OPERATIONS MANAGEMENT

CHAPTER :PERT & CPM

By :- Prof. B.R.Narielwala
 PROJECT DESIGN AND NETWORK
ANALYSIS
• Execution of a project follows a definite path of planning, scheduling
and controlling.

• Project design defines individual activities which go into corpus of

project and their interrelationship.

• Network techniques help in performing various functions efficiently

and effectively.

• Framework formulated with detailed sequences and work plan -

duration time - to implement project.

• Based on techno-economic analysis, details are worked out to

compile sequential activities.
 ORIGIN OF PERT AND CPM
PERT, CPM AND MOST ARE THREE DIFFERENT NAMES
GIVEN TO NETWORK ANALYSIS

PERT - PROGRAMME EVALUATION AND REVIEW TECHNIQUES

• It coordinates and synchronize various parts of overall job, expedite
completion of project to accomplish a pre determined job.
• Communication facility to report developments and keep managers
posted and informed.

PERT HAS 2 ASPECTS:

1. EVENTS : Specific completion that occurs at a recognizable
point of time.
2. ACTIVITIES : Specific work required to complete specific event.
STEPS IN PERT
1. Development of project work
2. Time estimation
3. Determination of critical path, event slacks
And activity floats
4. Development of project schedule
5. Calculation of variability duration and
Probability of completion in a given time

•In PERT, time is basic measure.

It is expressed in calendar Weeks of completion of project within
stipulated time.

•Three time estimates employed are:

1.OPTIMISTIC TIME : Shortest possible time if Everything goes perfectly well.

2.PESSIMISTIC TIME : Longest time conceived due to Unusual delays.
3.MOST LIKELY TIME : Best estimates of what normally would occur.
CPM : Critical Path Method

CPM has two time cost estimate for each activity :

• One for normal situation &
• Other for crash situation

 Basic assumption is that there is a precise known time for each

activity of project

 It identifies most critical elements and thus more Attention can be

paid to these activities

 CPM is difficult to use to control activity as fresh Evaluation is

required each time when changes are Introduced into network

 CPM is static planning model

DIFFERENCE BETWEEN PERT AND CPM

Though fundamental network of PERT and CPM are identical, there are certain
differences in details as per the chart given below:

PERT CPM

1). Event-oriented 1). Activity oriented (cost

(time-based) based)
2). Allowance for 2). No such allowance
uncertainty 3). Only one time
3). Three time estimates estimate. Emphasis on cost
4). Probabilistic model with 4). Deterministic model
uncertainty in activity duration with well-known activity time
based.
DIFFERENCE BETWEEN PERT AND CPM
PERT (Continue)…
5). No demarcation for
critical/non-critical
activities
6). Suitable for high precision
time estimates
7). Time is averaged
8). Concept of ‘crashing’ is not
applied
9). Based on reduction of
execution time without too
much cost implications
CPM (Continue)…
5). Marking of critical activity
6). Suitable for reasonable
precision time estimates
7). No averaging of time
involved
8). ‘Crashing concept’ is
applied
9). Greatest reduction in
completion time with
least increase in project
cost
APPLICATION OF NETWORK ANALYSIS

Two types of graphs are used in CPM/PERT:

1. Activity on the arrow (aoa) system
2. Activity on node (aon) system

AOA SYSTEM : Activity is graphically represented by an Arrow represents

the start and the head shows the end of activity.

1 a 2 b 3

Where “a” & “b” are activities, this can be represented by the
Numbers of nodes like a = (1,2) b = (2,3)

AON SYSTEM : Activities are represented by circles or nodes and arrows are
used to show only dependency relationship between the activity nodes.

a b c
GRAPHS OF AOA & AON
10 days 8 days
1 2 3
AOA For showing needed time

a,10 b,8

AON Showing time needed for activity

DUMMY ACTIVITIES
3 d 5
a h
f
b
1 2 7
g
c i
4 e 6
 “b” is common immediate predecessor of both “d” and
“e”, “a” is an immediate predecessor of “d” alone,
and “c” is one of “e”. Hence “f” and “g” are dummy jobs
introduced to indicate precedence relationship

CRITICAL PATH SLACK PERIOD = ( 100 - 40 ) = 60

c, 20 days
a, 10 days 2 3 e, 10 days

1 CRITICAL PATH 6

b, 10 days 4 5 f, 30 days
d, 60 days
Longest path in net work 1-4-5-6 (100) & 1-2-3-6 ( 40)
CRASHING CPM NETWORKS

Time estimates are developed under conditions of normal Working and known
as normal time estimates. It does not take into consideration overtime working
or use of Abnormal resources for completion of an activity.

