OPERATIONS & PRODUCTION

MANAGEMENT

Chapter: 03

PROJECT
MANAGEMENT
Chapter Layout:
y Defining Project & 3‐Phases of Project.

y Project Management
y Project Planning 
y Work Break Structure.

y Project Scheduling 
y Gantt Chart.

y Project Controlling 
y ( PERT & CPM ).
Chapter Layout … Cont.
y Project Management Techniques: PERT and CPM
y The Framework of PERT and CPM

y Network Diagrams and Approaches
y Activity‐on‐Node (AON) 

y Activity‐on‐Arrow (AOA) 

y Determining the Project Schedule
y Forward Pass

y Backward Pass
Chapter Layout … Cont.
y Calculating Slack Time and Identifying the 
Critical Paths.
y Numerical

y Variability in Activity Times
y Three Time Estimates in PERT

y Probability of Project Completion
Chapter Layout … Cont.
y Cost‐Time Trade‐Offs and Project Crashing
1. Selecting Activities to be crashed.

2. Calculating Final Cost incurred.

y Probability of Project Completion.
y Numerical

y END ‐‐‐‐‐‐‐‐‐‐ Practice Problems.
Chapter: 03 PROJECT 
MANAGEMENT

DEFINITIONS
WHAT IS PROJECT ?????
y DEFINITION
y Project is an unique activity, with specific 
objective  has  to  completed  in  a 
determined time frame and incurred cost.
y CHARACTERISTICS OF PROJECT
1. UNIQUENESS
2.OBJECTIVITY
3.TIME FRAME
4.COST
DEFINING PROJECT MANAGEMENT:
y1st Definition
“ Project management is the process of
planning and directing a project from its
inception to its completion at a given
time and at a given cost for a given end
product.”.

y PROBLEM IN‐FLEXIBILITY
DEFINING PROJECT MANAGEMENT:
y2nd Definition
“ PROJECT MANAGEMENT PLANS AND
DIRECT THE PROCESS OF COMPLETION OF A
PROJECT TO ENABLE IT TO REACH THE
BEST POSSIBLE WAY, THE BEST POSSIBLE
RESULTS AND THE INTENDED OBJECTIVE OF
THE PROJECT. ”
Chapter: 03 PROJECT 
MANAGEMENT

PROJECT
PRIORITIES
 PROJECT 
PROJECT 
PRIORITIES
PRIORITIES
PROJECT SCOPE: Terms and Definitions
y SCOPE STATEMENTS
y Also called statements of work (SOW)
1. To clearly define the deliverables for the end 
user.
2. To focus the project on successful completion 
of its goals.
y PROJECT CREEP
y The tendency for the project scope to expand 
over  time  due  to  changing  requirements, 
specifications, and priorities.
Chapter: 03 PROJECT 
MANAGEMENT

PHASES OF PROJECT
MANAGEMENT
 3‐PHASES OF PROJECT MGT.
; Planning
; Scheduling
; Objectives
; Project activities
; Resources
; Start & end times
; Work break-down
schedule ; Network
; Organization

; Controlling
; Monitor, compare, revise, action
PROJECT PLANNING, SCHEDULING, 
AND CONTROLLING.

Before Start of project During

project Timeline project
PROJECT PLANNING
y Work Breakdown Structure (WBS)

y An hierarchical outline (map) that identifies the 
products and work elements involved in a project.

y Defines the relationship of the final deliverable (the 
project) to its sub deliverables, and in turn, their 
relationships to work packages.
HIERARCHICAL 
HIERARCHICAL 
BREAKDOWN 
BREAKDOWN 
OF THE WBS
OF THE WBS
 WORK PACKAGES
y A work package is the lowest level of the WBS.
y It is output‐oriented :
1. Defines work (what).
2. Identifies  time  to  complete  a  work  package  (how 
long)
3. Identifies  a  time‐phased  budget  to  complete  a  work 
package (cost).
4. Identifies  resources  needed  to  complete  a  work 
package (how much).
5. Identifies a single person responsible for units of work 
(who).
6. Identifies  monitoring  points  (milestones) for 
measuring success
PROJECT PLANNING, SCHEDULING, 
AND CONTROLLING.

