Project Management Pert For Sharing

Project Management
CPM / PERT
Need to add the footer with Dr.
Bhattachara to all slides
Module 2: Strategic Decisions
• Planning and designing product / services
• QFD
• Facility location: factor rating, load-distance, center of gravity / median
• Facility layout: Assembly Line Balancing, block diagramming
• Capacity planning & management: break-even, decision tree
• Project management: PERT / CPM
2
Dr. Tapas Bhattacharya, Amity Business School
MBA (M&S), 2 Semester, Batch 2024
What is PERT?
• Project Evaluation & Review Technique (PERT) is a statistical

tool used in project management, to analyse and represent
tasks involved in completing a given project
• Uses a network of activities and each activity is represented

as a step in the chart.
• In a simple form, a project is viewed as a total system and

consists of setting up of a schedule of dates for various
stages and exercise control over the activities.
PERT chart is a graphical representation of the activities of a

project, showing the sequence that has to be monitored,
controlled and performed continuously.
3
Why PERT?
• Prediction of deliverables
• Planning and controlling resources requirement
• Determination of activities and evaluation of activities
• Elimination of risks in a complex activities
• Reduction in cost and savings in time
• Internal program review and performance evaluation
PERT makes two assumptions for completion of project:
• Total project completion time follows a normal probability distribution

• Activity times are statistically independent
4
Probabilistic Time Estimates
• Reflect uncertainty of activity times
• Beta distribution is used in PERT
Optimistic Time : (to) Most Likely Time : (tm) Pessimistic Time : (tp)
the minimum time in which the best estimate of time in the maximum time in which
activity can be completed which the activity can be the activity can be completed
accomplished against all odds
to is equal to or less than tm which in turn is equal or less than tp

Mean (Expected Time)
Variance
2
te = to + 4tm + tp
6
σ² = tp - to
6
to = optimistic time estimate

tm = most likely time estimate
tp = pessimistic time estimate 5
Probability computation
Determine probability that project is completed within specified time
Z = x - μ Standard deviation,
σ
Where,
σ = √ σ2 = √ tp−to 2
μ = te = project mean time 6

σ = project standard mean deviation
X = (proposed) specified time Where,
tp = pessimistic time
to = optimistic time
σ = project standard mean deviation
6
Examples of Beta Distribution
• When Z is positive, Ts is at the right of Te and the probability of completion >50%
• When Z is negative, Ts is at the left of Te and probability of completion is <50%
• When Z is Zero, Ts coincides with Te and the probability of completion is 50%

7
Where PERT?
• Used in research and development projects
• Developing , tooling and introducing a new project
• Plan and execute the acquisition and installation of an

electronic system
• Management development and organizational planning
• Estimation of cost and time of each step or activity in a

project
8
Advantages of PERT
• Identifies the most critical elements in the plan, thus focusing
management attention ie. Constraining on the schedule
• It explicitly defines and makes visible dependencies

(precedence relationship) between the WBS elements
• Provides for potentially reduced project duration due to better

understanding of dependencies leading to improved overlapping
of activities and tasking wherever feasible
• Encourages logical discipline in planning, scheduling and

control of project
• Facilitates long range and detailed project planning
• Provides a standard method of documenting and

communicating project plans, schedules and time & cost
performance 9
Disadvantages
• Major disadvantage is it’s emphasis only on time and not costs
• This method can get very complex and tedious - there can be potentially
hundreds of activities and individual dependency relationships
• It is difficult to estimate accurate time of various activities involved in a

project. Errors in estimation makes the Pert charts unreliable
• The activity time estimates are somewhat subjective and depend on

judgement bringing in personal bias in time
• PERT assumes that the probability distribution of the project

completion time is the same as that of the critical path
10
Process Flow in a PERT
• Identify Activities & Events

– Activities = tasks to be performed to complete
the project.
1. Identify 2. Determine
– Events mark the beginning and end of the
the specific the proper activities
Activity & sequence of the
Events activities • Determine the sequence of activities
• Estimate the time required for activity

– A distinguishing feature of PERT is its ability to
deal with uncertainty in activity completion times.
3. Estimate the • Construct a network diagram

5. Determine time required – Network diagram shows sequence of serial and
the critical
for each parallel activities, using activity sequence
path
activity
• Determine the critical path
– The longest path in the network diagram is the
4. Construct a critical path for the project
network – The critical path determines total time for the
diagram overall process flow
11
Differences between PERT and CPM
PERT CPM
• Uncertain / unpredictable • Predictable and well defined

Type of activities events, using probabilistic activities, using deterministic
model model
Variables that are

• Time only • Cost and time
minimized
• Three (optimistic, pessimistic,

Types of time • One (duration)
most likely)
estimates • Reasonable
• More precise
• Research and development

Application • Non-research projects
projects
12
PERT Example 1
For the given activities determine:
1. Critical path using PERT.

