UNIT – IV

DIFFRENCE BETWEEN PERT AND CPM

Both PERT and CPM are managerial techniques for planning and control of large complex
projects. Both are techniques to network analysis wherein a network is prepared to analyze inter-
relationships between different activities of a project. However, there are several differences
between the two techniques:

S.No Activity CPM PERT

1 Repetitive / CPM is used for repetitive jobs
Non-repetitive like planning the construction of a
jobs house.
2 Deterministic CPM is a deterministic model with
/ Probabilistic well-known activity (single) times
model based upon past experience. It
therefore, does
not deal with uncertainty in project
duration.
3 Activity / CPM is activity-oriented as the
Event results of calculations are
oriented considered in
terms of activities or operations of
the project.
4 Uses CPM is implemented in
construction and business
problems.
5 Statistical CPM does not incorporate
Analysis statistical
analysis in finding time estimates
because time is precise and known.
6 Control It is difficult to use CPM as a
device controlling device for the simple
reason that one must repeat the
entire evaluation of the project
each time the changes are
introduced into the network.
PERT is used for non-
repetitive jobs like planning
the assembly of the space
platform. .
PERT is a probabilistic model
with uncertainty in activity
duration. Multiple time
estimates are made to evaluate
the probability of completing
the project within scheduled
time.
PERT is said to be event
oriented as the results of
analysis are expressed in terms
of events or distinct points in
time indicative of progress
PERT is applied mainly for
planning and scheduling
research programmes.
PERT incorporates-statistical
analyss and thereby enables
the determinations of
probabilities concerning the
time by which each activity
and the entire project would be
completed.
PERT serves a useful control
device as it helps the
management in controlling a
project by calling attention
through constant review to
such delays in activites which
might lead to a delay in the
project completion date.
 1. CPM is used for repetitive jobs like planning the construction of a house. On the other
hand, PERT is used for non-repetitive jobs like planning the assembly of the space
platform.

2. PERT is a probabilistic model with uncertainty in activity duration. Multiple time

estimates are made to evaluate the probability of completing the project within scheduled
time. On the contrary, CPM is a deterministic model with well-known activity (single)
times based upon past experience. It therefore, does not deal with uncertainty in project
duration.

3. PERT is said to be event-oriented as the results of analysis are expressed in terms of

events or distinct points in time indicative of progress. CPM is, on the other hand,
activity-oriented as the results of calculations are considered in terms of activities or
operations of the project.

4. PERT is applied mainly for planning and scheduling research programmes. On the other
hand, CPM is implemented in construction and business problems.

5. PERT incorporates-statistical analyss and thereby enables the determinations of

probabilities concerning the time by which each activity and the entire project would be
completed. On the other hand, CPM does not incorporate statistical analysis in finding
time estimates because time is precise and known.

6. PERT serves a useful control device as it helps the management in controlling a project
by calling attention through constant review to such delays in activites which might lead
to a delay in the project completion date. But it is difficult to use CPM as a controlling
device for the simple reason that one must repeat the entire evaluation of the project each
time the changes are introduced into the network.

CRASHING OF PROJECT NETWORK

In any project network, the first stage is to determine critical path with normal activity timings.
The execution of various activities can be expedited if necessary. This is called crashing of
activity timings. In many situations, we may be interested in finding the least possible project
completion time if crashing of activities is allowed. While crashing a particular activity, there is
a lower limit beyond which it is not feasible to minimize its time anymore. This is called crash
limit of that activity. So, each and every activity will have two time estimates, viz. normal time
and crash time. Normal time is the time taken to execute an activity under normal circumstances.
Crash time is the minimum duration of an activity beyond which it is not feasible to minimize it
anymore.
The cost associated with the normal time is called normal cost and the cost associated with the
crash time is called crash cost. It is obvious that the crash cost should be more than
the normal cost. .-
This concept of time-cost relationship is shown in Fig. below, as
Tn = Normal time
Tc = Crash time
Cn = Normal cost
Cc = Crash cost.

The slope of crashing an activity is as given below.

Slope = (Cc - Cn) / (Tn -Tc)
The slope of crashing an activity means the incremental cost of expediting that activity
per unit period.
The crashing of a network increases the direct cost, because of expedition of activities. But it
leads to in decreased project completion time. This in turn decreases indirect costs like cost of
supervision, security personnel's salaries etc. Hence; there is a trade-off between the direct cost
and indirect cost when a project is crashed. So, the objective is to crash the project until it
becomes uneconomical.

