Network Analysis — PERT and CPM INTRODUCTION i few Techni ERT and Critical Path Method or Programme Evaluation and Review T ‘echniques or PER’ , COM atthe tetenck techniques or models whieh ar widely used in projet management These techniques are very useful for planning, scheduling and executing ceo - projects which involve careful co-ordination of variety of complex and interrelated activities, estimating resource requirements and time for each activity and establishing inter-relationship amongst the activities. Scheduling requires the details of starting and finishing date times of each activity. Generally we are always interested to know the important aspects of any project such as @) Expected completion time. (i) Effect of any delay in any activity (iti) How to use additional resources if projects are to be completed before time. (iv) Probability of completing the project in time. Programme Evaluation and Review Techniques and CPM are two, popular quantitative analysis techniques that help managers to plan, schedule, monitor and control large and complex projects. \ i aaSNUG, I. OBJECTIVES OF NETWORK ANALYSIS Almont any largo project be analysed with PERT L 8. ‘The following are the main obj an be wubdivie 0 series of smaller activities that can ives of the network. Helpful in planning. Network analysis is powerful tool for planning, scheduling and controlling. Inter-relationship of various activities. Network analysis creates inter- relationship and inter-dependence of various activities of project or a programme, ‘This relationship helps in bringing out. the technological interdependencies of the various activities, At the same time it helps in integrating the project planning. Cost control. In certain cases we can measure cost of delay in the completion of the Project. This cost can be compared to the cost of the resources required to carry out the various activities at various speeds. Their total cost can be calculated and minimized, Minimization of maintenance time. Network analysis helps the management, to minimise the total maintenance time. If the cost of production overhead is ry high then it may be economically justifiable to minimize the maintenance time, regardless of high resource costs. Reduction of time. Sometime we have to arrange existing resources with a view to reducing the total time for the project, rather than reducing cost. Control on idle resources. Net work analysis also helps to control the idle resources. we should not allow large fluctuations in the use of limited resources, We should adhere to our scheduled cost and time. For example if we need 30 plumbers for IstGrERATIONS RESEARCH AND NTs ‘willbe required f0F the tan 10 on intl 0 wet enon angen ae cobcooaperes itinerary nel ie __ ice ict etn se A Aan Ee eerie re oro ‘ysemat FP cngues bps shemanager 0" bilioer ror production and control large ‘and complex projects. c IV. APPLICATIONS OF NETWORK MODELS score on nd CPM, there are several other network models example the 1 nant eA er eas Minima Sree points while minimizing ot! Avon ‘This technique is widely used to {hat coma the ouses to electrical power, water refer i such a way that minimizes the conn ance o length of powerlines or water Pipe seisrpeiechnique is‘Maximal Flow Technique This eechiiaie finds the maximum oe tte ety or substance through a network, This, tenis determine, the flow of a chiles, that can go through a network of roads fr location to a a the Shortest Route Teche ca be used to determine the ‘shortest route Fanani city to another through a network of roads. ‘These models were successfully applied by the US. chemical frm of Dupont in the conse ued maintenance of chemical plant. Another American Company Perini Pacic earn etal che network analysis for Bidding. In so many cases the company was awarded ihe contract for a high bid, because of the vast knowledge in the field 370 pln ad nel te maitre of oa vlan inte required for the procedure. PERT was also used by the U.S. navy to control he construction and implementation ofthe Polaris mi be ance “The other applications ofthe above models are as under : (i) Planning. scheduling, monitoring and control of large and comple ; complex projects Construction of factories, highways, building, bridges, cineraas ete Helpfl to Army for ita Missle development. (iv) Assembly line scheduling {e) Installation of cormputers and high tech machineries. (vi) Developing advertising programmes (vit) Development and launching of new products Helpful to management fr its resent lopment (is) Tomake marketing strategies panier he (3) Helpful to find traffic flow patterns in big cities (2 Porn venir plas i) Maintenance of big and en iyi = ‘equipments in