CPM,PERT and Other

Networks
CPM – Critical Path Method

PERT – Program Evaluation and

Review Technique
 PROJECT

A project is a temporary endeavor involving a connected

sequence of activities and a range of resources, which is
designed to achieve a specific and unique outcome and which
operates within time, cost and quality constraints and which is
often used to introduce change.
 Characteristic of a Project

• A unique, one-time operational activity or effort

• Requires the completion of a large number of interrelated

activities
• Established to achieve specific objective (s)

• Resources, such as time and/or money, are limited

• Typically has its own management structure

• Need leadership
 Examples

• Construction of houses, factories, shopping malls, athletic

stadiums or arenas
• Development of military weapons, systems, aircrafts, new
ships, satellite systems
• Construction of oil pipelines
• Development and implementation of new computer
systems
• Planning a concert, football games, or basketball
tournaments
• Introduction of new products into market

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 Project Scheduling and Control Techniques

Critical Path Method (CPM)

Program Evaluation and Review Technique

(PERT)
 History of CPM/PERT

Critical Path Method (CPM)

E I Du Pont de Nemours & Co. (1957) for construction of new
chemical plant and maintenance
Deterministic task times
Activity-on-node network construction
Repetitive nature of jobs
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)
 CPM/PERT Process
3 stage process
Stage 1 Formulation

Step 1 Analysis of the project, i.e. dividing the whole

project into some identifiable activities (determining the
activities that must be performed to accomplish the
objective of the project)
Step 2 Sequence the activities, i.e. establishing the
preceding and succeeding relationship among the activities
identified in step 1.
Step 3 Estimate the time and cost required to perform
the activities identified in step 1.
 CPM/PERT Process Contd.

Stage 2 Solution
Step 1 Network construction
Step 2 Event Analysis
Step 3 Activity Analysis

Stage 3 Analysis and Application

Step 1 Monitoring and control
Step 2 Resource utilization
 Definitions Used in PERT and CPM

 Activity – An activity is an effort that requires resources

and takes certain amount of time for completion.
Examples are designing job description and job
specification, giving job circular etc.

 Event – An event is a specific accomplishment at a

recognizable point in time; a milestone, a checkpoint. For
example: getting approval of the job design from the top
management
To reach an event, all activities that precede it must be
completed. An event can be viewed as a goal attained.
 Definitions Used in PERT and CPM
 Network – A network is a logical and chronological set of
activities and events, graphically illustrating the relationship
among the various activities and events of the project.
 Critical Activity – A critical activity is an activity that, if even
slightly delayed, will delay the scheduled completion date of
the entire project.
 Path – A path is sequence of adjacent activities that form a
continuous path between two events.
 Critical Path – A critical path is the sequence of critical
activities that forms a continuous path between the start of a
project and its completion and takes longest time to complete
the project.
 Problem: 1

Activity Description Duration Immediate

Predecessor
a Administrative setup 3 None
b Hire personnel 4 a
c Obtain material 4 a
d Transport material to Project location 2 c
e Gather measuring team 4 a
f Planning 6 c
g Assemble equipment 3 d, b
h Plan evaluation 1 e
i Oxygenation 12 f, g
j Measurement and evaluation 2 i, h
 Event Analysis

The following three things are to be calculated for event analysis:

 Earliest Possible Start time for an event (TE)

 Latest Allowable Finish Time for an event (TL)
 Event Slack
 Calculating TE

• Forward Pass method is used.

• The method starts with the assumption that TE of the
first event of the project will always be zero.
• TE of all the events other than the first one will be
calculated by using the following rule:

TE of an event = TE of preceding event + Activity duration

Note: If there are two preceding events of an event, we have to

calculate TE using both the preceding events, but we have to
accept the maximum value.
 Calculating TL

• Backward Pass method is used.