If it is desired to reduce total duration of the project to be below normal

duration, it is necessary to analyze the critical path for a possible reduction of
the original time estimates for some of the activities on critical path. This
Reduced time estimates is called ‘crash time estimate’.

STEPS IN NETWORK CRASHING

STEP NO.1 :
Determine the time - cost ratio for each activity in the network

TIME-COST RATIO = Increase in cost

Decrease in time
= Crash cost - normal cost
Normal time - crash time
STEP NO.2 :

Identify activities on the critical path and select that activity on the critical
path which has the smallest time-cost ratio and crash that activity to the
extent possible.

STEP NO.3:

Observe whether there is any change in the critical path i.e. any other path
becomes critical. If so, calculate time-cost ratio for the activities in the new
critical path.

STEP NO.4:

Repeat step no.2 and 3, till activities are crashed to reduce the project
duration to the desired time period.
 COMMONLY USED NETWORK SYMBOLS:

SYMBOL MEANING
• Activity
• Dummy activity
• Event
B
A • Activity “a” must be
1 2 3 completed before activity “b”
A can begin
1 C
3 4 • Activities “a” and “b” can
occur concurrently, but both
2 must be completed before
B
activity “c” can begin
1 4 • Activites “a” and “b” must
A C be completed before
activities “c” and “d” can
3 begin, but “c” can begin
independently of “d” and
2 B D 5 vice versa.
 • Activities “a” and “b” can
A D occur concurrently, but both
must be completed before
activity “d” can begin. Activity
C “e” can occur only after
activity “b” is completed.
E Activity “c” (dotted line with
B arrow head) is a dummy
activity which shows a
precedence relationship but
has a zero time duration.
 TERMS USED IN NETWORK BASED SCHEDULING TECHNIQUES

1). ACTIVITY:- An effort that is required to complete a part of a project

( )
2). EVENT:- A beginning, completion point or milestone
accomplishment within the project. An activity begins
and ends with an event-
e.g:- A
1 2

1& 2 – events; A – Activity

3). Predecessor Activity:- An activity that must occur before another
activity
1 A 2 B 1
Activity ‘a’ is a predecessor activity for activity ‘b’

4). Successor Activity:- An activity that must occur after another

activity. 3

Activity ‘d’ is a successor activity to activity ‘c’.

5 Activity In CPM, this means the best estimate of the
duration time to complete an activity.
In PERT, the expected time or average time to
complete an activity.

6 Optimistic The time for completing an activity if all goes

time (to) well, used in PERT.

7 Pessimistic The time for completing an activity, if

time (tp) everything goes wrong used in pert.

8 Most likely The time for completing an activity, that is the

time (tm) consensus best estimates, used in pert.

9 Expected time The average time for completing an activity.

(te)
10 DUMMY An activity that consumes no time (zero time duration)
ACTIVITY but shows precedence between events.

L M DUMMY ACTIVITY
1 2 3

P
N 4 5

The above network diagram shows that both activities m

and n begin with event number 2 and end with event
number 3 as a rule, no two activities can be represented
by the same set of event numbers. This problem is
solved by inserting a dummy activity as shown below:
11 Earliest start The earliest that an activity can start, from the
(es) beginning of the project.

12 Earliest The earliest that an activity can finish, from

finish (ef) the beginning of the project.

13 Latest start The latest that an activity can start, from the
(ls) beginning of the project, without causing a
delay in the completion of the project.

14 Latest finish The latest that an activity can finish, from the
(lf) beginning of the project, without causing a
delay in the completion of the project.

