CHAPTER ONE

PROJECT PLANNING FUNDAMENTALS

1.1 What is a Project?
A project is a temporary endeavor undertaken to create a unique product or service, or a known
product or service in a unique environment. A set of inter-related and controlled activities with
start and finish dates, undertaken to achieve a unique objective conforming to specific
requirements, including the restraints of time, cost and resources.
It is important to understand that not every work is a project. A project is a
temporary and one-time endeavor, with a definite start and an end date, undertaken to
create a unique product or service, that brings about beneficial change or added value.
• Temporary means that any project will have a start and an end date (but it has nothing
to do with short duration).
Project produces unique results: meaning the product or service at the end of the
project should be some way different than the existing (can be an invention or an
innovation.)
• Projects are characterized by progressive elaboration: due to uniqueness and
greater uncertainty, projects cannot be understood entirely at or before project start,
and therefore planning and execution of projects is happening many times in
separate steps or phases. As project progresses, project team understands next
steps, deliverables and way of execution much better. Based on this knowledge,
team members elaborate initial draft plans, and execute next phase of the project
based on these detailed plans.
Projects may involve a single unit of one organization or may cross organizational
boundaries as in joint ventures or partnering. Projects are often critical
components of
the performing organization’s business strategy. Examples of projects include:
• Developing a new product or service
• Effecting a change in structure, staffing, or style of an organization
• Designing a new transportation vehicle
• Running a campaign for political office

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Projects differ from operations, because operations are continuous and repeating
(projects are temporary), and operations deliver the same or almost the same results
(project results are in contrast unique).

1.2 Project Planning Process

Construction Time Planning is the first step in the construction planning process. It
includes the planning effort required to facilitate timely completion of a project.
Construction Time Scheduling provides a working time-table of project activities for
completion of the project within specified time. It is a direct consequence of the
construction time planning process.
The process involved in construction time planning and scheduling are:
1. Develop Project scope and Work Breakdown Structures (WBS)
2. Develop Activity list and durations
3. Establish Activity Logic Relationships
4. Define Project Base Calendars
5. Develop Project Time Schedule
1. Scope and Work Breakdown Structure (WBS)

Project scope definition is the process whereby a project is defined and prepared for
execution. It helps to decide on whether or not to proceed with the project. An incomplete
scope definition in early stages of a project’s life cycle is a common source of difficulty
in construction project development process. Meanwhile, the developing of the project
can affect positively or negatively a variety of interests. Construction projects in specific
bring different degrees of changes on the surrounding environment and people, not only
limited at the construction site. Therefore, project definitions boundaries may be
redefined, or subjected to differing expectations and interpretation by different
stakeholders.
A Work Breakdown Structure (WBS) is a deliverable-oriented grouping of project
components that defines and organizes the total scope of the project; work not in the
WBS is outside the scope of the project. Stated in another way, a WBS is the hierarchy of
work you must accomplish to complete a project. The WBS is structured in levels of

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work detail, beginning with the end result or product, and then divided into identifiable
work elements. Each descending level in a WBS represents an increasingly detailed
description of the project deliverables.
These definitions imply that a WBS has the following characteristics:
1. It is representative of work, and this work has a tangible result.
2. It is arranged in a hierarchical structure.
3. It provides a management structure.
1.1 WBS Levels
The WBS will include all work to be done by the primary organization. While generally
the WBS
consists of a five-level hierarchy describing the entire effort to be accomplished by the
primary
organization, that number may not be appropriate for all situations. The depth of a WBS
is dependent upon the size and complexity of the project and the level of detail needed to
plan and manage it. The WBS levels may be broadly categorized into five major levels.
These levels, arranged in a descending hierarchical order are:
Level 1: Program level
Level 2: Project level
Level 3: Task level
Level 4: Sub-Task Level
Level 5: Work Package level

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1.1.1. Program and Project Levels:
Program level defines the overall work program. A work program consists of two
or more inter-related projects with overall time, cost and performance objectives
and resource constraints. Each group of major works which can progress in a
systematic manner, with minimal interference from other works, and which
produces a major deliverable can be treated as a project. Each project is assigned
time, cost and performance objectives and is provided with planned resources for
accomplishing the project objectives.
1.1.2. Task and Sub-Task Levels: A task represents a higher-level significant
work output within a project. Each task can further be decomposed in sub-tasks.
This hierarchical structure of task / sub-tasks establishes a management structure
with desired level of management control at each level of project work.