chemical, cement, steel plant.syet90r ANALYSIS-PERT AND CPat # willbe stance to # basic understanding ofboth PERT and CPM, the network coneePt wit ned, When network is being constructed certain es rantione are llowed U0 Tepes, nd it is essential thatthe relationship betwoen activites and e* sere depicted. The following deinion must be understood clearly i ‘A. Event. An event represents an instant of time at which an activity of « Prolcy gor or finishes, Tn network an event is represented by a node ie. Q,an event ism | sa which indicates the start and completion of the project but dose not consume 2H 5 Bet The beginning ofa tivity is tal event and finishing ofan activity is Head Event. AY tint cexepts the starting and completion af the whole project must have atleast one activi erring and one activity leaving. Ia the activities leading to node are finished, that node aripe called an event, SE" B, Activity. In both PERT & CPM an activity isa distinct operation or an element of work, which has to be performed for execution of jab. Activity is represented by an arrow {——>). The tail of an arrow represents the beginning and head its completion. ‘The length, Shape or position of the arrow is insignificant, Activities can be of the following LyPES | tail events, "The above picture shows wrong indication because network violates abasicrule of CPM/PERT because two or more network 5 Sn en ace os = =RESEARCH AND QUANTITATIVE TECHNIQUES a everson : 4 n given network : Te may be noted that while puting towane the independent events - Lote dummy, 1 9 cnn - aa e activity is used to proserve tnsential lagi of network it is called logic dummy. IC is use if two paraltel chains of an activity have any common cevont. The Following example explains the situation sich humm is used where (xo independent projets are undertaken and both the projects ek am eat such cmon ovent, we make use of loge dummy : i P ut Sn roveed onl ‘Priv information states that P & Q should proceed R but S need to p va ‘Such situations usually warrant the need of introduction of dummy. Such dummy is called Jogie dummy VI. ERRORS IN NETWORK LOGIC Looping and dangling are two common errors creeping up in a network logic at design stage. A. Looping, Looping is also known as oyeling error and creates an impossible situation and it appears that ‘onc of the atvities could ever be completed, For example, Jet us consider the situation as shown in Fig. Here activity beannot begin ill event 3 occurs, activity cannot begin tll event 4 occurs, activity d cannot begin tll event 3 occurs and again activity b cannot begin till event 3 occurs and so on. Thus, the eyle will goon and no activity ean be completed as they are inter-linked by path abed. For avoiding looping the network logic should be completely ‘re-examined and the network should be redrawn, B. Dangling. Sometimes a project [—, ‘network includes an activity which does not fit into the end objective of the project: and is carried out without any result related with completion ofthe project, Such an error in a network is called dangling. This activity does not have any final impact on last event. For example, construction of debewr quarter ‘which are removed after the project is completed. Let us consider the situation (@ All events, except the first and the last it bie tomate the last, must have at least one activity entering and {All activities must tart and fnsh with an event After drawing a notwor Tk and dangligg, int natwork it shouldbe checked that i is free from the errors of looping373 18-7 yerwonk ANALYSIS-PERT AND CPM ortho should Ho dummies 0" “A dummy activity is used to p iduetion of got eared ta network unless i eco at Psi number ereates an error elled Revi vil. RULES TO FRAME A NETWORK 1. Troetwork dagen aerown (—») ypresonte activities an ciecan C) the vent The longth ofan arrow i of no ngaifcane 2, Bach activity mist start and end it ad, The tai af am ativity Fe ert and head the completion of work The event no. 1 dents the start of project and is call ini activites emerging fom event {1) shoul hot be preceded by ‘Event carrying the highest number denotes the completion even ants. should be numbered inn ascending order so that for each activity Tess than) presents the node or event. All iy other activity wa (a 5. Only one activity can span across a pair of events. (a) _Anevent number should not be repeated or duplicated. (6) Two activities should not be identified by the same completion events (©) Activities must be represented ether by their symbol or by the corresponding order of starting and completion events. No dangling is allowed unless especially desired in the question. The logical sequence betwoen activities must follow the following rules (a) An event ean’t occur until all the incoming activities into it have been completed, (©) ‘Though a dummy activity does not consume either resources or time even then it has to follow the rules stated above. 