15 Slack The amount of time that an activity or group

of activities can slip without causing a delay in
the completion of the project. It is also know
as ‘float’.
16 CRITICAL An activity that has no room for
ACTIVITY schedule slippage, if it slips the entire
project completion will slip. An
activity with zero slack.

17 CRITICAL The chain of critical activities for the

PATH project and is the longest path
through the network.

*********************
CPM – TIME ANALYSIS

TIME SYMBOLS USED ARE:

D DURATION OF ACTIVITY (HOURS OR DAYS OR WEEKS OR

MONDAYS)
ESA EARLIEST (POSSIBLE) STARTING TIME OF THE ACTIVITY.

LSA LATEST (PERMITTED) STARTING TIME OF THE ACTIVITY

EEA EARLIEST (POSSIBLE) ENDING TIME OF THE ACTIVITY

LEA LATEST (PERMITTED) ENDING TIME OF THE ACTIVITY

EE EARLIEST (POSSIBLE) TIME OF THE EVENT

LE LATEST (PERMITTED) TIME OF THE EVENT

TF TOTAL FLOT OF THE ACTIVITY

FF FREE FLOR OF THE ACTIVITY

IFINDEPENDENT FLOAT OF THE ACTIVITY

MODE OF REPRESENTATION

I j
Ei Lt Ej Lj

EXPECTED TIME (te) = to + 4 tm + tp

6
ACTIVITY STANDARD DEVIATION :

EVENT STANDARD DEVIATION:

ASSESSMENT OF FLOATS OR SLACKS

• If difference between earliest starting time (esa) and

Latest ending time (lea) of an activity exceeds its duration
then the respective activity is not critical i.e. Lea-esa>d

• In such cases certain time reserves are ensuing which are

termed as floats or slacks

• Slack analysis is done to indentify sub-critical paths i.e.

Which activity is likely to become critical, if slack period
moves up beyond available slack period
• Slack analysis is done from two stand points i.e. Event or Activity:

(A) event slack = latest event time - earliest event time

All events having zero slack represent critical path

(B) Activity slack analysis

- Provides margin of allowance available for commencement and completion of

various activities.

- It follows that activities with zero slack value represent activities on critical path

- Three types of activity slacks or floats are identified:

(I) Total float or slack
(II) Free float or slack
(III) Independent float or slack
(I) Total float :
It is the amount of time an activity can be delayed beyond its earliest starting
time without delaying the project’s completion, if other activities take their
estimated duration

Total float for activity = (a-b)

* LE(b) - EE (a) - D

(II) Free float :

It is the amount of time on the basis of which an activity can be delayed
without delaying the early start of a successor activity

* Free float for activity (a-b) = EE (b)- EE(a) -D

(III) Independent float :

It indicates the time span by which the activity (a-b) can be
expanded/shifted if, for the event (a) the latest
and for the event (b) the earliest times of occurrence shall be maintained

* Independent float : EE(b)-LE(a)-D

Independent float can be negative also. Since a negative float has not
meaning, independent float is taken as zero, if negative.

EE (i) LE (i) EE (j ) LE (j)

Time
Total float
D Free float

Independent float

RELATIONSHIP BETWEEN 3 TYPES OF FLOATS

EE= Earliest time for event

LE = Latest event time for event
SOLUTION -

(PART – I)
D
4 5
B F
A Dummy
1 2
activity 7 H
8
C
3 6 G
E

The dummy activity 3-4 has been introduced here because “b” and
“c” both precede activity d and activity “c” precedes activity “e”.
(PART – II)

Network diagram - Based on Predecessor Activity

3
E
20 22 5
(12)
B 34 34
H
(8) F
(18) (4)
1 A 2 C 4 7 J 8
0 0 (12) 12 12 (4) 16 16 38 38 (6) 44 44
G
(5) I
D
(3) 6 (9)
21 29

Critical path = Events having no slacks to be connected

= A C F H J

And project duration time is 12+4+18+4+6 = 44 Months

(PART – III)

Step No. : 1 Calculate expected time (te) For each activity

FORMULA : te = to +4tm+tp
6
to = Optimistic Time tm = Most likely Time tp = Pessimistic Time

Activity Expected time for the activity (te)

