PROJECT MANAGEMENT CPM & PERT TECHNIQUES

MEMBERS
ADITI APTE ± 01 RITU AGARWAL ± 42 PAYAL GUPTA ± 37 LINCIA FONSECA - 29

FLOW OF PRESENTATION 
INTRODUCTION NETWORK

PLANNING TIME 

ESTIMATING CPM

AND CRASHING CHARTS 

PERT GANTT

Project Management
Project : A project is an interrelated set of activities that has a definite starting and ending point and that results in a unique product or service. Project management : Project management is a scientific way of planning, implementing, monitoring & controlling the various aspects of a project such as time, money, materials, manpower & other resources.

Network Planning Methods
What is network planning? Methods used for network planning are: CPM PERT GANTT CHARTS Managing a project with network planning methods involves four steps:
1. 2. 3. 4.

Describing the Project. Diagramming the Network. Estimating time of completion. Monitoring Project Progress.

Network Diagram
Concepts  Activity  Precedence relationship  Successor  Event

Guidelines for network diagram
1. 2. 3. 4. 5.

Before an activity can begin, its preceding activities must be completed. Arrows indicate logical precedence. Flow of the diagram is from left to right. Arrows should not intersect. Dangling should be avoided.

APPRAOCHES FOR NETWORK DIAGRAM
ACTIVITY ON ARC(AOA): Uses arcs to represent activities and nodes to represent events. It is Event Oriented.
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DUMMY ACTIVITY
AOA approach requires the addition of a Dummy Activity to clarify the precedence relationships between the two activities. It is a zero time activity and consumes no resources. Dummy Activity is used in two situations: 1) When two or more activities start and end at the same nodes 1 3

2

2) When two or more activities share the same precedence activity but not all the precedence are shared.

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ACTIVITY ON NODE(AON): Uses nodes to represent activities and arcs indicate precedence relationships between them. It is Activity Oriented.

ESTIMATING TIME OF COMPLETION
Planning the schedule of the project Time estimates include:
1) 2)

Total time for completion. ESES- Earliest start time: the earliest time at which the activity can start given that its precedent activities must be completed first. EFEF-Earliest finish time: equals to the earliest start time for the activity plus the time required to complete the activity. LFLF- Latest finish time: the latest time in which the activity can be completed without delaying the project. LSLS- Latest start time: equal to the latest finish time minus the time required to complete the activity.

3)

4)

5)

6)

FORWARD PASS: The early start and early finish times are calculated by moving forward through the network and considering the predecessor activities. Considers maximum BACKWARD PASS: The latest start and finish times are calculated by moving backward through the network. Considers minimum SLACK TIME: Slack time for an activity is the difference between its earliest and latest start time or between the earliest and latest finish time. Critical path is the path of activities having zero Slack time.

7)

8)

A Simple Project
Acti it A I r i t c ss r A D A, 4 ct Ti

Precedence Diagram

ES EF LS LF Slack

Earliest Starting (time) Earliest Finishing Latest Starting Latest Finishing Difference Time

CRITICAL PATH METHODS(CPM)
HISTORY :
It was developed by J.E.KELLY of REMINGTON-RAND REMINGTONand M.R.WALKER of DU PONT and the emphasis was on the trade-off between the cost of project and its tradeoverall completion time. The first test was made in 1958,when CPM was applied to the construction of a new chemical plant.

DEFINITION: DEFINITION:
Critical path is the sequence of activities between a project¶s start and finish that takes the longest time to complete.

STEPS IN DETERMINING CRITICAL PATH
‡ ‡ ‡ ‡ ‡ ‡

Specify the individual activities. Determine the sequence of the activities. Draw the network diagram. Estimate the activity completion time. Identify the critical path. Update the CPM diagram.

ADVANTAGES 
Provides

a graphical view of the project.  Predicts the time required for completing the project.  Shows which activities are critical to maintaining the schedule and which are not.

DISADVANTAGES
‡

There can be potentially hundreds or thousands of activities making the network diagram complex. Any changes introduced in the diagram makes the calculation of critical path difficult.

‡

CRASHING
Crashing is process of reducing overall project completion time and total project cost. Total Project Cost includes 1. Direct cost Labor, Materials ,Machinery etc 2. Indirect cost Administration, Depreciation, other variable overhead cost . 3. Penalty cost Extension of the project date, Bonus provided for early completion

TIME AND COST IN CRASHING 

NORMAL TIME : NORMAL COST : CRASH TIME : CRASH COST :

Time to complete activity under normal conditions. 

Activity cost associated with normal time. 

Shortest possible time to complete the activity. 

Activity cost associated with crash time.