Before Start of project During

project Timeline project
PROJECT PLANNING, SCHEDULING, 
AND CONTROLLING.

Before Start of project During

project Timeline project
PROJECT PLANNING, SCHEDULING, 
AND CONTROLLING.

Before Start of project During

project Timeline project
PROJECT SCHEDULING
A Simple Gantt Chart:
Time
J F M A M J J A S

Design
Prototype
Test
Revise
Production
Chapter: 03 PROJECT 
MANAGEMENT

PROJECT
NETWORKING
TECHNIQUES.
 Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

A comes before
(a) A B C B, which comes
before C A B C

A A
A and B must both
(b) C be completed
before C can start C
B B
 Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

B
B and C cannot
(c) A begin until A is B
completed A
C C
PERT AND CPM TECHNIQUES.
y Network techniques
y Developed in 1950’s
1. CPM by DuPont for chemical plants (1957)
2. PERT by Booz, Allen & Hamilton with the 
U.S. Navy, for Polaris missile (1958)
y Consider precedence relationships and 
interdependencies
y Each uses a different estimate of activity 
times.
A COMPARISON OF PERT AND 
CPM TECHNIQUES.
S.NO PERT CPM
1 TIME FOCUS TIME & COST FOCUS
2 FIRST TIME REPEATED PROJECT
PROJECT
3 ASK TO TRACK RECORD OR
KNOWLEDGEA PAST HISTORY.
BLE PERSON
4 3 – TIME ONE TIME
ESTIMATES ESTIMATE.
Chapter: 03 PROJECT 
MANAGEMENT
PRACTICAL
PROJECT
MANAGEMENT
AON Example 
PAKISTAN PAPERSACK CORPORATION LTD.
Balochistan

Activities and Predecessors

Immediate 
Activity Description Predecessors
A Build internal components —
B Modify roof and floor —
C Construct collection stack A
D Pour concrete and install frame A, B
E Build high‐temperature burner C
F Install pollution control system C
G Install air pollution device D, E
H Inspect and test F, G
 Activity A
A
(Build Internal Components)

Start

Activity B
Start B (Modify Roof and Floor)
Activity
 Activity A Precedes Activity C

A C

Start

B D

Activities A and B
Precede Activity D
 F
A C

E
Start H

B D G

Arrows Show Precedence

Relationships
Variability in Activity Times
y CPM assumes we know a fixed time 
estimate for each activity and there 
is no variability in activity times
y PERT uses a probability 
distribution for activity times to 
allow for variability
Variability in Activity Times
y Three time estimates are required
y Optimistic time (a) – if everything 
goes according to plan
y Pessimistic time (b) – assuming 
very unfavorable conditions
y Most likely time (m) – most 
realistic estimate
Variability in Activity Times

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

Variance of times:
v = [(b – a)/6]2
Variability in Activity Times
Most Expected
Optimistic Likely Pessimistic Time
Activity a m b t = (a + 4m + b)/6
A 1 2 3 2
B 2 3 4 3
C 1 2 3 2
D 2 4 6 4
E 1 4 7 4
F 1 2 9 3
G 3 4 11 5
H 1 2 3 2
Determining the Project Schedule
Perform a Critical Path Analysis

Activity Description Time (weeks)

A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total Time (weeks) 25
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
Earliest start (ES) = earliest time at which an activity can
Activity Description Time (weeks)
start, assuming all predecessors have
A Build internal components
been completed 2
B Modify roof and floor 3
Earliest finish (EF) = earliest time at which an activity can
C Construct collection stack
be finished 2
D Pour concrete and install frame 4
Latest start (LS) = latest time at which an activity can
E Build high-temperature burner 4
start so as to not delay the completion
F Installtime
pollution control
of the entiresystem
project 3
G Install air pollution device 5
Latest finish (LF) = latest time by which an activity has to
H Inspect and test 2
be finished so as to not delay the
Total Time (weeks) time of the entire project
completion 25
Table 3.2
Chapter: 03 PROJECT 
MANAGEMENT

DESIGNING
PROJECT
NETWORK
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
Activity Name
or Symbol
A Earliest
Earliest ES EF
Start Finish

