CHAPTER 6

Project Management
with PERT/CPM
 6.1 Introduction
• The management techniques such as Program Evaluation and Review Technique
(PERT), and Critical Path Method (CPM) are widely used all over the world to
help the managers plan, monitor, and control their projects to ensure they can
be completed within the scheduled time and the expenditure spent is within the
scheduled budget.

6.1.1 The Characteristics of a Project

1. It can be broken down into a number of activities.
2. The time duration for each activity can be estimated.
3. Certain activities must be completed first before new activities begin.
4. Some of these activities can take place concurrently.
5. All activities can be connected in a sequence forming a network.
6.1.2 The Objectives of Project Management Techniques
1. Determine a schedule of earliest and latest start and finish time for each
activity that leads to the earliest completion time for the entire project.
2. Calculate the likelihood that a project will be completed within a certain time
period.
3. Find the minimum cost schedule that will complete a project by a certain date.
4. Investigate how delays to certain activities affect the overall completion time
of a project.
5. Monitor a project to determine whether it is proceeding on time and within
budget.
6. Find a schedule of activities that will smooth out the allocation of resources
over the duration of the project
 6.2 The Framework of PERT/CPM Analysis
Six steps common to both PERT and CPM:
1. Define the project and all of its significant activities.
2. Develop the relationships among the activities. Decide which activities must
precede and follow others.
3. Draw a network that connecting all of the activities.
4. Assign time (and cost) to each activity.
5. Compute the longest time path through the network; this is called the critical path.
6. Use the network to help plan, schedule, monitor, and control the project.

Time Analysis
(i) Single time estimate for each activity - based on the judgment of the individual
responsible or by technical calculations using data from similar projects.
(ii) Multiple time estimates for each activity - three estimates for each activity,
optimistic (O), most likely (M), and pessimistic (P).
6.3 Network Diagram and Critical Path Method (CPM)
Example 6.1
A project has been broken into seven activities, namely A, B, C, D, E, F, and G.
Draw a project network diagram connecting all the activities and obtain all the
paths from “begin” to “finish”.

a) Activity A is the starting point of the whole project.

b) Activities B and C can only begin after activity A completed.
c) Activities D and E can only begin after activity B completed.
d) Activity F can only begin after activities E and C completed.
e) Activity G can only begin after activities D and F completed.
f) Activity G is the last activity of the whole project.
 6.3.2 Earliest Start and Earliest Finish Times
• The EST is the earliest possible time at which an activity can start, and EFT is the
earliest possible time an activity can finish.
• To determine the EST and the EFT for all activities, a forward pass is made
through the network.

6.3.3 Latest Start and Latest Finish Times

• The LST is the latest possible time at which an activity can start, and LFT is the
latest possible time an activity can finish without increasing the project
duration.
• To determine the LST and the LFT for each activity, a backward pass is made
through the network.
Example 6.2
Draw a complete network diagram for a project with the following
activities. Then determine the earliest start and earliest finish times
for each activity.
Solution 6.2

Critical path = A-I-J-L

Expected completion time = 10 weeks
 6.3.4 The Critical Path and Slack Times
• The critical path of a network gives the shortest time in which the whole project
can be completed. It is the chain of activities with the longest duration times.
• Slack time is the amount of time an activity can be delayed from its EST without
delaying the project’s estimated completion time.
Slack time = (LST – EST) or (LFT – EFT)
• Slack Times for Example 6.2
6.5 PERT Analysis (Handling Uncertainty)
(Further Project Time Analysis - Multiple Time Estimates)
• 
Uncertainty of activity durations:
• The PERT analysis assumes duration to complete an activity as “uncertain” due to
the unpredictable factors which could occur in nature such as weather condition,
material supply, labour supply, public holidays and etc. Thus, instead of a single
estimate of each completion time, PERT seeks three-time estimates.
The three-time estimates are defined as:
• a = optimistic time (the shortest completion time assuming no interruption),
• m = normal time (the most likely duration to complete a project),
• b = pessimistic time (the longest completion time assuming an interruption);
where a ≤ m ≤ b.

• The expected completion time for each activity (t) = (a + 4m + b)/6

• The variance of completion time for each activity () =
6.5 PERT Analysis (Handling Uncertainty)
(Further Project Time Analysis - Multiple Time Estimates)
•   uncertainty of project completion time, tp:
The
• The project completion time is assumed to follow a normal distribution with mean
= m = sum of expected times along the critical path, variance = = sum of variances
along the critical path, standard deviation of project duration = s.
• The probability of project completion at a specified time X ≤ tp as follows:

• where P(X ≤ tp ) is the probability that a project can be completed on or before tp

Example 6.7
Table below shows the breakdown of activities, the individual sequence required,
and the three time estimates for each activity in a project.
(a) If the project can start immediately, how long would it take, at the earliest,
before the project can be completed?
(b) When can activity J start at the earliest?
(c) Assuming that the duration of the activities are normally distributed. What is
the probability of completing the project in 25 weeks?
 Solution 6.7

 a) Critical path = A-C-F-H-J

Expected completion time = 19.83 weeks
Project variance (1+0.44+0.44+0.44+0.03) = 2.36 weeks
b) Activity J can start at the earliest after 18 weeks
c) Probability of completing the project in 25 weeks = 100%
(µ = 19.83 weeks, = 2.36 weeks and σ = 1.54 weeks)
Example 6.8
Mewah Properties Sdn Bhd is planning to construct various types of shop-houses in
its area. The company is given 42 weeks to complete this project. Suppose you are
the consultant for this project, you have identified the activities as listed in table
below.
(a) Construct the project network connecting all project activities.
(b) Determine the expected completion time and variance for each activity.
(c) Find the critical path, the expected project duration and the project variance.
(d) What is the probability that the project will be completed within the given time?
 Solution 6.8

 c) Critical path = A-C-E-G-I

Expected completion time = 41 weeks
Project variance (1.78+2.78+0.11+0.44+0.44) = 5.55 weeks
d) Probability of completing the project in 42 weeks = 66.28%
(µ = 41 weeks, = 5.55 weeks and σ = 2.3558 weeks)
Solution 6.8
  (µ = 41 weeks, = 5.55 weeks and σ = 2.3558 weeks)
Table A1: page 324
 Probability of Project Completion
• If Z < 0, the probability will be less than 0.5
• If Z > 0, the probability will be greater than 0.5
• If Z = 0, the probability will be 0.5