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1.1.3. Work Package Level:
According to PMI:
"A Work Package is defined as a deliverable at the lowest level of the work
breakdown structure, when that deliverable may be assigned to another (work)
manager to plan, execute and control." This may be accomplished by further
decomposing each work package into activities.
There is an important difference in the last work breakdown structure level and an
activity. Typically, a work package includes the outcomes of more than one
activity from more than one department/ area of work. Therefore, the work
package does not have duration of its own and does not consume resources and
cost directly; the resources and cost for the work package are simply the
summation of the resources and costs for all the activities constituting the work
package.
1.2 Uses and Effectiveness of WBS
1. Represents complete scope of work in an organized manner.
2. Sorts work in a hierarchical order.
3. Identifies major deliverables and sub-deliverables.
4. Develops a list of work packages.
5. Thought process tool. WBS helps the PM and the project team visualize
exactly how the work of the project can be defined and managed effectively.
Alternative ways of decomposing the work will be considered until an alternative
is found with which the PM is comfortable.
6. Strategy Design tool. WBS is a picture of the work of the project and how the
items of work are related to one another.
7. Management database at various Levels.
8. Structuring of work organization. While WBS is developed, organizations,
organizational units, teams and individuals are assigned responsibility for
accomplishment of work components.

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 9. Integration tool. WBS supports integrating responsibility for the various
works with various responsibility units (organizations, departments, teams,
individuals) by having a direct relationship between the WBS elements related to
the Organizational Breakdown Structure (OBS) identified through the
Responsibility Assignment Matrix (RAM).
10. Work Budgeting. WBS can be used for budget allocation on individual work
components. Using the project roll-up approach, this budget allocation can be
consolidated into establishing the overall project budget requirement.
11. Planning tool. Using the lowest work package level of the WBS, time,
resource and cost requirements of constituting activities are estimated; a work
schedule is prepared; and deliverable dates and project completion are estimated.
12. Monitoring and Reporting tool. Use of structure provides the opportunity to
"roll up" (sum) the budget and actual costs of the smaller work items into larger
work elements so that performance can be measured by organizational units and
work accomplishment. These performance measurements can then be reported to
senior management at various levels in the project organization.
13. Communication tool. WBS defines communication channels and assists in
understanding and coordinating many parts of the project. The structure shows the
work and organizational units responsible and suggests where written
communication should be directed.
2. Develop Activity list and durations
An activity is an identifiable and measurable short duration task that has a definite start
and stop point, consumes resources and represents cost. Each activity is a control point.
An Activity Manager is responsible for seeing that the activity is completed on time,
within budget and according to technical specifications.
The resources and cost for a work package are simply the summation of the resources and
costs for all the activities constituting the work package. Thus, the activity is the basic
unit used for planning, monitoring and controlling the project.

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The activity list must include all activities that will be performed on the project. A well-
prepared activity list allows the project team to separate out all activities of each trade, as
well as identify the activity types.
Activity duration estimating involves assessing the work time likely to be needed to
complete each
identified activity Duration for every activity is needed so that planning of the project can
be done with respect to time.
3. Establish Activity Logic Relationships

Sequencing can be performed with the aid of a computer (e.g., by using project
management software) or with manual techniques. Manual techniques are often more
effective on smaller projects. Manual and automated techniques may also be used in
combination.
4. Define Project Base Calendars

A base calendar defines the work period of a project organization. Project Base Calendars
cumulatively define the working and non-working periods of the project activities with
respect to the performing organization(s).
Note that Work Calendars can be different for:
• Organizations involved in the project
• Resources
• Activities
Note that each party may also have its designated holidays (non-work periods); for
instance, national day, Independence Day, other company designated holidays, etc. Some
of these non-work periods may be common among the various companies involved while
some may belong to specific organizations only.

5. Develop Project Time Schedule

Based on logical relationships among activities and time estimates, preparing a time
chart showing the start and finish times for each activity, and hence calculation of total
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project duration by applying network analysis techniques such as forward (backward)
pass and floats calculation; identifying the critical path; carrying out resource smoothing
(or levelling) exercise for critical or scarce resources including re-costing of the schedule
taking into account resource constraints.