2 | VII. FULKERSON’S RULE TO NUMBERING OF EVENTS \ We usually number the events like 1, 2,3... and soon. This we do by following the rule known as Fulkerson’s Rule : (a) Anevent having no preceding events called initial event and is numbered (1),'The ‘numbering is done from left to right in the ease of successive event and from Top to Bottom in the ease of more than one intial event. It may be noted that in every network there is one such event, and itis numbered (1). (&) Forget all activities from one and see that it will result in one or more initial events, Number these events 2, 3,4 and so on. (c) Now we shall again forget all those activities which have been numbered. This will farther result in new initial events, and number them as 6,7 and ... 80 on. (@) Continue this procedure till all the events are numbered. The end event is one having no arrow emerging from it. This event will bear the highest number. ) Ge STAGES OF PROJECT MANAGEMENT Project management consists of three stages (A) Project Planning Stages. In order to visualize the sequencing or precedence requirements of the activities ina projet, it is helpful to draw a network diagram. For this following tips are adopted : (0) Identify various activities to be porformed in the project.AND QUANT Sn OPERATIONS: RESEARCH erials, machines, money ete, 374 tof resources such as men, mat i) Determine requireme? r a be carrying out activities listed above. (ii) Assign responsibility fOr et ok age. it rte resources to work Packages: : ‘ 0 tte coat and time at various levels of project completion. v) Bi 8 5 (vi) Develop work performance criteria. oii) Establish control channels for project perso (B) Scheduling Stage. Once all work packages (. given unique names OF ‘dentifiers, scheduling of the project, Bijuired to be performed, is taken UP- ; ‘The various steps involved during this phase are listed below = () Identify all people who will be responsible for each task. (i) Estimate the expected duration(s) of each activity, taking into consideration the resources required for their execution in most economic manner. (iii) Specify the interrelationshij (iv) Develop a network diagram s| activities. (v) Based on time estimates, calculate the total project duration, identify critical path ; calculate floats ; carry out resources smoothing (or leveling) exercise for critical (or scare) resources talking into account resource constraints (if any). ontrol Stage. Project control refers to evaluating actual progress (status) .d, then the scheduling and resources In mnnel. i.e. tasks) have been identified and e. when each of the activities ip among various activities. showing the sequential interrelationship between various (©) Project C against the plan. If significant differences are observes allocation decisions are changed to update and revise the uncompleted part of the pro, other words, remedial or reallocation of resources measures are adopted in such cases. ) ee ae ee) ee gig ea ts clad ita oe ek eesetvewune anu une recy ehart ean be modules U7 += XII. SLACK ‘The term ‘Slack’ can be dissociated with both an event: : event, « slack is the difference between its latest and earliest event tint setivily, slack willbe synonymous toa float. ‘ted with an event andl in such a case an acivity will have two slacks, {Ge.) slack ofits head event) and Tail Slack (. (a) Head slack : = Ly ~ Bg head event () Tail slack = Lp Es of tail event ‘This ean be depicted as follows, A slack can be positive or nogat time of an event. XU, FLOAT Float is of great importance for a manager. Float indicates the free time associated with an event, It is the time available for an activity in ‘dition to its duration time. So, float or slack js the length of time an activity ean be delayed without delaying the whole project. When activities have no slack time, this means that 1 In relation to an {In relation to an is ordinaril diat-Bxt or 1f-Ef). But, stack is orden ‘and an activity. lack of its tail event) wher depending upon the latest and earliest occurrence Taam Teas sent aes o «bee eathefitete Leese ck Lp esrHead ack ea a6 ‘none of them can be delayed without delaying the entire project, they ar called eiteal activities Solack s zero along the events on the eis! pat, hence events having zero sack or float show the ertieal path, ‘Since both start and end events of an activity have earliest and latest times, an activity has three possible types of floats, (a) Total float. This is