Unit 4: PROJECT MANAGEMENT

4.1 Definition of Terms

Project management can be understood as a systematic way of planning, scheduling, executing,

monitoring, controlling the different aspects of the project, so as to attain the goal made at the time of
project formulation.

Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM) are the two
network based project management techniques, which exhibit the flow and sequence of the activities and
events.

PERT is appropriate for the projects where time needed to complete different activities are not known.
On the other hand, CPM, is apt for the projects which are recurring in nature.

These two scheduling methods are popular quantitative analysis techniques that help managers plan,
schedule, monitor, and control large and complex projects. These were developed because there was a
critical need for a better way to manage.

4.2 Steps of PERT/CPM:

1. Define the projects and all of its significant activities or tasks;

2. Develop the relationships among activities. Decide which activities must precede
others;

3. Draw the network connecting all of the activities;

4. Assign time and/or cost estimates to each activity;
5. Compute the longest time path through the network; this is called the critical
path; and

6. Use the network to help plan, schedule, monitor and control the project.

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 Example 10. Given the table below with relevant information of a project:

Activity Immediate Time(in

predecessors weeks)
A None 4
B None 3
C A 4
D A 2
E B 1
F C 5
G D,E 2

SOLUTION:
a. The network diagram: (Figure 1)

b. Find all the paths between events or from node 1 to event 6 and the total
activity time for each path:
Path A-C-F : 4 + 4 + 5 =13 weeks*
Path A-D-G : 4+ 2+ 2 = 8 weeks
Path B-E-G : 3 + 1 + 2 = 6 weeks

*Thirteen (13) weeks represent the longest path, therefore the critical
path is Path A-C-F.

c. From part (b), the earliest expected time that the project can be completed
is thirteen (13) weeks.

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 4.3 Computing the ES (Earliest Start) And EF (Earliest Finish) Times

The ES and EF times are computed in a forward pass through the network.

Study the following diagrams: (Figure 2)

Formula: ES = maximum EF of all immediate predecessors

EF = ES + activity completion time

The Process:
Begin from the initial node, node 1, assign 0 as the ES for activity A. since the duration of A
is 4 weeks, the earliest time A could be finished EF is week 4, or EF = 4 for A.
Proceed to activity C. It cannot start until activity A is finished. Since EF = 4 for A, the ES
activity C could start is week 4. Since the duration time of C is 4 weeks, the ES for activity
C could be finished is week 8, or EF=8.
Continue the process until we obtain the results as reflected in figure 2.

Note: For 2 or more lead nodes, choose the largest EF as the ES for the next node.
Look at node 5 of the above diagram.

4.4 Computing the LS (Latest Start) and LF (Latest Finish) Times

The LS and LF times are computed in a backward pass through the network.

Study the network diagram whose data is taken from example 1: (Figure 3)

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In one network diagram, record both the forward pass and backward pass.

Formula:
Note: when LF =activities
2 or more minimum LSout
lead of all
of aimmediate successor
node, choose activities LS as the LF in
the minimum/least
the next activity going backward: (refer to node 2 in figure 3 above)
LS = LF – activity completion time

The Process:
Begin with the terminal node; use the OCT of the project as the LF of the terminal activity,
then work backward;
The LF of an activity of an activity is the smallest LS or minimum of the LS time of the
immediate predecessor. From figure 2, the OCT is week 13, therefore the LF = 13 minus the
activity time in G which is 2, so the LS = 11;
The process is continued until you reached the LS in node 1.

…and so on.
SLACK TIMES

Slack time for an activity is defined as the latest time an activity can be completed without delaying the
project minus the earliest time the activity can be completed. It is the amount of time an activity can be
delayed without delaying the entire project.

Can be computed in two ways: Slack time = LS – ES

Slack time = LF – EF

Example: (data from Figure 2)

LS=10 E LF=11
ES=3 1 EF=4
3 5

For activity E: slack time for E = LSE - ESE = 10 – 3 = 7

Thus, we can start activity E as early as month 3 or as late as month 10 without delaying the
project.