2. Calculate variance and standard deviation for each activity.
3. Calculate the probability of completing the project in 26 days.
ACTIVITY to tm tp
1-2 6 9 12
1-3 3 4 11
2-4 2 5 14
3-4 4 6 8
3-5 1 1.5 5
2-6 5 6 7
4-6 7 8 15
5-6 1 2 3
13
PERT Example 1
Solution: First of all draw the network diagram for given data as shown below
by calculating Expected times (te):
2 6
9 6 6
9
1 4
6 2
5
3 5
2
ACTIVITY to tm tp te= (to+4tm+tp)/6

1-2 6 9 12 (6+36+12)/6 = 9
1-3 3 4 11 5
2-4 2 5 14 6
3-4 4 6 8 6
3-5 1 1.5 5 2
2-6 5 6 7 6
4-6 7 8 15 9 14
MBA (M&S), 2 Semester, Batch 2024 5-6 1 2 3 2
Quick CPM recap
Assuming, this was a deterministic case and the ‘expected time’ was actually
the duration
9
6 23
2 15
9 6 6
15 23
0 9
15 9
1 4
6 11 2
5 7
5
3 5
2
TOTAL
ACTIVITY DURATION EST EFT LST LFT
FLOAT
1-2 9 0
1-3 5 0
2-4 6 9
3-4 6 5
3-5 2 5
2-6 6 9
4-6 9 15
5-6 2 7 15
Quick CPM recap
2 6
9 6 6
9
1 4
6 2
5
3 5
2
DURATION EFT = TOTAL

ACTIVITY EST LST LFT
(D) EST + D FLOAT
1-2 9 0 9
1-3 5 0 5
2-4 6 9 15
3-4 6 5 11
3-5 2 5 7
2-6 6 9 15
4-6 9 15 24
5-6 2 7 9 16
Quick CPM recap
9 24
2 6
9 6 6
0 9 15 24
9
1 4
0 6 15 2
5 7
5
3 5
20 2 22
TOTAL
FLOAT
1-2 9 0 9 9
1-3 5 0 5 20
2-4 6 9 15 15
3-4 6 5 11 15
3-5 2 5 7 22
2-6 6 9 15 24
4-6 9 15 24 24
5-6 2 7 9 24 17
Quick CPM recap
2 6
9 6 6
9
1 4
6 2
5
3 5
2
LST = TOTAL
ACTIVITY DURATION EST EFT LFT
LFT - D FLOAT
1-2 9 0 9 0 9
1-3 5 0 5 15 20
2-4 6 9 15 9 15
3-4 6 5 11 9 15
3-5 2 5 7 20 22
2-6 6 9 15 18 24
4-6 9 15 24 15 24
5-6 2 7 9 22 24 18
Quick CPM recap
2 6
9 6 6
9
1 4
6 2
5
3 5
2
TF = (LFT-
EST-D)
TOTAL
FLOAT
1-2 9 0 9 0 9 0
1-3 5 0 5 4 20 15
2-4 6 9 15 9 15 0
3-4 6 5 11 9 15 4
3-5 2 5 7 20 22 15
2-6 6 9 15 18 24 11
4-6 9 15 24 15 24 0
5-6 2 7 9 22 24 15 19
Now let’s use PERT method
1 Critical path
Here the critical path is along the activities 1-2, 2-4, 4-6.
So the critical path is 1-2-4-6.
Following diagram is prepared to show critical path along with EST and LFT.
9
2 6 24
9 9 6 6
15 24
0 9
1 4
0 6 15 2
5
3 5
2
TOTAL
FLOAT
1-2 9 0 9 0 9 0
2-4 6 9 15 9 15 0
4-6 9 15 24 15 24 0
∴ The critical path = 1-2-4-6 with time duration (tcp) of 24 days. 20

PERT Example 1
2 Standard deviation & variance
Solution: First of all draw the network diagram for given data as shown below:
2 6
9 6 6
9
1 4
6 2
5
3 5
2
Here the time for completion of activities are probabilistic. So, using given
values of time we will find the expected time to completion the activities and
variance.
Expected time, te = (to+4tm+tp) / 6
Variance V = tp−to 2
21
6
PERT Example 1
2 6
9 6 6
9
1 4
6 2
5
3 5
2
ACTIVITY to tm tp te= (to+4tm+tp)/6 Variance V