without aff tthe time by which an activity may be delayed or extended ithe total project duration. As-already ‘stated activities along the critical path have no float. Total float isthe difference between the maximum time ‘available to perform the activity and the activity duration. The maximum time available for any activity is from the earliest start time to the latest completion time. ‘Thus in simple words, total float of an activity is the difference of its latest start and earliest start times or the difference ofits latest finish and earliest finish time. ‘Total float=Latest Finish time of anvactivitj~Earliest finish time of an activity ic. Lp Er302 OPERATIONS RESEARCH AND QUANTITATIVE TECHNIQUES 4 start time of an activity. Le. Ls~Es Latest start time of an activi OR {Latest allowable time for activity ~ Barliest expected time for event] - duration of an activity. ivity may be delayed or extended without Free float. This is the time by which an at red eo rcsing the start of any succeeding activity. In other words itis that portion ofthe i ‘an be manipulated without affeeting the floats total float within which an activity of the subsequent activities. Free fl activities occur at the earliest post fad is the spare time available when all preceding. Ye times and all suceeding activities also occur at the earliest possible times. : Free float — Earliest start time of succeeding activity - Earliest Finish time of activity for which, free float is being caleulated oR efor the activity Latest finish time ~ alist fnish oR ‘Total float ~ Head event slack Ttis interesting to note that fre float is found at merge events is also worth mentioning that ifan activity has a free float the resources from such autivity can be reallocated to an activity on the ertial path. In this way the total resources and the total projec time may remains unafféted. (@) Independent float. Independent float is that portion ofthe total float within which an activity can be delayed for start without affecting floats of the preceding activities, Independent float = (aries start time of succeeding activity lates finish time for preceding activity] ~ Duration of activity for whieh independent float is being talcalated oR Free Float ~ Tail event slack. Itis again worthwhile to mention ifindependent float is negative it may be taken as zero. However on this pont there is difference of opinion amongst the operation resoarchers. From the above discussion it can be easly seen that Independent float = Free float = Total float Caleulation of floats helps the management in identifying under utilized resources anni othe sacl and anima wn emacs evalablco ret Example 10. Consider the following table :v Eres oR aya es REVIEW TECHNIQUE (PERT) ( XIV, PROGRAM EVALUATION AND nique in which we ry to exercise logic I disciplines in planning PERT is a management tec a ‘ : and calling prok ia, The PERT is a network technique which uses a network diagrams consisting of events, ‘Tho sticeessive events fre Jom I by arrows. PERT system is preferred for those projects or operations which are of non repetiti nature or for those prajeets in which precise time de mination for various activities can not jel prajets, managements eannol bo guided by the past experience. For example, nyza space craft involves the work never done before. For such research ;, the time estimates made for use may be little more than guesses, od for such projects. in the analysis through PERT is be made, In the projects of laune and deyolopment praje PERT em is best st ‘The main objectiv ished by a given date. PER'T is usofil technique in project planning and cont ‘ idea hotel 5 rol. It gives the plan a ‘doa about the sequence of activities and their times, Tis a method ei gine delay und erruptions. It helps in coordinating the various parts of th 5 elay al every predeosoraetivity is finished in time forthe following chet erg kare ri ceed fe way ow a projet ean be finished earlier than the original sch ule, For this, Ti ghows 1ay be re-allocated from activities with spare time to activities that have or ti ae no spare time. to find out whether a job could beLo I a sess oy XIV. PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) PERT isa management technique in which we try to exercise logical disciplines in planning and controlling projects. ‘The PERT is a network technique which uses a network diagram consisting of events. The successive events are joined by arrows. PERT system is preferred for those projects or operations which are of non repetitive nature or for those projects in which precise time determination for various activities can not be made. In such projects, managements cannot be guided by the past