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4.5 PROBABILITY CONCEPTS in Program Evaluation and Review Technique (PERT)

PERT is a tool that project management uses to manage a project. The PERT chart contains
information about subprojects and estimated completion times. Each subproject is assigned an
estimated completion time, based upon probability distributions for the expected completion time for
the subproject from start to finish.

The probability distribution for expected time is calculated by the following equation:

Expected Time (t)= (Optimistic Time + 4 x Most Likely Time + Pessimistic Time)
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OR,
You may let: O = Optimistic Time or the Shortest Time
M= Most likely Time
P= Pessimistic Time
t = Expected Performance Time

So that you can use the formula:

t = O + 4M +P
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Standard deviation of each activity: σ = (P – O) ÷ 6

Example 11.
For each activity of the PERT in the following table:
a. Compute the mean and standard deviation of the activity time.
b. Construct a PERT network diagram.
c. Determine the expected project completion time and critical path.
d. Compute the standard deviation of the critical path.
e. What is the probability that the project will be finished in 30 days or less?

Activity code Predecessor Optimistic (O) Most likely (M) Pessimistic (P)
time (days) time (days) time (days)
A None 5 9 13
B A 4 7 10
C A 5 9 11
D B 2 4 6
E C, D 3 5 10
F E 1 3 6
G C,D 2 2 2

SOLUTION:

a. For the mean time t: t = O + 4M +P

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Activity code A: t = ⦋(5 + 4(9) + 13⦌÷ 6 = ( 5 + 36 + 13) ÷ 6 = 54 ÷ 6 = 9

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 Activity code B: t = ⦋(4 + 4(7) + 10⦌÷ 6 = ( 4 + 28 + 10) ÷ 6 = 42 ÷ 6 = 7

(You can continue computing the mean time t until activity code G using the formula and
the process, then record the results within the table under the column for mean time t).

For the Standard Deviation: σ = (P – O) ÷ 6

Activity code A: σ = (P – O) ÷ 6 = ( 13 – 5 ) ÷ 6 = 8 ÷ 6 = 1.33

Activity code B: σ = (P – O) ÷ 6 = ( 10 – 4 ) ÷ 6 = 6 ÷ 6 = 1

(You can continue computing the standard deviation σ until activity code G using the
formula and the process, then record the results within the table under the column for
standard deviation σ).

Table with the mean time t and standard deviation σ columns:

Activity
code
Predecessor Optimistic
(O)
Most likely
(M) time
Pessimistic
(P)
t σ
time (days) (days) time(days)
A None 5 9 13 9 1.3
B A 4 7 10 7 1
C A 5 9 11 8.7 1
D B 2 4 6 4 0.7
E C, D 3 5 10 5.5 1.2
F E 1 3 6 3.2 0.8
G C,D 2 2 2 2 0

b. the NETWORK DIAGRAM:

3 5

B D E F
A 7 4 5.5 3.2
start 1 9 2 C 4
G 6 finish
8.7 2

c. Paths: A-B-D-E-F ---9 + 7 + 4 + 5.5 + 3.2 = 28.7

A-B-D-G--- 9 + 7+ 4 + 2 = 22
A-C-E-F --- 9 + 8.7 + 5.5 + 3.2 = 26.4
A-C-G --- 9 + 8.7 +2 = 19.7

Hence, the longest path which is the expected completion time is 28.7 days and with the
critical path A-B-D-E-F.

d. Standard deviation of the critical path: σcp = √(1.3)2 + (1)2 + (0.7)2 + (1.2)2 + (0.8)2

= √(1.69 + 1 + 0.49 + 1.44 + 0.64

= √5.26

σcp = 2.3

e. The probability that the project will be finished in 30 days or less:

Note: The expected completion time is the Mean (μ), thus μ = 28.7,
σcp = 2.3
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 Using the normal curve concept:

Convert the raw data, time in days, into the z –score using the formula: z = (x – μ)/σ

(RECALL: AREAS UNDER THE NORMAL CURVE from previous Math courses)

Hence, the solutions: z = (x – μ)/σ

At x = 30: z = (x – μ)/σ
= (30 – 28.7)/2.3
= (1.3)/ 2.3
Z = 0.56, from here, find the area under the normal
curve “to the left” of Z = 0.56

Showing the normal curve:

z
-3 -2 -1 0 1 2 3
z = 0.56

∎Find the area to the left z = 0.56 , using the “Table on Areas Under the normal curve.