1-2 2+4X5+8 = 5
6

1-4 4+4X19+28 = 18
6

1-5 5 + 4X11+17 = 11
6

2-3 3+3X9+27 = 11
6
2-6 3+4X6+15 = 7
6

3-6 2+4x5+14 = 6
6

4-6 3+4x4+7 = 7
6

5-7 1+4x4+7 = 4
6

5-8 2+4x5+14 = 6
6

6-8 6+4x12+30 =14

6

7-8 2+4x5+8 = 5
6
Step No.2 DRAW PERT NETWORK DIAGRAM
5-7
5 7
(4) 7-8
11 30 5-8 15 34
(5)
1-5 (6)
8
(11)
39 39
1 1-4 4 4-6 6 6-8
0 0 18 18 25 25
(18) (7) (14)

1-2 (5) 3-6 (6)

2-6

(7)
2-3 3
2
5 8 16 19
(11)
CRITICAL PATH : 1-4 4-6 6-8
18 + 7 + 14 = 39 weeks
(B) Mean time for each activity expected time = te
Standard deviation for each activity = tp-to
ACTIVITY STANDARD DEVIATION (WEEKS) Z 6
1-2 8-2 = 1 7-8 8-2 = 1
6 6
*1-4 28-4 = 4 *4-6 15-3 =2
6 2
1-5 17-5 = 2
6
2-3 27-3 = 6
6
2-6 15-3 = 2
6
3-6 14-2 = 2
6
5-7 7-1 = 1
6
5-8 14-2 = 2
6
*5-8 30-6 = 4
6
(C) To determine std. deviation for critical path :

Activity Std. Deviation

1-4 1= 4
4-6 2= 2
6-8 3= 4

Std. Deviation for critical path=

cp = 1
2
+ 2
2
+ 3
2

= (4)2 + (2)2 + (4)2

= 6 weeks
(D) Calculation of slacks for events :

Event no. Slack (weeks)

1 NIL
2 8-5 = 3
3 19-16 = 3
4 18-18 = NIL
5 30-11 = 19
6 25-25 = NIL
7 34-15 = 19
8 39-39 = 0

(E) To calculate total float, free float and independent float for each activity

Total float for activity (I-j) = (Lej)- (EEi) - D

Free float for activity (I-j) = (Eej-Eei) - D
Independent float (I-j) = (Eej - Lei) - D

If D > (EEJ-LEI), Then independent float is negative hence no meaning hence

zero.
Calculation of float :
Activity Total Float Free Float Independent Float
1-2 (8-0)-5 = 3 (5-0)-5 = 0 (5-0)-5 = 0
*1-4 (18-0)-18 = 0 (18-0)-18 = 0 (18-8)-18 = 0
1-5 (30-0)-11 = 19 (11-0)-11 = 0 (11-0)-11 = 0
2-3 (19-5)-11 = 3 (16-5)-11 = 0 (16-8)-11 = (-3)
2-6 (25-5)-7 = 13 (25-5)-7 = 3 (25-8)-7 = 10
3-6 (25-16)-6 = 3 (25-16)-6 = 3 (25-19)-6 = 0
*4-6 (25-18)-7 = 0 (25-18)-7 = 0 (25-18)-6 = 1
5-7 (34-11)-4 = 19 (15-11)-4 = 0 (15-30)-4 = (-)
5-8 (39-11)-6 = 22 (39-11)-6 = 22 (39-30)-6 = 3
*6-8 (39-25)-14 = 0 (39-25)-14 = 0 (39-25)-5 = 0
7-8 (39-15)-5 = 19 (39-15)-15 = 19 (39-34)-5 = 0
*Floats are nil for critical path
Crashing of CPM Network
[Answer 1]
STEP : 1

Time Cost Ratio Crash Cost – Normal Cost

Per Week Normal Time – Crash Time

Activity T/C Ratio Per Week (Rs.)