experience. For example, ing a space craft involves the work never done before. For such research the projects of launc! and development projects, the time estimates made for use may be little more than guesses, PERT system is best suited for such projects. The main objective in the analysis through PERT is to find out whether a job could be finished by a given date. PERT is useful technique in project planning and control. It gives the planner a perfect idea about the sequence of activities and their times. It is a method of minimising delay and interruptions, It helps in coordinating the various parts of the overall job and seeing that every predecessor activity is finished in time for the following activity to commence. It shows the way how a project can be finished earlier than the original schedule. For this, resources may be re-allocated from activities with spare time to activities that have no spare time.287 NETWORK ANALYSIS-PERT AND cpm (a) Bstimating Activity Times (Once the activities have been specifi and the management has die ust proceed and follow others and the nel work has been dave, the next ste i 0.28880 the estimates of the times required to complete each activity. The time is usually EN units of weeks. The degree of succoss attained with the network planning procoss depen’ upon the accuracy athe ime eatinates. Providing tine etiates snot always an a8) Without the solid historical data, the managers are often uncertain as to activity times. Pe this reason, if the time estimates are nol deterministic in nature, then the usual way of expressing is uncertainty istoemplay a probability distribution based on three times estas foreach activity, ‘Three estimates are ( Optimistic Time (4). Is the minimum time an activity is expected to take if good luck prevails and everything goes right in the first instance. There should be only a small probabi 1, which activity say 3i> ofthis occurring (ii) Most Likely Time (¢,,). The most likely time is time an activity is expected to take ‘most often when itis repeated under similar circumstances. (ii) Pessimistic Time (,). Pessimistic imeis the time an activity would take assuming unfavourable conditions. ‘The probability of the event being completed in the pessimist time again is less (say 1/100 PERT assumes three time cstimates and these time estimates follow the Beta Probability Distribution. ‘This continuous distribution has been found tobe appropriate for determining average expected lime for each activity. in Tofind the expected time (¢,) for an activity the beta distribution weights the estimates as to + Atm + ty Expected time (t.) 5 where fo = optimistic time ; 4 = pessimist time tn = most likely time, and ; = expected time. (b) Beta Probability Distribution (Three Time Estimates) ‘To compute the dispersion or variance ofthis expected time estimate, Probabily of 1700 ot Probabity of Occuring Tin 1008 Occuring te Tale + ‘we use the following formula Variane: (c) Steps Involved in PERT Calculations 1, Identify the events and activities and preparea suitable network forthe given problem.388 OPERATIONS RESEARCH AND QUANTITATIVE TECHNIQUES ascending order from left to right. 2, Events are numbered in ascending ord i yt i 8. Obtain the various time estimates for each activity. mite) and tho optimist) estimates 4, Bapocted te verge tine taken for the job canbe determined as by tA Hy Ls 6 5. Range: Itisthe diferenc between the maximum and minimum time Range = fp ~ to 6, Standard Dovintion Ii oqutl to one-sixth of the Range ie alec 3 7. Variance: isthe square af the Standard Deviation i Variance = $2 = {(ty~tq) + 6)? 8. Probab: Duco ns in tine eit, the probability chan the projet wil be completed within the expected dationeritia path duration, nis 50% Fr example ith era a drain Is 25 dys, ee probly ot Completing within 25 days is 0, The prabaiiy of eampleting the projet within ‘Sy 40 dae wl be higher than 60% wile probity of eampleting the projet before th ceded date wl be les than 30% 9. Using the expected activity time climates, determine the earliest event time (,) and the latest event tie (Ly foreach event. 