STEPS IN CRASHING 


Determine projects critical path. Calculate cost slope for each activity. cost slope = crash cost ± normal cost normal time ± crash time Find activities on critical path(s) with lowest cost of crashing. Reduce the time for this activity until It cannot be further reduced. Another path becomes critical. Increase in direct cost exceeds the savings. Repeat the procedure until increase in direct cost is larger than the savings. 

 a) b) c) 

Activity Precede nce

Normal time
(week)

Normal Crash time Cost
(Rs)

Crash cost

Cost slope

A B C D E F G H I Total

A A A D B,C,E F F G

3 3 7 9 5 6 4 13 10

300 30 420 720 250 320 400 780 1000 4220

2 3 5 7 4 4 3 10 9

400 30 580 810 300 410 470 900 1200

100 0 80 45 50 45 70 40 200

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Overhead cost as per the given data- Rs.50 dataPaths in the network diagram : A-D-F-G-I = 32 A-D-F-H = 31 A-C-F-H = 29 A-C-F-G-I = 30 A-B-E-F-H = 30 A-B-E-F-G-I = 31

Critical path ± A-D-F-G-I = 32
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Total

normal cost = 4220  Project duration = 32 weeks  Total project cost = Total normal cost + Overhead cost x Project duration.  Total project cost = 4220 + 50 x 32 = Rs. 5820

Crashing activity D A-D-F-G-I = 31 A-B-E-F-G-I = 31
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Crashing activity F Twice A-D-F-G-I = 29 A-B-E-F-G-I = 29

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Project Cost and Time after Crashing
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Total project duration = 29 weeks Crash cost = 135 Total cost = 4220 + 135 + 50 x 29 = Rs. 5805 OR Savings = Rs.15 Total cost = Cost before crashing ± savings = 5820 ± 15 = Rs.5805

PERT
HISTORY : Pert (Program Evaluation and Review Technique) (Program was developed in 1958 by BOOZ ALLEN and HAMILTON Inc along with US Navy for planning and control of Polaris Missile Project and emphasis was on completing the project in the shortest possible time.

TIME ESTIMATES
Optimistic time (to) ± It is the shortest time in which the activity can be completed. o Most likely time (tm) ± It is the probable time required to perform the activity. o Pessimistic time (tp) ± It is the longest estimated time (tp) required to perform an activity. o Expected time te = to + 4tm + tp 6
o

STEPS IN PERT
1. 2. 3. 4. 5. 6.

Identify the specific activities. Determine proper sequence of the activities. Construct the network diagram. Estimate the time required for each activity. Determine the critical path. Update the PERT chart.

Activity

Descrip Preced tion ence

Optimis Most tic time Likely time

Pessimi Expecte stic d time time

A B C D E F G

Initial design Survey market Build prototype Test prototype Redesign ing Market testing Set up productio n

A A C B,D E F

12 6 8 2 3 6 15

16 9 10 3 4 8 20

26 18 18 4 11 10 25

17 10 11 3 5 8 20

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A-B-E-F-G = 60 A-C-D-E-F-G = 64 (CRITICAL PATH)

Advantages of PERT
‡ ‡ ‡

Expected project completion time. Probability of completion before a specified date. The critical path activities that directly impact the completion time. The activities that have slack time and that can lend resources to critical path activities. Activity start and end dates.

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LIMITATIONS
‡ ‡ ‡

The PERT Formula Requires Too Much Work. The network charts tend to be large and unwieldy. Calculating the time estimates is very complex for all the activities. Updating of the project is time consuming and requires high costs. Emphasis is laid only on time factors and cost factors are neglected.

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Application
o o

Used for scheduling of aircrafts. Pert techniques used in the administration of firms.

Difference between CPM & PERT
CPM
‡ CPM works with fixed

PERT
‡ PERT works with

deterministic time
‡ CPM is useful for repetitive

probabilistic time
‡ PERT is useful for non

and non complex projects repetitive and complex with a certain degree of time projects with uncertain time estimates. estimates.
‡ CPM includes time-cost time‡ PERT is restricted to time

trade off.
‡ CPM- for construction CPM-

variable.
‡ PERT- used for R&D PERT-

projects.

programs.

Gantt charts
Developed by HENRY GANTT in around 1910. Graphical representation of the duration of activities against the progression of time. It is a useful tool for planning & scheduling projects. It is helpful for monitoring a project¶s progress.

ADVANTAGES 

They provide an excellent presentation tool for illustrating groups of milestones and demonstrating individual resources scheduled to time. They can be used in status reporting to show how much of the plan has been completed by displaying the progress of an activity in the same or a parallel bar, or using colour. Many executives prefer this presentation format.  

Disadvantages 
   

Chart does not effectively address the dependencies between jobs. It is difficult to show slack and critical path without additional notation. Changes to the schedule require a redrawing of the chart. Several scheduling possibilities cannot be shown in the same chart. Resource assignments are not easy to illustrate.

Questions answered 
Completion

date?  On Schedule?  Within Budget?  Critical Activities?  How can the project be finished early at the least cost?

Thank You«

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