A 2000
B 3000
C 1000
D 1000
E 500
F 250
STEP 2 : DRAW NETWORK DIAGRAM

4
A
2
C
( ) Normal Time
(6) (3) F 4  Crash Time
3 (8)
B 3
(4) D (8)
E 6
(14)

NORMAL:
CRITICAL PATH B D F
DURATION 4 + 8 + 8 = 20 weeks
COST Rs. 36,000/-
CRASH:
CRITICAL PATH A C F
4 + 2 + 4 = 10 weeks
COST Rs. 54,000/-
B D F
3 + 3 + 4 = 10 weeks
Step : 3 Normal Cost Rs.36,000
Current
Activities
Project Critical Activities
which can Cost of Crashing Cost Total Cost Time
Completi Path (s) Selected
be Crashed
on Time
B-D-F B,D,F 3000, 1000 F
20 250 36,250 19
250
19 B-D-F B,D,F ------ “ ------ F 250 36,500 18
B-D-F B,D,F 3000,1000,250 F 250
18 37250 17
B-E B,E 3000,500 E 500
B-D-F B,D,F 3000,1000,250 F 250
17 38,000 16
B-E B,E 3000,500 E 500
B-D-F B,D 3000,1000 D 1000
16 39,500 15
B-E B,E 3000,500 E 500
B-D-F B,D 3000,1000 D 1000
15 41,000 14
B-E B,E 3000,500 E 500
B-D-F B,D 3000,1000 D 1000
14 42,500 13
B-E B,E 3000,500 E 500
B-D-F B,D 3000,1000 D 1000
13 44,000 12
B-E B,E 3000,500 E 500
B-D-F B,D 3000,1000 D 1000
12 45,500 11
B-E B,E 3000,500 E 500
B-D-F B 3000 - 500 46,000 10
11
B-E B,E 3000,500 E Cannot be crashed further
SUMMARY:
Overhead
Cost @ Total Cost
Project Time Direct Cost
Rs.1,000/- (Rs.)
per week
10 46,000 10,000 56,000
11 45,500 11,000 56,500

Therefore, Optimal Time of Crashing

duration 10 weeks Cost Rs. 56,000/-

CRITICAL ACTIVITIES B,E after crashing.

[Answer 2]
STEP : 1

Activity T/C Ratio Per Week (Rs.)

1-2 (A) 20
1-3 (B) 25
1-4 (C) 30
2-4 (D) 10
3-4 (E) 15
4-5 (F) 40
STEP : 2 NETWORK DIAGRAM

2
D 3 ( ) Normal Time
6
A
C 10
(5)
F
1  Crash Time
1 (15) 4 5
B 5 6 (2)
(8) E
(10)
3

NORMAL:
CRITICAL PATH B E F
DURATION 8 + 10 + 2 = 20 days

CRASH:
CRITICAL PATH B E F
5 + 6 + 1 = 12 days (Minimum)
STEP : 3 Project Crashing
Project Activities
Critical Cost of Activity
Completion which can be Cost Time
Path(s) crashing selected
Time (Days) crashed
L 20 B-E-F B,E,F 25,15,40 E 15 19
L-1 19 B-E-F B,E,F 25,15,40 E 15 18
L-2 18 B-E-F B,E,F 25,15,40 E 15 17
L-3 17 B-E-F B,E,F 25,15,40 E 15
16
C-F C,F 30,40 C 30
L-4 16 B-E-F B,F 25,40 B 25
C-F C,F 30,40 C 30 15
A-D-F A,D,F 20,10,40 D 10
L-5 15 A-D-F A,D,F 20,10,40 D 10
C-F C,F 30,40 C 30 14
B-E-F B,F 25,40 B 25
L-6 14 A-D-F A,F 20,40 A 20
C-F C,F 30,40 C 30 13
B-E-F B,F 25,40 B 25
L-7 13 A-D-F A,F 20,40 A 20
C-F C,F 30,40 C 30 12
B-E-F F 40 F 40
L-8 12 A-D-F A 20 A 20 11
C-F - - - -
B-E-F - - - -
(No further Crashing)
SUMMARY
Project Time Crashing Cost Overhead Total Cost
(Rs.) Cost @
Rs.60/- day
12 385 720 1105
11 405 660 1065
Optimal length schedule for each job
A 6 days
B 5 days
C 10 days
D 3 days
E 6 days
F 1 day

Minimum Crashing Cost Rs.385

Adding overhead Cost Rs.1105
Minimum Number of Weeks 12