PROJECT PLANNING

AND SCHEDULING(2)

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Introduction to Project
Management
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(May 20, 1861 – November 23, 1919
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 Network Analysis

• Network analysis is the general name

given to certain specific techniques
which can be used for the planning,
management and control of projects

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Critical Path Analysis

Critical Path Method (CPM)

 E I Du Pont de Nemours & Co. (1957)
for construction of new chemical plant
and maintenance shut-down
 Deterministic task times
 Activity-on-node network construction
 Repetitive nature of jobs

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PERT

Project Evaluation and Review

Technique (PERT)
 U S Navy (1958) for the POLARIS
missile program
 Multiple task time estimates
(probabilistic nature)
 Activity-on-arrow network construction
 Non-repetitive jobs (R & D work)

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Project Network

Heart of the system = Arrow Diagram

Arrows are NOT drawn to scale

Conventionally drawn from left to right

Constructed logically to show relationship
and interdependency of each activity

Arrow indicates the activity which must
take place before succeeding event can
be said to be achieved

The dependence of the final activity on
preceding work is clearly highlighted

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Activity on the Arrow

Use of nodes and arrows
Arrows  An arrow leads from tail
to head directionally
 Indicate ACTIVITY, a time consuming
effort that is required to perform a
part of the work.
Nodes n A node is represented by a
circle
- Indicate EVENT, a point in time where
one or more activities start and/or
finish.
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Activity on the Arrow

Dummy Activity
 Indicates only precedence relationships
 Does not require any time of effort

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 Activity on the Arrow

3
Lay Dummy
foundation
2 0 Build Finish
3 1 house work
1 2 4 6 7
Design house Order and 3 1
and obtain receive Select 1 1 Select
financing materials paint carpet
5

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Activity on the Node
Lay foundations Build house
2 4
Finish work
2 3
7
Start 1 1
3
Design house and 6
3
obtain financing 5 1
1
1 Select carpet
Order and receive
Select paint
materials

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 3
Lay Dummy
foundation 2 0 Build Finish
1 3 2 1 4 house 6 work 7
Design house Order and 3 1
and obtain Select 1 1 Select
receive
financing materials paint carpet
5

Lay foundations Build house

2 4 Finish work
2 3
7
Start 1 1
3
Design house 3 6
and obtain 1 5 1
financing Order and receive 1 Select carpet
Select paint
materials

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 Situations in network diagram
B
A A must finish before either B or C can start
C
A
C both A and B must finish before C can start
B
A
C both A and C must finish before either of
B B or D can start
D
A B
A must finish before B can start
Dummy both A and C must finish before D can start
C
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D
Network Diagram

Activity is ON THE ARROW

Nodes are events

Duration of activity written above arrow

Description of activity written below arrow

Early start / finish written above event

Late start / finish written below event

Dummy arrows show dependence and NOT work

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Network Diagrams – Critical Path

The earliest completion time for any
event is found by addition of all
preceding activity durations along the
longest path (from Left to Right)

Latest Completion time can be worked
out subtracting activity duration from
event time working from Right to Left

When all early / late starts are marked
on diagram – there is always one
chain of events which have no float at
all – earliest times = latest times –
This is the CRITICAL PATH

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 FORWARD PASS

Earliest Start Time (ES)

 earliest time an activity can start
 ES = maximum EF of immediate predecessors

Earliest finish time (EF)
 earliest time an activity can finish
 earliest start time plus activity time
EF= ES + t

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BACKWARD PASS

Latest Start Time (LS)

 Latest time an activity can start
without delaying critical path time

LS= LF - t

Latest finish time (LF)
 latest time an activity can be
completed without delaying critical
path time
 LS = minimum LS of immediate
predecessors
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CPM Example:

CPM Network
f, 15

g, 17 h, 9
a, 6
i, 6

b, 8
d, 13 j, 12

c, 5
e, 9

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CPM Example

ES and EF Times
f, 15

g, 17 h, 9
a, 6
0 6 i, 6

b, 8
0 8 d, 13 j, 12

c, 5
0 5 e, 9

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 CPM Example

ES and EF Times f, 15
6 21
g, 17 h, 9
a, 6
0 6 6 23 i, 6

b, 8
0 8 d, 13 j, 12
8 21
c, 5
0 5 e, 9
5 14
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CPM Example

ES and EF Times f, 15
6 21
g, 17 h, 9
a, 6
21 30
0 6 6 23 i, 6
23 29
b, 8
0 8 d, 13 j, 12
8 21 21 33
c, 5
0 5 e, 9
Project’s EF = 33
5 14
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CPM Example

LS and LF Times f, 15
6 21
h, 9
21 30
a, 6 g, 17
24 33
0 6 6 23 i, 6
23 29
b, 8 27 33
0 8 d, 13 j, 12
8 21 21 33
c, 5 21 33
0 5 e, 9
5 14
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CPM
CPM Example
Example

LS and LF Times f, 15
6 21
h, 9
18 24
21 30
a, 6 g, 17
24 33
0 6 6 23 i, 6
4 10 10 27 23 29
b, 8 27 33
0 8 d, 13 j, 12
0 8 8 21 21 33
c, 5 8 21 21 33
0 5 e, 9
7 12 5 14
12 21
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CPM
CPM Example
Example