Latest LS LF Latest
Start 2 Finish

Activity Duration
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis

EF of A =
ES ES of A + 2
of A
A
Start 0 2
0 0

2
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
A
0 2

2 EF of B =
ES ES of B + 3
0
Start
0 of B
B
0 0 3

3
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
A C
0 2 2 4
FORWARD 
FORWARD 
2 2
PASS
PASS
Start
0 0

B
0 3

3
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
A C
0 2 2 4 FORWARD 
FORWARD 
PASS
PASS
2 2

Start
0 0
= Max (2, 3) D
0
3 7
B
0 3

3
4
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
A C
0 2 2 4

2
FORWARD 
FORWARD 
2
PASS
PASS
Start
0 0

B D
0 3 3 7

3 4
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis FORWARD 
FORWARD 
PASS
PASS
A C F
0 2 2 4 4 7

2 2 3

Start E H
0 0 4 8 13 15

0 4 2

B D G
0 3 3 7 8 13

3 4 5
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis BACKWARD 
BACKWARD 
PASS
PASS
A C F
0 2 2 4 4 7

2 2 3

Start E H
0 0 4 8 13 15
13 15
0 4 2

B LS = LF
D – Activity time
G
0 3 3 7 8 13

3 4 5 LF = EF
of Project
 DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
BACKWARD 
BACKWARD 
PASS
PASS
A C F
0 2 2 4 4 7

10 13
2 2 3

Start E H
0 0
LF =4 Min(LS
8 of 13 15
following activity) 13 15
0 4 2

B D G
0 3 3 7 8 13

3 4 5
DETERMINING THE PROJECT SCHEDULE
LF = Min(4, 10) BACKWARD 
BACKWARD 
PASS
PASS
A C F
0 2 2 4 4 7

2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15
4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
8 13
3 4 5
DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis BACKWARD 
BACKWARD 
PASS
PASS
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5
DETERMINING THE PROJECT SCHEDULE
Critical Path And Slack Times Analysis
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start Slack = 0 Slack = 0 E Slack = 6 H

0 0 4 8 13 15
0 0 4 8 13 15
0 4 2

B D Slack = 0 G Slack = 0
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5

Slack = 1 Slack = 1 Slack = 0

DETERMINING THE PROJECT SCHEDULE
Perform a Critical Path Analysis
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5
Chapter: 03 PROJECT 
MANAGEMENT

DESIGNING
PROJECT GANTT
CHART.
 GANTT CHART
PAKISTAN PAPERSACK CORPORATION
LTD. Balochistan
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-temperature
burner
F Install pollution control
system
G Install air pollution
device
H Inspect and test
 GANTT CHART
PAKISTAN PAPERSACK CORPORATION
LTD. Balochistan
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-temperature
burner
F Install pollution control
system
G Install air pollution
device
H Inspect and test
Chapter: 03 PROJECT 
MANAGEMENT

PROBABILITY OF
COMPLETION
PROBABILITY OF COMPLETION 
Variability in Activity Times

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

Variance of times:
v = [(b – a)/6]2
Variability in Activity Times
Most Expected
Optimistic Likely Pessimistic Time
Activity a m b t = (a + 4m + b)/6

A 1 2 3 2
B 2 3 4 3
C 1 2 3 2
D 2 4 6 4
E 1 4 7 4
F 1 2 9 3
G 3 4 11 5
H 1 2 3 2
 Variability in Activity Times
Computing Variance
Most Expected
Optimistic Likely Pessimistic Time Variance
Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 1 2 3 2 .11
B 2 3 4 3
C 1 2 3 2 .11
D 2 4 6 4
E 1 4 7 4 1.00
F 1 2 9 3
G 3 4 11 5 1.78
H 1 2 3 2 .11
PROBABILITY OF PROJECT 
COMPLETION
Project variance is computed by
summing the variances of critical
activities

σp2 = Project variance

= ∑(variances of activities
on critical path)
PROBABILITY OF PROJECT 
COMPLETION
Project variance
Project variance is computed by
σ = .11 + .11 + 1.00 + 1.78 + .11 = 3.11
2
summing
p the variances of critical
activities
Project standard deviation
σp = Project variance
= 3.11 = 1.76 weeks
PROBABILITY OF PROJECT 
COMPLETION
PERT makes two more assumptions:
; Activity times are statistically
independent
; Total project completion times
follow a normal probability
distribution
PROBABILITY OF PROJECT 
COMPLETION
Standard deviation = 1.76 weeks

