 Critical Path Analysis
Example
Event Description Time
Pred.
ID (Wks)
A None Prepare Site 1
B A Pour fdn. & frame 6
C B Buy shrubs etc. 3
D B Roof 2
E D Do interior work 3
F C Landscape 4
G F, E Move In 1
 Critical Path Analysis
Example
Event Description Time
Acty..
ID (Wks)
A 1-2 Prepare Site 1
B 2-3 Pour fdn. & frame 6
C 3-4 Buy shrubs etc. 3
D 3-5 Roof 2
E 5-6 Do interior work 3
F 4-6 Landscape 4
G 6-7 Move In 1
 Critical Path Analysis
Example
Event
Acty..
ID
4 F.4
A 1-2 C.3
B 2-3 A.1 B.6 G.1
1 2 3 6 7
C 3-4 E.3
D.2 5
D 3-5
E 5-6
F 4-6 Different paths from network:
G 6-7 1-2-3-4-6-7 - 15 (Critical Path)
1-2-3-5-6-7 - 13
 Earliest Start Time & Finish
Steps
• Begin at starting event & work forward
• EST = 0 for starting activities
• EST is earliest start
• EFT = EST + Activity time
• EFT is earliest finish
• EST = Maximum EFT of all predecessors for
non-starting activities
 Latest Start Time &
Finish Steps
• Begin at ending event & work backward
• LFT = Maximum EFT for ending activities
• LFT is latest finish; EFT is earliest finish
• LST = LFT - Activity time
• LST is latest start
• LFT = Minimum LST of all successors for
non-ending activities.
 Compute Earliest, Latest & Slack
durations.
Act. Earliest Latest
Activity Dura. ES EF LS LF Slack
A 1-2 1 0 1 0 1 0
B 2-3 6 1 7 1 7 0
C 3-4 3 7 10 7 10 0
D 3-5 2 7 9 9 11 2
E 5-6 3 9 11 11 14 3
F 4-6 4 10 14 10 14 0
G 6-7 1 14 15 12 15 0
 PERT
& Time
Estimates
 PERT Technique - foretaste
 Event oriented technique
 Three time estimation
 Use of dummy activities are required – representing
the proper sequence
 A probabilistic model with uncertainty in activity
duration
 Analyzed statistically
 Employs words Network diagram, events and Slack
etc
 Activity Time Estimates

 CPM - One Time Estimate per Activity

 PERT - Three Time Estimates per Activity
 to = Optimistic Time Estimate
 tm = Most Likely Time Estimate
 tp = Pessimistic Time Estimate
 Can Calculate Activity Mean Time
Estimate and Variance
 PERT Time Estimates

 Activity Mean Time Estimate = te

 Activity Variance Estimate = Sigmae
• te = (to + 4tm + tp)/6

• Sigmae = (tp - to )/6

Can Use Central Limit Theorem to Estimate Project Time

Computing the Float value

Ff
Ft

E1 E2
t
1 2
L1 L2

Fid
 Example Network Flow Diagram

D
2 5

A G
C I
4
1 H 7

B E 6 J
3
F
Example Activity Characteristics
Activity a m b te Sigmae
 A 1-2 10 12 14 12 2/3
 B 1-3 9 11 13 11 2/3
 C 2-4 1 3 11 4 5/3
 D 2-5 1 8 9 7 4/3
 E 3-4 1 7 13 7 6/3
 F 3-6 5 10 15 10 5/3
 G 4-5 8 13 18 13 5/3
 H 4-6 1 7 19 8 9/3
 I 5-6 6 10 20 11 7/3
 J 6-7 6 10 14 10 4/3
 Example Network Flow Diagram

te =7
2 5
te =12 te =13
te =4 te =11
4
1 te =8 7

te =7 te =10
te =11 3
6

te =10
 Earliest Start Time & Finish
Steps
• Begin at starting event & work forward
• EST = 0 for starting activities
• EST is earliest start
• EFT = EST + Activity time
• EFT is earliest finish
• EST = Maximum EFT of all predecessors for
non-starting activities
 Example Network Flow Diagram

ES=12 ES=31
te =7
2 5
te =12
ES=18 ES=52
ES=0 te =4 te =13 te =11
4
1 te =8 7
ES=42
ES=11 te =7
te =11 6 te =10
3
te =10
 Latest Start Time &
Finish Steps
• Begin at ending event & work backward
• LFT = Maximum EFT for ending activities
• LFT is latest finish; EFT is earliest finish
• LST = LFT - Activity time
• LST is latest start
• LFT = Minimum LST of all successors for
non-ending activities.
 Example Activity Characteristics
to tm tp te Sigmae EST LST EFT LFT
 1-2 10 12 14 12 2/3 0 2 12 14
 1-3 9 11 13 11 2/3 0 0 11 11
 2-4 1 3 11 4 5/3 12 14 16 18
 2-5 1 8 9 7 4/3 12 24 19 31
 3-4 1 7 13 7 6/3 11 11 18 18
 3-6 5 10 15 10 5/3 11 32 21 42
 4-5 8 13 18 13 5/3 18 18 31 31
 4-6 1 7 19 8 9/3 18 34 26 42
 5-6 6 10 20 11 7/3 31 31 42 42
 6-7 6 10 14 10 4/3 42 42 52 52
 Example Network Flow Diagram
With Critical Path
ES|LS|EF|LF
t2-5 =7
2
12|24|19|31 5
t1-2 =12 t4-5 =13 t5-6 =11
0|2|12|14 t2-4 =4 18|18|31|31 t4-6 =8 31|31|42|42
12|14|16|18
1
4 18|34 |26|42 7
t3-4 =7
t1-3 =11 11|11|18|18 6 t6-7 =10
0|0|11|11 3
t3-6 =10 42|42|52|52
11|32|21|42
Computing the Float value

Ff
Ft

E1 E2
t
1 2
L1 L2

Fid
 Distinction between CPM & PERT
CPM
 Activity oriented technique.
 It has one time estimate.
 Designed for repetitive projects.
 Not statistically analyzed.
 It demarcates critical activities.
 It employs words like arrow diagram,
node, floats etc.
 Dummy activities are not necessary.
 Suitable for industrial settings, plant
maintenance, civil construction projects.
 A deterministic model with well known
activities times based on past experience.
 Cost is not directly proportional to time
and const is the controlling factor.
PERT
 Event oriented technique.
 It has three time estimation.
 Suitable for non-repetitive projects.
 Analyzed statistically.
 It does not demarcated critical and
non-critical activities.
 It employs words like network
diagram, events Slack etc.
 Use of dummy activities are required
representing the proper sequence.
 Suitable for defense projects and R &
D etc. Where activities cannot be
predicted.
 A probabilistic model with uncertainty
in activities duration
 Cost varies directly with time and time
is the controlling factor.
 Benefits &
Limitations
of PERT/CPM
 Benefits
of PERT/CPM
 Useful at many stages of project
management
 Mathematically simple
 Use graphical displays
 Give critical path & slack time
 Provide project documentation
 Useful in monitoring costs and time
 Limitations
of PERT/CPM
 Clearly defined, independent, & stable
activities
 Specified precedence relationships
 Activity times (PERT) follow
beta distribution
 Subjective time estimates
 Over emphasis on critical path
 Conclusion
 Explained what a project is
 Summarized the CPM / PERT project
activities and their time estimates
 Drew project networks
 Compared PERT & CPM
 Determined slack & critical path
 Computed project probabilities
Project Management

PERT/CPM

THE END