1.3 Responsibility Assignment Matrix

Once a project WBS and organizational breakdown structure are developed, these
documents may be used to develop a project responsibility assignment matrix. This
matrix is simply a table for which one axis is the project WBS and the other axis is the
project (and support organizations) organizational breakdown structure. Each point at
which these two structures intersect becomes a work execution element, and an
individual is identified who is responsible for executing the work. If desired, each
intersection can also identify the value of that specific element of work in terms of both
dollars and hours.

When planning a project it is necessary to assign the work on the project to the project
team so that there will be one person responsible for each part of the project and it is clear
who performs the work, with whom it should be consulted, and who is to be informed of
this activity.
The responsibility matrix is a tool used to define the powers of individual project team
members for various parts of project works (work packages). In professional literature, it

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is referred to as RAM (Responsibility Assignment Matrix) or RACI matrix, according to
the English abbreviated names of responsibility relations.
The following basic relations are distinguished:
A – Accountable: Person authorized to approve the outcome of the concerned activities.
Outputs from each activity (work package, areas) are subject to approval by the person
who is actually responsible for it. Each activity must only be approved by one person. It
is an error if this type of responsibility is not assigned or if the responsibility for a
specific area is assigned to multiple persons, and it usually results in a situation when no
one is responsible for the concerned matter, or everyone thinks the work will be done by
someone else. On the other hand a situation when no one is responsible for the concerned
work does not lead to any result either.
R – Responsible: Person tasked with the performance of the concerned activities. It is the
member of the team who is authorized to perform or responsible for performance of those
activities. There may be several persons with this relationship in one package. At the
same time it is possible to combine R – Responsible and A – Accountable.
C – Consulted: Person with whom the progress of work shall be consulted. It is usually a
person closely related to this area despite not being responsible for it, an expert in the
given field who may be invited to consult key aspects. There may be several persons with
this relationship in one package.
I – Informed: Person kept informed of the progress and outcomes from the concerned
area. These are in particular those team members who need to be familiar with the
progress of work. The way of "informing" should be set within the communication plan
(regular reports, meetings, etc.). There may be several persons with this relationship in
one package.
The responsibility matrix is used to link work packages or outputs and project team
members. Therefore, it is suitable to prepare it during planning following the appointment
of the project team and work breakdown (deconstruction). It is necessary to keep it up-to-
date during the project in reaction to changes to the team or the planned activity so that it
provides true information about who is performing individual work and is responsible for
it.

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Project manager when appointing the team and planning activities. They use this
structure as it is a suitable tool for making and keeping track of clear responsibilities in
the team. We will use the responsibility matrix each time we need to determine who is to
be responsible, accountable, consulted or informed about the project output.

CHAPTER 2: NETWORK ANALYSIS

2.1 Introduction
Network analysis refers to a family of related techniques that help management to
plan and control projects. These techniques show interrelationships of various
chores/tasks which make up the overall projects and clearly identify the critical
paths of the project. They are most useful in complex large organizations or big
projects with restrictions or constraints.

2.2 Objectives of network analysis

1. Planning, scheduling and control
2. Simplified framework of the interconnectivity of various activities
constituting a project or a programme. Done to show the technology
interdependence of various activities.
3. Minimization of the total cost, total time, and other resources.
4. Maximization of efficiency/effectiveness, returns, etc.

2.3 Management Applications of Network Analysis

Network analysis is the organized application of systematic reasoning for
planning, scheduling, monitoring and controlling practical situations where many
separate tasks (which make up a whole project) can happen simultaneously or
consecutively. Applications include the following:
1. Building and construction – construction of buildings, bridges, factories,
highways, stadiums.
2. Budgeting and auditing procedures.
3. Assembly line scheduling
4. Missile development
5. Installation of complex equipment e.g. computers, large machines.
6. Planning.
7. Advertising programmes for development and launching of new products.
8. Finding the best traffic flow pattern in a city.
9. Research and development.