General Guidelines for Network Crashing

 Draw the network diagram with normal activity durations and indicate the following
on the network.
- Duration of each activity.
- Early and late events times for each node.
- Free float for each activity.
Find the critical path (or paths) and the corresponding project completion time.
 If there is only one critical path, then crash the least-cost activity (least slope activity)
from among the critical activities within the crash limit and free float limit of that
activity.
 For the activity which is choosen based on the minimum cost slope, compression limit for
the activity time is given by the formula:
Compression limit = min {Crash Limit, Free Float Limit]
Crash limit is the difference between the current duration and the crash duration of the choosen
activity. Free float limit is obtained from among the non-critical activities as follows :
Reduce the duration of the non-critical activity with the least slope by one time unit.
Find the free floats of all non-critical activities before reduction and after reduction in time.
Then identify the non-critical for which the free floats after time reduction are minimized by just
one unit.
Free float limit is the smallest free float (before time reduction among such non-critical
activities.
If there are more than one critical path then choose a common critical activity if it has the least
cost slope and crash it within the compression limit.
If there is no common critical activity with the least cost slope for crashing, then select a critical
activity with the least cost slope in each path. They can then be crashed within their compression
limits.
 Based on the decision to crash an activity or a set of activities, activity durations are
accordingly revised. Revised network is then sketched and the critical path is obtained.
Now the project duration and the costs can be evaluated. Further crashing can be done according
to the procedure mentioned above.
Crashing of project network can be classified into two types such as
(i) Crashing the project network until it is not feasible to crash anymore (alternatively,
we can call this as crashing the project at any cost).
(ii) Crashing the project network until it is uneconomical to crash anymore.
The generalized approach shown previously can be implemented without any modification to the
first approach, that is crashing the project network at any cost.
In the second approach, where trade-off between direct cost and indirect cost is taken, the
amount of time compressed at a time in any critical activity is just one unit or by the compression
limit. In some cases, the usage of compression limit will contain excessive calculations. In such
cases, the reduction using unit by unit approach will be efficient.

Crashing of Project Network with Costs Trade-off

Example X: Consider the following data of project.
Iteration 1. The CPM determinations are shown in fig.
Iteration 2. The CPM determinations are shown in fig.

Fig. Network of Example X. with CPM determinations in Iteration 2.

Total cost = Previous total cost + Increase in direct cost - Decrease in indirect cost

= Rs. 3700 + Rs. 50 - Rs. 150 = Rs. 3600.

There are two critical paths : , (i) 1 - 2 - 3 – 5 (ii) 1 - 2 – 5

Critical Path Critical Activity Crash Limit (weeks) Cost Slope (Rs.)
1-2-3-5 1-2 2 70
2-3 1 50*
3-5 5 92
1-2-5 1-2 2 70
2-5 7 40*
From the first critical path, activity 2 - 3 is choosen for crashing.
From the second critical path, activity 2 - 5 is choosen for crashing. Iteration 3. shown in fig.

Fig. Network of Example X. with CPM determinations in Iteration 3.

Total cost = Previous total cost + Increase in direct cost- Decrease in indirect cost

= Rs. 3600 + Rs. (50 + 40) - Rs. 150 = Rs. 3540.

There are three critical paths such as (i) 1 - 2 - 3 – 5 (ii) 1 - 2 – 5 (iii) 1- 3- 5

Critical Critical Crash Limit Cost Slope (Rs.)

Path Activity (weeks)
1-2-3-5 1-2 2 70
2-3 0 -
3-5 5 92
1-2-5 1-2 2 70*
2-5 6 40 (This will not minimize the project completion time)
1-3-5 1-3 2 60*
3-5 5 92
The activities 1 - 2 and 1 - 3 are choosen for compression.

Iteration 4. Shown in Fig. below

Fig. Network of Example X with CPM determination in Iteration 4

Total cost = Previous total cost + Increase in direct cost- Decrease in indirect cost

= Rs. 3540t Rs. (70 + 60) - Rs. 150 = Rs. 3520

There are three critical paths : (i) 1 - 2 - 3 – 5

(ii) 1 - 2 – 5
(iii) 1 - 3 – 5
 Critical Critical Crash Limit Cost Slope (Rs.)
Path Activity (weeks)
1-2-3-5 1-2 1 70*
2-3 0 -
3-5 5 92
1-2-5 1-2 1 70*
2-5 6 40 (This will not minimize the project completion time)
1-3-5 1-3 1 90*
3-5 5 92
The activities 1 - 2 and 1- 3 are choosen for compression. But, crashing these activities will not
bring any reduction in total cost.
Instead, they increase the total cost by Rs. 10.
Total cost = Previous total cost+ Increase in direct cost - Decrease in indirect cost
= Rs. 3520 + Rs. (70 + 90) - Rs. 150 = Rs. 3530
Hence, post pone the procedure and take the solution of the network given Fig. 16.11 as the best
solution which is reproduced in fig below.

Fig. 11.54 Network of Example 11.21 with CPM determinations for the best solution,
The final crashed project completion time = 19 weeks.
Corresponding critical paths are :
(i) 1- 2 - 3 - 5
(ii) 1- 2 - 5
(iii) 1- 3- 5