10, Compute the oat asoiated with each activity. The activities with zero lot ae the vital activities, Determine rita ath through the critical activites, 1. Find the total expeted duration time, by ang the time estimates for various activities onthe real path, 12, Find the variance of th ime etimaer of ll activites. Variance ofan aeivty ~ variances of time estimates of leita activities, 18. Find standard Normal variate (2) = X, - SD, where X = Duration in which the project i required to be completed; X; = Duration of the critical path and SD = Standard Deviation ofthe Critical Path, 14. Obtain the substitution value of the Standard Normal Variate from the Norma ‘ables, Call this as normal carve table (2). — 15. Compute probability of completing the project within the required duration = 05 = normal detebution valve af pare eirvecins (4) Probability Project Completion by a Target date Find the probability of ishing the project on some fixed targo by us normal distribution for the valu of Zobained by the equation Tt SIME th table of 2 Died Expected de ofcompltion | x _ where 1 = Standard deviation ofthe critical path, eomiemristsAieteahenilr 1 ~ sm of the variances oF ec aeivicg nay ta armal expat duration isnot acceptable to ‘he management, crashing the project ‘Tesources are limited resources allocation may have toe performed.NETWORK ANALYSIS-PERT AND CPM = to be completed within 28 week (say), then project manager may that the project might be completed within 25 week (say). For this formula mentioned below : z= X=k If project is estimated ask what is the Probability calculation we use the whereas X o x Due date i.e. 25 x a Expected date of completion i.e. 28 The sum of the variance of the activity times along the critical path. If it is 25 (say) the Standard deviation will be 5. Hence z= 25 = us The higher the standard deviation, the greater the uncertainty that the project will be completed on the due date. PERT make two assumptions in this regard. 1. Total project completion time follow a normal probability distribution. 2. Activity times are statistically independent with these assumptions, the bell shaked curve can be used to represent the project dates. It means that there is tae e entire project will be complete in less than or more than the mean project time. nae Z factor is +ve the probability of completion of project by scheduled date is more than 50% and vice-versa. In case Z factor is zero probability is 50%, this is possible w’ mean time and scheduled date are equal. ) "we “0 PEYe wARLUIES When THIS WIHT LAKE DD aaLys UY LUMA 1 Merits and Demerits of PERT Having this analysed, the various merits and demerits of the PERT as a Quantitative ‘echnique can be summed up as follows : Merits (1) Itenables a manager to understand easily the relationship that exists between the activities in a project. (2) It enables a manager to know in advance, where thi more supervision may be needed, and where resources may be the project on schedule. e trouble may occur, where transferred to keepOPERATIONS RESEARCH AND QUANTITATIVE TECHOCIUES o Jkcompei te mana plan catalan ho heart aii fe project. (4). Iedrae atieotion of the management tothe crtial activities of the project (3). Ttsuggests areas of increasing efficiency, decreasing cost and maximizing profits (6) Itenables the use of statistical analysis. (7) Te makes poasible a forward looking type of control (8) Ttcompels the management for taking necessary action at the right time without any let up. (9) Tt provides upto date information through frequent reporting, data processing and programme analysis. (10) thei formulating a new schedule when the existing ones cannot meet the situation, (11) Ithelps in minimizing delays and disruptions by scheduling the time and budgeting the resources (12) Ithelps in coordinating the various parta ofthe project and expediting the mode of ‘operation for completing the project in time. (18) Tt permita more effective planning and control Demerits (1) It-does not lay any emphasis on the cost of « project except on the time only. (2) It does not help is routine planning of the recurring events (3) Errors in time estimates under the PERT make the network diagram and the critical path ete. meaningless (4) In the calculation of the probabilities under the PERT it is assumed that a large number of indepeadent activities operate on critical path and that the distribution Of total time ts normal. This may not hold good in a peculiar situation. For effective control, the PERT requires, frequent up-to date information and revision in ealeulation which may be quite costly for the management (6) Idoes not the matter of resouroes required for various types of activities of a project. XVI. CRITICAL PATH METHOD {GEM sa dterminnti mee, I namimen that both the time to complete each activity andthe cost of doing a0 ia known with certainty This i known as CPM as it focuses directly aetditical path and entival activities Scheduling of activities is done in such a way that Gniical netivities cause no delay to project, rather time requirement to these activities is feduced hy inducing additional resourees to complete the project before normal times. CPM was developed in 1957 by JE. Walker of Du-Pont, to help schedule maintenance of chemical plant. The fundamental departure of CPM from PERT is that CPM brings more prominently Into the planning and control process, the concept of cost where the time can be estimated very accurately in advance. Similarly cost can be calculated accurately in advance. CPM may besuperior to PERT But when there is extreme degree of uncertainty and when control over time out weight control over cost, PERT will be a better choice. 