∎From the table, you have the area to the left of z =0.56, which is 0.7123

∎Hence, using this area=0.7123, we can say that the probability that the project
will be finished in 30 days or less is 0.7123 or 71.23 %.

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 TEST YOURSELF 4.0

DO THE FOLLOWING. Compare your work with the solutions presented

in the answer key pages.

1. Given the table below with relevant information of a project:

Activity Immediate predecessors Time(in days)

A None 5
B A 4
C B 5
D B 3
E C 2
F E 6
G F, D 3
a. Draw the network diagram.
b. Determine the critical path.
c. Find the optimum completion time.

2. A PROJECT plan is as follows:

Activity Most optimistic Most likely Most pessimistic predecessor

time(in weeks) time(in time(in weeks)
weeks)
A 7 12 18 None
B 5 11 16 None
C 5 9 13 A
D 4 7 21 B
E 4 6 22 B
F 9 12 16 C, D
G 3 11 21 E

a. Construct the PERT network for the project.

b. Find the critical path and its standard deviation.
c. What is the probability that the activities on the critical path will be
completed by 34 weeks?

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ANSWER KEY to the TEST YOURSELF ITEMS:

TEST YOURSELF 4.0

1)
Activity predecessor Time(days)
A - 5
B A 4
C B 5
D B 3
E C 2
F E 6
G F, D 3

a) The network diagram:

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E (2) 5

C(5) F(6)
A (5) B(4) D(3) G(3)
1 2 3 6 7

b) Paths: A-B-C-E-F-G ---5+4+5+2+6+3 = 25 days

A-B-D-G --------5+4+3+3 = 15 days

So, the critical path is A-B-C-E-F-G

c) Optimum completion time is 25 days

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2.

Mean
Most Most Most
Activity completion
optimistic likely pessimistic
time(in time(in time(in
predecessor time σ
weeks) weeks) weeks) t
A 7 12 18 None 12.2 1.8
B 5 11 16 None 10.8 1.8
C 5 9 13 A 9 1.3
D 4 7 21 B 8.8 2.8
E 4 6 22 B 8.3 3
F 9 12 16 C,D 12.2 1.2
G 3 11 21 E 11.3 3

a) The PERT network diagram:

C(19) 4
2
A(12.2)
F(12.2)
1 D(8.8)
B(10.8) 6
E(8.3)
3 5 G(11.3)

b) Paths: A-C-F ------12.2 + 9 + 12.2 = 33.4 weeks

B-D-F ----- 10.8 + 8.8 +12.2 = 31.8 weeks

B-E-G ----- 10.8 + 8.3 + 11.3 = 30.4 weeks

Therefore, the CRITICAL PATH is A – C – F

and the EXPECTED COMPLETION TIME IS 33.4 WEEKS

STANDARD DEVIATION OF THE CRITICAL PATH:

σcp = √(1.8)2 + (1,3)2 + (1.2)2

= √3.24 + 1.69 + 1.44

= √6.37

σcp = 2.5

c) Probability that the project will be finished in 34 days or less:

Mean completion time , x = 33.4

X = 34
σ = 2.5

z =(x – x) / σ = (34- 33.4)/ 2.5 = 0.6/2.5 = 0.24

z = 0.24

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 using the area under the normal curve, find the to the left of z =0.24;
and the area is 0.5948.

Hence, the probability that the project will be finished in 34 days or less is 59.48%

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