Float
f, 15
3 6 21 h, 9
9 24
3 21 30
a, 6 g, 17
24 33
0 6 4 6 23 i, 6
3 10 27
3 9 4 23 29
b, 8 27 33
0 8 d, 13 j, 12
0
0 8 0 8 21 21 33
8 21 0
c, 5 21 33
e, 9
7 0 5
7 12 7 5 14
12 21
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CPM Example

Critical Path f, 15

g, 17 h, 9
a, 6
i, 6

b, 8
d, 13 j, 12

c, 5
e, 9

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PERT

PERT is based on the assumption that an activity’s

duration follows a probability distribution instead of being
a single value

Three time estimates are required to compute the
parameters of an activity’s duration distribution:
 pessimistic time (tp ) - the time the activity would take
if things did not go well
 most likely time (tm ) - the consensus best estimate of
the activity’s duration
 optimistic time (to ) - the time the activity would take if
things did go well

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PERT

tp + 4 tm + to
Mean (expected time): te =
6
2

2
tp - to
Variance: Vt =σ =
6

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PERT analysis

Draw the network.

Analyze the paths through the network and find the critical
path.

The length of the critical path is the mean of the project
duration probability distribution which is assumed to be
normal

The standard deviation of the project duration probability
distribution is computed by adding the variances of the
critical activities (all of the activities that make up the
critical path) and taking the square root of that sum

Probability computations can now be made using the normal
distribution table.

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AOA Diagram

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AON Chart

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PROJECT COST

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 Cost consideration in project

Project managers may have the option or

requirement to crash the project, or accelerate the
completion of the project.

This is accomplished by reducing the length of the
critical path(s).

The length of the critical path is reduced by reducing
the duration of the activities on the critical path.

If each activity requires the expenditure of an
amount of money to reduce its duration by one unit
of time, then the project manager selects the least
cost critical activity, reduces it by one time unit, and
traces that change through the remainder of the
network.

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Cost consideration in project (2)

As a result of a reduction in an
activity’s time, a new critical path
may be created.

If the length of the project needs to
be reduced further, the process is
repeated.

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 Project Crashing

Crashing
 reducing project time by expending additional
resources

Crash time
 an amount of time an activity is reduced

Crash cost
 cost of reducing activity time

Goal
 reduce project duration at minimum cost

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 Activity crashing

Crash
cost Crashing activity
Activity cost

Slope = crash cost per unit time

Normal Activity
Normal
cost
Normal
time
Crash Activity time
time CNM2801_04 40
 Time-Cost Relationship
 Crashing costs increase as project duration decreases
 Indirect costs increase as project duration increases
 Reduce project length as long as crashing costs are less than
indirect costs
Time-Cost Tradeoff
Min total cost = Total project cost
optimal project
Indirect
time
cost
cost

Direct cost

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time 41
Project Crashing example

2 4
12
8
7
1 4
12

3 6
4 5 4
4

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 Time Cost data

Activity Normal Normal Crash Crash Allowable Rate

time cost € time cost € crash time

1 12 3000 7 5000 5 400

2 8 2000 5 3500 3 500
3 4 4000 3 7000 1 3000
4 12 50000 9 71000 3 7000
5 4 500 1 1100 3 200
6 4 500 1 1100 3 200
7 4 1500 3 22000 1 7000

75000 110700

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 € 500 €7000
Project duration = 36
2 4
8 12 €700
7 From…..
1 4
12

€ 400 3 6
4 5 4
4 €200
€ 3000
€ 200
€ 500 € 7000
2 4
8 12 € 700
To….. 7
1 4
7
Project 6
€ 400 3
4 5 4
duration = 31 4 € 200
€ 3000
Additional cost € 200
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= € 2000
Benefits of CPM/PERT

Useful at many stages of project management

Mathematically simple

Give critical path and slack time

Provide project documentation

Useful in monitoring costs

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CPM/PERT can answer the following
important questions:

How long will the entire project take to be

completed? What are the risks involved?

Which are the critical activities or tasks in
the project which could delay the entire
project if they were not completed on
time?

Is the project on schedule, behind
schedule or ahead of schedule?

If the project has to be finished earlier
than planned, what is the best way to do
this at the least cost?

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Limitations to CPM/PERT

Clearly defined, independent and stable activities

Specified precedence relationships

Over emphasis on critical paths

Deterministic CPM model

Activity time estimates are subjective and depend on
judgment

PERT assumes a beta distribution for these time
estimates, but the actual distribution may be different

PERT consistently underestimates the expected project
completion time due to alternate paths becoming critical

To overcome the limitation, Monte Carlo simulations can be

performed on the network to eliminate the optimistic bias

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Computer Software
for Project Management

Microsoft Project (Microsoft Corp.)

MacProject (Claris Corp.)

PowerProject (ASTA Development Inc.)

Primavera Project Planner (Primavera)

Project Scheduler (Scitor Corp.)

Project Workbench (ABT Corp.)

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