6NETWORK ANALYSIS-PERT AND CPA inducted, Crash cost isthe total cost of completing an activi in cost ai ‘of simplicity the relationship between nor Jrenerally assumed to be linear ‘The objective of praject crash time, while nly by erashing critica activition Ue fi However, an activities arw ermal, th of previously non eri {tatu shell, ceaahing means adding extra resour cost speeding UP) Limitations of CPM aject at the leat adit The CPM suffers from the following limitat on the assumption of a precise known time 8 real situation )Tedoes not make use of th estimates for each activity: c)Terequires repetition of the evaluation of the ent wt analy low tat wot all preject wet critical path tay’ ean al activities in order to further re statistical analysis in the determinat 405 1 For the purposes ny in cr fr an activi i eran time cot (0 4 completion he shortened ve crashed menting further crashing ine. ne gc epi ti . ually interested in Ja to reduce the total projected eae ities should b i) Mangers are 1 for each activity which may ion of the time 1 project each time a change is introduced to the network, This i a very difficult and cumbersome process d)Weannot aerve ax a dynamie controlling device as it was introduced as a static planning model Comparison between CPM and PERT CPM and PERT contrast each other on the following points 2. It deals with the activities of precise well Jenown time. {Its used for repetitive jobs like residential construction. 4. Seis activity oriented in as much as its results fre calculated on the basis of the activities 5. It dows not make use of dummy activities 6, Iedeale with cots of project schedules and their minimization, 4. It deals with Uhe concept of crashing 15 Its calculation is based on one type of time testimation that is precisely known. 9, Tean not be used as x control devices a it rogues repetition of the entire evaluation of the project each Gime the changes are {introduced to the network: 10, Itdoes not make use ofthe statistical devices in the determination ofthe the estimates, cM, PERT 7 Teiva deterministic model under which the | 1. It isa probabilistic model under which the reall isancertainedinamanner ofeertainty. | "result isestimated in a manner of probabil 2. Tedeals with the activities of uncertain time. 8.18 is known for non-repetitive jobs like planning and scheduling of research programmes. 4, This even oriented in as much as its results fare ealeulated on the basis ofthe events. 5. It makes use of dummy activities to represent the proper sequencing of the activities. 6, Teas nothing todo with cost of a projet. 7 Itdoes not deal with concept of crashing, {8 Ifinds out expected time ofeach activity on the asa of three types of estimates. 9, Itisuse as an important control deviee asi avsiste the management in controlling a project by constant review of the delays in tho activities 10, Te makes use of the statistical deviceseaarigeriee FOF Lory, “On the weber Hana te ae PROJECT COST ANALYSIS Mont activities can be Thos, with rection i thace ie me pecan reac rede orev inne nat oral st fal mctiitven, asthe over exaahed. Aetivitien on now ‘The total cost mee pret br Direct Conte. The sired eat annsinting of at accents with untvichsnl actistin. nce the time sand indirect conte Fink acne tie ee. iy srty te rete the drveg Monae of iret emt of aa, sco ibn juration of a” ithe b cont inereaann hve ‘nctivgy in ewan to te duration cab The three oot curves ropresent three fe ‘of an activity cannot be rediced regarllest pe cot be th sil be borzomtal sf} Tes! 53} : : TRASH NORMAL GRASH NORMAL enue oe ‘me ‘Me “ ° ° Indirect Costs. The indirect costs are associated with the project, and not with the activities. In case the duration of the project is, ‘reduced or crashed the indirect costs decrease. The indirect costs consist of general administrative overhead, rent of equipment, depreciation of plant, insurance charges, ete. The behaviour of indirect, costs in relation to project duration can be explained CRASH NORMAL by the following figure. aR iwoiREcT cost CRASH NORMALNETWORK ANALYSIS-PERT AND CPM . THE XIX. THE LOWEST COST SCHEDULE soethod for vides a syst rticlarly ’M lays great stress upon time cost trade off. ‘This (CPM lays great stress upon time eos trade off. This provides i