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2.4 Main concepts of network analysis:
1. Activity – a task or job which takes time and resources. Denoted by an arrow
( ). Or by Box
2. Predecessor activity – an activity that must be completed immediately prior
to the start of another activity.
3. Successor activity – activity that succeeds other activities.
4. Concurrent activities – activities that can be accomplished together.
5. Critical activity – an activity whose delay causes delay in the entire project.
6. Dummy activity – an activity that does not consume time or resources. It is
used to show logical dependencies between activities. Denoted by a broken
arrow ( ).
7. Event – a point in time that indicates the start or finish of an activity. It is
denoted by a circle (O), or a node.
Activity

Start Event Finish event

There are 3 types of events:

i) Merge event – formed when more than one activity come and join together in
an event.

ii) Burst event - formed when more than one activity leaves an event.

iii) Merge and burst event – a combination of the two. When more than one
activity come and join together and more than one activity leaves an event.

8. Network – a combination of activities and events in a logical sequence

according to the rules of drawing networks.

2.5 Rules for construction of network diagrams

a) Each activity is represented by one and only one arrow in the network.
b) No two activities can be identified by the same beginning and end event.
In such cases a dummy activity is used.
c) An activity can only be undertaken if all activities preceding it are
completed.
d) The flow of the network diagram should be from left to right.
e) Arrows should be straight, not curved or bent, and should not cross each
other unless it is inevitable.

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 f) The length of arrows is of no significance.
g) Angles between the arrows should be as large as possible.
h) Each activity must have a unique tail and head event.
Activity

i. Tail event Head event

i) A complete network should have only one point of entry (i.e. start
event)
and only one point of exit (finish event).
j) Generally no event can be numbered until all preceding events have been
numbered. The number at the head of the arrow is always greater than the
number at its tail.

Illustrations
1. Activity B cannot start until A is completed. (B depends on A or B is preceded by A
or B succeeds A).
A B

2. Activities B and C cannot start until activity A is completed i.e. B and C depends on
A.

B
A

3. Activity C cannot start until both A and B are completed

A
C

4. Both A and B must be finished before either C or D can start.

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 A C

B D

5. Activity A and B must be completed before activity C can start. Only activity B must
be completed before activity D can start.

A C

B D

6. Activity Preceding activity

A -
C A
B -
D A, B

A C

B D

2.6 Common errors in Network Diagrams

1. Dangling – disconnection of an activity before completion of all activities in the
project network diagramming.

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2. Looping or cycling error – this is having a series of activities which lead back to the
same event.

3. Redundancy – providing unnecessary dummy activity in a network diagram.

Draw the following network diagrams

1. Activity Preceding activity
A -
B -
C A
D C
E B&C

A D

B
E

Exercise 1
Draw the following network diagrams

1. Activity Pre-requisite

A -
B -
C A
D B

2. Activity Pre-requisite
A -
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 B A
C A
D B
E C
F D&E
3. Activity Preceding activity
A -
B -
C A
D A
E B
F B
G C&E
H C, E, & F

4. Preceding activities are in brackets:

A(-), B(-), C(A), D(B), E(A&C), F(B), G(C&D), H(G&F), I(E), J(H&I), K(J)

2.7 TIME ESTIMATES IN NETWORK ANALYSIS

Time analysis of the network is useful for planning the various activities of a project.
Time analysis requires an estimation of time to complete an activity. An activity time is
the forecast of time expected of each activity from the starting time to its completion
under normal conditions. The basic objective of time analysis is to get a planned schedule
of the project. The plan should include the following:
i) Total completion time for the project
ii) Earliest time when each activity can begin
iii) The latest time when each activity can be started without delaying the total
project.
iv) Float for each activity – that is the amount of time by which the completion of
an activity can be delayed without delaying the total project completion
v) Identification of critical activities and critical path
The analysis of the projects time can be achieved by using:
i) Single time estimates of each activity
ii) Multiple time estimates of each activity

2.8 CRITICAL PATH METHOD (CPM)

If the times of all activities of a particular project are given, the time taken for each of the
possible paths through the network can be evaluated.