1-2 6 9 12 (6+36+12)/6 = 9
1-3 3 4 11 5
2-4 2 5 14 6
3-4 4 6 8 6
3-5 1 1.5 5 2
2-6 5 6 7 6
4-6 7 8 15 9
5-6 1 2 3 2
22
PERT Example 1
2 6
9 6 6
9
1 4
6 2
5
3 5
2
te= Variance
ACTIVITY to tm tp
(to+4tm+tp)/6 V = [tp – to /6]2
1-2 6 9 12 (6+36+12)/6 = 9 (12 – 6 /6)2 = 1.00
1-3 3 4 11 5 1.778
2-4 2 5 14 6 4.000
3-4 4 6 8 6 0.444
3-5 1 1.5 5 2 0.444
2-6 5 6 7 6 0.111
4-6 7 8 15 9 1.778
5-6 1 2 3 2 0.11 23
PERT Example 1
Next we calculate, standard deviation for activities of critical path.
∴ The critical path = 1-2-4-6 with time duration (tcp) of 24 days.
ACTIVITY to tm tp Te Variance
1-2 6 9 12 9 1.00
1-3 3 4 11 5 1.778
2-4 2 5 14 6 4.000 σc = √ V1+V2+V3
3-4 4 6 8 6 0.444
3-5 1 1.5 5 2 0.444 σc = √ 1+4+1.778 = 2.6034
2-6 5 6 7 6 0.111
4-6 7 8 15 9 1.778
5-6 1 2 3 2 0.11

PERT Example 1
3 Probability: 26 days completion
Finally to get to the probability of completion of project in that given time

(t) of 26 days, can be calculate by below formula,
Z = tsp−tcp = 26−24 = 0.7682

σ 2.6034
Using the Standard Normal Table, we can look up the corresponding probability

25
STANDARD NORMAL TABLE
26
STANDARD NORMAL TABLE
3 Probability: 26 days completion
Z = 0.7682
Probability = average of 0.7764 and 0.7794

= 0.7779 = 77.8%
Therefore, the probability of completion of project in given time (t) of 26 days is 77.8%
27
Project Crashing
It is not uncommon to face the following situations in a project

execution :
• The project is behind schedule

• The completion time has been moved forward
Such shortening of duration of the project is called Project Crashing
• Crashing : reducing project time by utilising additional resources
• Crash time : amount of time by which activity is reduced
• Crash Cost : Additional cost implications for reducing activity time
• Goal : reduce project duration at minimum cost

28
Crashing Activity
29
ASSIGNMENT QUESTION
30
Questions

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Project Management

Module 2: Strategic Decisions

• Planning and designing product / services

• Facility location: factor rating, load-distance, center of gravity / median

• Facility layout: Assembly Line Balancing, block diagramming

• Capacity planning & management: break-even, decision tree

• Project management: PERT / CPM

• Project Evaluation & Review Technique (PERT) is a statistical

• Uses a network of activities and each activity is represented

• In a simple form, a project is viewed as a total system and

PERT chart is a graphical representation of the activities of a

PERT makes two assumptions for completion of project:

• Total project completion time follows a normal probability distribution

to is equal to or less than tm which in turn is equal or less than tp

to = optimistic time estimate

Determine probability that project is completed within specified time

μ = te = project mean time 6

• When Z is positive, Ts is at the right of Te and the probability of completion >50%

• When Z is negative, Ts is at the left of Te and probability of completion is <50%

• When Z is Zero, Ts coincides with Te and the probability of completion is 50%

• Used in research and development projects

• Developing , tooling and introducing a new project

• Plan and execute the acquisition and installation of an

• Management development and organizational planning

• Estimation of cost and time of each step or activity in a

• It explicitly defines and makes visible dependencies

• Provides for potentially reduced project duration due to better

• Encourages logical discipline in planning, scheduling and

• Facilitates long range and detailed project planning

• Provides a standard method of documenting and

• It is difficult to estimate accurate time of various activities involved in a

• The activity time estimates are somewhat subjective and depend on

• PERT assumes that the probability distribution of the project

• Identify Activities & Events

• Estimate the time required for activity

3. Estimate the • Construct a network diagram

• Uncertain / unpredictable • Predictable and well defined

Variables that are

• Three (optimistic, pessimistic,

• Research and development

1. Critical path using PERT.

ACTIVITY to tm tp te= (to+4tm+tp)/6

DURATION EFT = TOTAL

∴ The critical path = 1-2-4-6 with time duration (tcp​) of 24 days. 20

Expected time, te ​= (to​+4tm​+tp) / 6

ACTIVITY to tm tp te= (to+4tm+tp)/6 Variance V

Next we calculate, standard deviation for activities of critical path.

∴ The critical path = 1-2-4-6 with time duration (tcp​) of 24 days.

Dr. Tapas Bhattacharya, Amity Business School

Finally to get to the probability of completion of project in that given time

Z = tsp−tcp ​= 26−24​ = 0.7682

Dr. Tapas Bhattacharya, Amity Business School

Probability = average of 0.7764 and 0.7794

It is not uncommon to face the following situations in a project

• The project is behind schedule

Such shortening of duration of the project is called Project Crashing

• Crashing : reducing project time by utilising additional resources

• Crash time : amount of time by which activity is reduced

• Crash Cost : Additional cost implications for reducing activity time

• Goal : reduce project duration at minimum cost

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∴ The critical path = 1-2-4-6 with time duration (tcp) of 24 days. 20

Expected time, te = (to+4tm+tp) / 6

∴ The critical path = 1-2-4-6 with time duration (tcp) of 24 days.

Z = tsp−tcp = 26−24 = 0.7682