15 Weeks
(Expected Completion Time)
Figure 3.13
PROBABILITY OF PROJECT 
COMPLETION
What is the probability this project can
be completed on or before the 16 week
deadline?
due
Z = date – expected date
of completion /σp
= (16 wks – 15 wks)/1.76

= 0.57 Where Z is the number of

standard deviations the due
date or target date lies from
the mean or expected date
PROBABILITY OF PROJECT 
COMPLETION
From Appendix I
What is the probability
.00 .01 this project
.07 can
.08
be completed on or before the
.1 .50000 .50399
16 week
.52790 .53188
deadline?.2 .53983 .54380 .56749 .57142

due expected date

.5 Z.69146
= date −
.69497 σp
.71566 /.71904
of completion
.6 .72575 .72907 .74857 .75175
= (16 wks − 15 wks)/1.76

= 0.57 Where Z is the number of

standard deviations the due
date or target date lies from
the mean or expected date
PROBABILITY OF PROJECT 
COMPLETION
0.57 Standard deviations
Probability
(T ≤ 16 weeks)
is 71.57%

15 16 Time
Weeks Weeks
Figure 3.14
Chapter: 03 PROJECT 
MANAGEMENT

PROJECT
CRASHING
PROJECT CRASHING
1. Compute the crash cost per time period.  If 
crash costs are linear over time:
Crash cost (Crash cost – Normal cost)
per period = (Normal time – Crash time)

2. Using current  activity  times, find the 
critical  path and  identify the critical 
activities
PROJECT CRASHING
Time (Wks) Cost ($)
Activity Normal Crash Normal Crash

A 2 1 22,000 22,750
B 3 1 30,000 34,000
C 2 1 26,000 27,000
D 4 2 48,000 49,000
E 4 2 56,000 58,000
F 3 2 30,000 30,500
G 5 2 80,000 84,500
H 2 1 16,000 19,000

TOTAL PROJECT COST =   308,000 
 PROJECT CRASHING
Time (Wks) Cost ($) Crash Cost
Activity Normal Crash Normal Crash Per Wk ($)

A 2 1 22,000 22,750 750

B 3 1 30,000 34,000 2,000
C 2 1 26,000 27,000 1,000
D 4 2 48,000 49,000 1,000
E 4 2 56,000 58,000 1,000
F 3 2 30,000 30,500 500
G 5 2 80,000 84,500 1,500
H 2 1 16,000 19,000 3,000
TOTAL PROJECT COST =   308,000 
PROJECT CRASHING
Time (Wks) Cost ($) Crash Cost Critical
Activity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 Yes

B 3 1 30,000 34,000 2,000 No
C 2 1 26,000 27,000 1,000 Yes
D 4 2 48,000 49,000 1,000 No
E 4 2 56,000 58,000 1,000 Yes
F 3 2 30,000 30,500 500 No
G 5 2 80,000 84,500 1,500 Yes
H 2 1 16,000 19,000 3,000 Yes
 Activity
Cost
Crash

$22,750 — Crash Cost – Normal Cost

Crash Cost/Wk =
Normal Time – Crash Time
Crash — $22,750 – $22,000
Cost =
2–1
$22,375 —
$750
= = $750/Wk
— 1 Wks

$22,000 —
Normal
Normal —
Cost
| | |
1 2 Time (Weeks)
Crash Time Normal Time
PROJECT CRASHING
Time (Wks) Cost ($)
Activity Normal Crash Normal Crash

A 2 1 22,000 22,750
B 3 1 30,000 34,000
C 2 1 26,000 27,000
D 4 2 48,000 49,000
E 4 2 56,000 58,000
F 3 2 30,000 30,500
G 5 2 80,000 84,500
H 2 1 16,000 19,000

TOTAL PROJECT COST =   308,000 + 750 = 308,750 $ 
TOTAL PROJECT DURATION = 15 + 01 = 16 Wks 
Chapter: 03 PROJECT 
MANAGEMENT

THE END