2.8.1 Role of CPM in project planning and coordination (importance)

i) The network indicates the specific activities required to complete a project.
ii) The network indicates the interdependence and sequence of specific activities.
iii) Indicates start and finish time of each activity of the project.
iv) It indicates the critical path and its duration of time.
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2.8.2 Assumptions of CPM
i) A project can be subdivided into a set of predictable independent activities.
ii) The precedence relationship of project activities can be completely represented by
a non-cyclical network graph in which each activity connects directly with the
immediate successors.
iii) Activity times may be estimated as single point estimates

2.8.3 Key concepts

i) Earliest start time (EST) – this is the earliest time at which an activity can begin. It
is the earliest time at which a succeeding activity can start.
ii) Latest start time (LST) – refers to the latest expected time – the latest time which an
activity can begin without affecting the normal project duration. The latest possible
time at which a preceding activity can finish without delaying project duration.
iii) Earliest finish time (EFT) – earliest time at which an activity can be completed.
iv) Latest finish time (LFT) – the latest time at which an activity can be finished
without affecting the normal time duration.
v) Slack/float – the amount of time by which the start of an activity may be delayed
without affecting the overall duration of a project. Free or spare time in the network.
vi) Critical path – the path in the network with the longest time.

two features to note:

i) There can be more than one critical path in a network.
ii) To reduce the duration of a project requires shortening the time of an activity that is
on the critical path.

Exercise 2
Precedence table for a project is given as follows:
Activity Predecessor Time duration
A - 3
B - 2
C - 2
D A 4
E B 4
F B 7
G C 4
H A, D 2
I B, E 5
J B, C, F, G 6
K A, B, D, E, I, H 3
a) Draw the A-O-N network diagram
b) Determine ES, LS, EF & LF of each activity
c) Find the critical path
d) Find project duration

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Exercise 3
A project consists of the following activities with duration in weeks of each activity given
in brackets.
A(12), B(8), and C(14), can be executed concurrently. A and B precede D(4). B
precedes E(2), F(10), and H(16). F and C precede G(6). E and H precede I(4) and
J(8). C, F, and J precede K(4). K precedes L(8). D, I, G, and L are the terminating
activities in the project.

i) Construct the precedence table, and hence draw the A-O-N network for the project.
ii) Determine the critical path and the project duration using the forward pass and
backward pass method.
iii) Construct a table of the ES, LS, EF, LF, and total float for each activity.

2.9 FLOAT CALCULATIONS

If an activity is not on the critical path then it is possible to increase its duration without
increasing the total project duration. The extra time is known as float. Common types of
floats are:
i) Total float
ii) Free float
i) Total float
It is the amount of spare time a path of activities could be delayed without affecting the
overall project duration.
Total float = Latest head time – Earliest tail time – Activity duration
TF = LFT – EST - tij
Activity Aij is that activity with the tail end I and the head end j. Total float on critical
activity is always zero.
Interpretation of total float
a) Negative total float – implies inadequate resources; activity may not finish on
time
b) Zero total float – resources are just enough to complete the activity; activities are
not delayed
c) Positive total float – excess resources; thus they can be reallocated to other
activities or delay activities by amount of the total float.
ii) Free Float
Amount of time an activity could be delayed without affecting the commencement of a
subsequent activity at its earliest start time.
FF = EHT – ETT - tij
= EFT – EST - tij

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2.10 PROJECT EVALUATION AND REVIEW TECHNIQUE (PERT)
In PERT, it is assumed that completion duration of an activity cannot be a single
measure, but it follows a probability distribution. In this context, the completion duration
of the activity is an estimate of its multiple-time completion durations and therefore, three
ideal activity durations are considered to determine the parameter of distribution of the
activity durations. For every activity in relation to its completion, Optimistic duration [a],
Most probable duration [m] and Pessimistic duration [b] needs to be estimated; and these
durations are used to estimate a weighted average duration of the activity as being
completed.
1. Optimistic time(t0) – It is the estimate of the shortest minimum possible time an
activity can take to be completed. This is usually under ideal conditions.
2. Pessimistic time( tm) – It is the longest possible time that an activity can take.
3. Most likely time(tp) – the time which the activity will take most frequently if
performed a number of times.

The three-time estimates are combined statistically to develop the expected time (te) for
an activity.

Two main assumptions:

1. The three time estimates O, M and P form the end-points and the mode of beta
distribution. Both optimistic and pessimist time are equally likely to occur whereas
the probability of occurrence of most likely time is 4 times that of O and P.