• The method starts with the assumption that TL of the
last event of the project will always be equal to TE of
the last event.
• TL of all the events other than the last one will be
calculated by using the following rule

TL of an event = TL of succeeding event - Activity duration

Note: If there are two succeeding events of an event, we have to

calculate TL using both the succeeding events, but, this time,
we have to accept the minimum value.
 Event Slack

• Event slack is the maximum amount of time by which

an event can be delayed without delaying the project
completion time.
• Event Slack = TL of an event – TE of an event
 Activity Analysis

 Under activity analysis, we have to calculate activity

slack.
 Activity slack is the maximum amount of time by
which an activity can be delayed without delaying the
project completion time.
 Activity slack = TL at the end of the activity – TE at
the start of the activity – Activity duration

Activity slack of all the critical activities must be zero indicating that critical
activities can not be delayed.
 Program Evaluation
and Review Technique
(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 all
the surrounding, environmental, social and economic factors
that affects the activity time will be against the project. So,
this will be the highest possible time to complete an activity.
Optimistic time (to ) - the time the activity would take if all the
factors will be in favor of the project. This is the minimum
possible time to complete an activity.
Most likely time (t ) - the time the activity would take under
m
normal condition that usually prevails. This is the time
estimate given by most of the experts.
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 Expected Time

From the three time estimates, one time estimate has to be

calculated based on the following formula:

t o + 4 tm + tp
Mean (expected time): te =
6

PERT Network facilitates the manager by giving probability of completing a

project within a given time.
 Problem -2
Activity Immediate Optimistic Most Likely Pessimistic Expected Time
Predecessor Time (to) Time (tm) Time (tp)

A None 18 20 22 20

B A 8 10 12 10

C B 6 8 10 8

D A 10 11 12 11

E C,D 7 7 7 7

F E 4 6 8 6

G D 10 12 14 12

H E 11 13 15 13

I G,H 5 6 7 6

Using this PERT network, we will find the probability of completing the project in 50 days.
 Calculating probability of project completion

• For finding probability of completing a project within a given

time period, we have to calculate the value of Standard
Normal Deviate, expressed by Z, by using the following
formula:
• Z = (D – TCP) / Vv
Where:
D = Desired time for which probability has to be calculated
TCP = Time to complete critical path
V = Sum of variances of all the critical activities
Activity Immediate Optimistic Time (to) Most Likely Time Pessimistic Time
Predecessor (tm) (tp)

A None
Requirements:
5 7 8

B None 6 8 12
• Draw a PERT network
C None 3 4 5
• Identify critical path
D A 11 17 25
• Compute the probability of completing the
E
projectB within 65 days.
8 10 12

F C, E 3 4 5

G D 4 8 9

H F 5 7 9

I G,H 8 11 17

J G 4 4 4
• The director wants to conduct the project 47
working days from now. What is the
probability that everything will be ready in
time?
 CPM Analysis: Cost-Time Relationship

• CPM analysis is used to evaluate various alternatives

of executing the projects where it is possible to
expedite some of the project activities or the entire
project.
• Expediting activities requires additional resources like
using overtime, special services, extra tools etc.
which increases the cost of the project.
• There can also be considerable savings if the project
is finished ahead of schedule.
 CPM Analysis: Cost-Time Relationship

• CPM analysis uses two types of costs and times:

normal time and cost and crash time and cost.
• Normal time: time required to complete an activity
without expedition.
• Crash time: time required to complete an activity when
it is expedited by adding additional resources.
Normally, crash time is less than normal time of an
activity.
• Normal cost: cost required to finish an activity in
normal time.
• Crash cost: cost required to finish an activity in crash
time. Normally, crash cost is higher than normal cost
 CPM Analysis: Cost-Time Relationship

• By using normal and crash time and cost, we will find

cost slope.
• Cost slope gives the measure of increase in costs
associated with a reduction of one unit of activity
duration.
• Alternatively, cost slope also gives the measure of
savings in cost if one unit of an activity is extended.
 CPM Analysis: Cost-Time Relationship

• Cost slope = (C C – CN) ∕ ( TN – TC)

Where,
CC = Crash cost of an activity
CN = Normal cost of an activity
TN = Normal time of an activity
TC = Crash time of an activity
The information presented in the following table shows the activities, time
and costs of a project. Determine the minimum time and cost for the
completion of the project.

Normal Crash
Activity Slope
Time Cost Time Cost
1-2 8 3000 4 6000 750
1-3 5 4000 3 8000 2000
2-4 9 4000 6 5500 500
3-5 7 2000 5 3200 600
2-5 5 8000 1 12000 1000
4-6 3 10000 2.5 11200 2400
5-6 6 4000 2 6800 700
6-7 10 6000 7 8700 900
5-7 9 4200 5 9000 1200