aauriniog prec semi epee ful the project isto be eompleted in miniznum possible time i or determing the owet cnt schdul tboin with oprliina) eta rated. Inthisallaciviinareshownat normal im. Taal ost fhe reiet HdeT TT fy adding direct costs ofall the activities at normal time and the indirect costo the pret by al durtion, Thieme cn fora prj Por reducing the time dora thopmiet the activiios which ean be crashed are ented, In his process ac ‘Sea path alone are considered as apeetng up of activities on non-ritial path ab ex ‘Gould mately ad tothe total projec ont without reducing the project duration. The nese ine direct cost of activities du to reduction of their duration or the cstslope is determin ty the equation: Crash cost - Normal cost es Crash coat — Normal cost. Cost! Time = Normal time ~ Crash time ‘The following terms are associated with Project Crashing (a) Normal time: Itis the minimum time required to complete an activ () Crash Time : Itis the minimum time required to complete an activity (c) Activity Cost Its the cost of performing and completing a particular activity or task. (@ Normal Cost: Iti the lowest posible diet cost required o complete an activity in the normal time. (©) Crash Cost: Its the direct cost thats anticipate in eompletingan activity within the crash time. (P Activity Cost slope : The cost slope indicates the additional cost incurred per unit of time saved in reducing the duration of en activity. Ibis computed as under + [Crash Cost - Normal Cost] [Normal Time - Crash Time] Steps for Project Crashing 1. Draw the Network Diagram and update the project duration based on Normal Time. 2, Prepare the Slope Table to compute the Activity Cost Slope for each activity. (Formula as above) 8. Prepare the Paths Table listing all the Paths through the network and their duration, Identify the Initial Cp. 4, Prepare the Decision Table for soquential crashing on a stage-by-stage basis. The following rules are applied for stage by stage crashing : + Path Identification : The longest path at each stage should be crashed. There ray be more than one critical path also. + Activity Definition : The activities available for crashing should be listed long with the maximum time reduction possible at that stage. Where there is a common activity forall paths itis advisable to crash to the maximum possible Extent If there isn common activity, one activity in each path has tobe crasked. + Slope : Tt represents the additional average cost per unit of time reduction (Craching), The activity with the least slope will be preferred for crashing ity at normal cost. Activity Cost Slope =OPERATIONS RESEARCH AND QUANTITATIVE TECHNIQUES which an activity should be crashed will be maximum reduction is generally advisable, rk Weeks Crashed X Activity Cost Days Crashing : The number of days for either (1) is less. In case of common activities, Crash Costs : Compute the Number of Days wo: Slope. Cumulative Crash Costs : Compute the total crash costs incurred upto that stage, ‘The Crashing Process will continue till one of the Paths is fully crashed/reduced to minimum. Prepare the Costs Table listing the normal costs, indirect costs per unit of time, crash costs, penalty/reward ete. Computer the Total Costs at each stage. The Costs Table should be prepared simultaneously along with the Decision Table, so as to monitor cost movement at each stage. 6. Write the Solution consisting of (a) Normal Duration and Normal Cost (6) Minimum Duration and Associated Cost and (c) Optimum Duration and Minimum Cost. Examole 25. A network is sinen helam —However, more frequent updating is necessary as tne pryery or XXII. DISADVANTAGES OF NETWORK TECHNIQUES sees, ai the Besides several advantages, the following difficulties are faced by management while using the network techniques + = 1. The difficulty arises while securing the realistic time estimates. Im the case of new and non-repetitive type of projects, the time estimates produced are often ieee ; i ds 2, It is also sometimes troublesome to develop a clear logical network This depen dpon tive data input and thus the plan ean be no better than the ‘personnel who provides the data. oe ‘ing the 3, ‘The natural tendency to oppose changed results in the difficulty of persuading management to accept these techniques. vnaleved of 4. Determination to the level of network detail is another troublesome area, The evel of Retail varies from planner to planner and depends upon the judgment and sper en 5. i j i i |. trained in the The planning and implementation of networks require personnel tray network methodology. Managements are reluctant to spare the existing staff to Jearn these techniques or to recruit trained personnel.