O M te P

2. The probability of O:M:P = 1:4:1

O 4M P
Expected time duration = + +
6 6 6

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 O + 4M + P
te =
6
OR
a + 4m + b
te =
6
Variance
2
 P−O
  =standard deviation squared
 6 
Standard deviation
2
 P−O
=  
 6 
The standard deviation of the project = sum of var iances of critical activities

Procedure for calculating time estimates using PERT

1. Prepare a table of expected duration, the variance for each of the activities of the
project.
2. Draw the project network diagram of activities based on the expected duration of
activities.
3. Find or determine the critical path.
4. Find the total expected duration of the project based on the network also referred to as
the average duration of the project.
5. Standard deviation of the entire project
6. Find the probability of completing the project within a particular time period.

Exercise
A project has the following activities and characteristics.

a. Draw the PERT network and, Determine the expected duration, standard
deviation and variance of the project from above information!

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 b. What would be the probability of the project to be completed in less than or equal
to 50 days?
c. What would be the probability of the project to be completed in more than 59
days? And, the probability in between 50 & 59 days??

2.11 Network Crashing /Cost-Time Trade-off/

The objective of the time-cost trade-off analysis is to reduce the original project duration,
determined form the critical path analysis, to meet a specific deadline, with the least cost.
In general, there is a trade-off between the time and the direct cost to complete an
activity; the less expensive the resources, the larger duration they take to complete an
activity. Shortening the duration on an activity will normally increase its direct cost
which comprises: the cost of labor, equipment, and material.

A simple representation of the possible relationship between the duration of an activity

and its direct costs appears in Figure below. Considering only this activity in isolation
and without reference to the project completion deadline, a manager would choose a
duration which implies minimum direct cost, called the normal duration. At the other
extreme, a manager might choose to complete the activity in the minimum possible time,
called crashed duration, but at a maximum cost.

Indirect costs, on the other hand, are the necessary costs of doing work which cannot be
related to a particular activity. The indirect cost will decrease by decreasing the project
duration, as the indirect cost are almost a linear function with the project duration.

If each activity was scheduled for the duration that resulted in the minimum direct cost in
this way, the time to complete the entire project might be too long and substantial
penalties associated with the late project completion might be incurred. Thus, planners

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perform what is called time-cost trade-off analysis to shorten the project duration. This
can be done by selecting some activities on the critical path to shorten their duration.

Concepts associated with Crashing

1. Normal cost – cost associated with the normal time estimate for an activity.
2. Crash cost – cost associated with the minimum possible time for an activity.
3. Crash time – minimum possible time for an activity.
4. Cost slope – average cost of shortening an activity by 1 time unit.
Crash cos t − Normal cos t
Cost slope =
Normal time − Crash time

Exercise 1

Activity Precedence Time Cost

Normal Crash Normal Crash Cost Slope
A - 4 3 400 600
B - 8 7 500 700
C F, D 3 2 900 1000
D B 6 5 600 700
E - 7 6 800 900
F A 15 14 950 1250
G B 12 10 670 870
H G 10 8 890 990
J L 5 3 1000 1200
K E 9 7 400 600
L G, K 11 9 1200 1400
By considering an indirect cost of 100birr/day, do the following;
1. Network diagram.
2. Critical path and total time for the project.
3. Least cost schedule – the minimum total project cost and optimum project duration,
taking into account maximum crashing possibility.

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Exercise 2
ABC Construction Ltd. has been awarded a road construction project. Its planning
department has produced the following data for the activities identified as
constituting the road project.

Activity Preceeding Normal Crash time Normal cost Crash cost

Activity (ies) time (months) (birr. millions) (birr. millions)
(months)
A B 5 3 50 72
B - 3 2 20 30
C A 2 1 15 30
D C 3 1 8 20
E A 4 4 30 30
F D 8 4 13 21
G H 5 1 45 65
H A 2 1 45 52
I F, G, J 2 2 40 40
J H, E 3 2 22 34

Take indirect cost of 1million/month

(a) (i) Draw a network for the road construction project and determine the normal
project duration.
(ii) List the critical activities.

(b) After receiving the estimated time to complete the road, the client has asked
. ABC Construction Ltd to reduce the completion time by 7 months. What
would be the minimum extra cost to meet this revised deadline?

(c) The client has now requested a further five months reduction in the project
duration. Comment on this request.

Construction Planning and Scheduling, Reading Material

Prepared by Mr. Giduma B.
22