ProjMgmt7

NETWORK Techniques PERT & CPM

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 Project trade-off analysis
• A “trade-off analysis” sounds scary and customers might read it
as “You mean I won’t get what I want?” And yes, the customer
may not get everything they want – it’s a matter of priorities.

• A “paired comparisons” matrix is a useful tool for establishing

project objective priorities. To complete the matrix we have
our client compare each of the four key project objectives
against each other objective and in each instance record on the
matrix the more important objective, then sum the number of
times (score) each objective is recorded to determine objective
priorities.

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• For example, we might find that our project is time-
driven, in which case no work package should exceed a
specific duration (say two weeks) to enable us to
monitor with some accuracy schedule progress and take
timely corrective action as need be. Also, if our project
is time-driven we would take particular care with risks
that might impact project duration and if on-time
completion is in jeopardy we might then trade-off the
least important parameter in order to stay on schedule
to meet our client’s top expectation of on-time delivery.

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• A trade-off involves a sacrifice that must be made to
obtain a desired result. During the planning or
execution of a project there may be a need to alter
one or more of the project parameters, but in doing
so there will usually be an impact or trade-off
elsewhere since key project parameters or objectives
are interlinked. For example, if we were to increase
the project scope (ie, add work) we could expect a
variation to at least the project schedule and/or
budget to accommodate this change.

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• This means if we tinker with one parameter it has
an effect on at least one other parameter, much
like the following diagram attempts to illustrate.
You will notice that if the project is delayed,
perhaps due to poor weather, the project cost is
likely to increase. This cost increase might occur
because we usually need to pay wages and
equipment hire charges even when work is
temporarily halted due perhaps to poor weather.

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• A useful way to tackle such problems is to first prepare a network diagram,
inset normal task durations, and thus determine the critical path that must
be accelerated to achieve shorter project durations. To reduce project
duration from 12 weeks to 11 weeks the cheapest option is to accelerate
critical Task D by one day, thus adding an extra $4,000 to the cost of the
project. While we accelerate a project by speeding up critical path tasks,
there soon comes a point when other paths also become critical and these
too must be completed more quickly should we wish to further accelerate
the project.

• The following network diagrams show the most economical options to

achieve the required durations. I suspect in this example that the client
would settle for one or two days acceleration, but beyond that point
further acceleration becomes a very expensive proposition for this project.

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• . Network Techniques helps managers to plan when to
start various tasks to allocate resources so that the task
can be carried out within schedule.
• The network diagram may be defined as a graphical
representation of the projects activities showing the
planned sequence of work. There are various
terminology which is used in network Technique
– 1) Event or Node: An event is a specific instant of time which
marks the start and end of the activity.
– 2) Dummy Activity: it is that activity which is accomplished in
zero time and consuming no resources.

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• Time is of great essence in all projects and one
of the most important objectives of all project
mgrs is to ensure completion of a project in
time.
• As projects are unique ,one time endeavors,
the normal planning and control tools are not
effective in planning and scheduling of
projects.

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• Network diagrams provide a framework which can be
used to develop project schedules and also for
updating and control of projects. Network diagrams
provide a mechanism to depict the interdependencies
of various activities that constitute a project.
• For effective monitoring and control ,it is necessary to
break up a project into smaller activities. The basic
idea is that if individual project activities are
completed in time , the project should also be
completed in time.

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• Activity : An activity is a homogenous element
of work consuming some resources and
requiring some definite amount of time for it’s
completion. An activity is the smallest unit of
productive effort to be planned, scheduled
and controlled in a project and is represented
by an arrow in a network diagram.

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• Event :The starting of an activity or ending of an
activity is called an event.
• Activities are completed over a period of time, while
events take place at an instant of time.
• A project is completed only when all it’s activities have
been completed.
• However ,as many activities may be going
simultenously,it is difficult to compute the project
completion time even if the estimated duration of
each activity is known.
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• Simple event : A simple event is one which has
only one preceding activity and only one
succeeding activity.
• Merge event :A merge event is one which has
more then one preceding and only one
succeeding activity.
• Burst event : A burst event is one which has
only one preceding activity and more than one
succeeding activity.
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• Combined merge and burst event :An event having
more than one preceding activities as well as more
than one succeeding activities is a combined burst and
merge event.
• A dummy activity is one which does not consume any
resource and does not require any amount of time for
it’s completion.
• Dummy activities are required only for the purpose of
explicitly depicting certain activity interdependencies
which can not be shown otherwise.
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• Dummy activities are represented by dotted arrows
in network diagrams. After a dummy activity has
once been introduced in a network , it is treated
exactly like any other activity for any further analysis.
• A project has to be broken up into it’s constituent
activities for detailed planning and scheduling. Each
activity is homogenous ,requires specific amount of
resources and is responsibility of a specific
individual.WBS is usually employed to break a large
project into it’s constituent activities.
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• Information required for drawing networks:
– Project activities
– Activity interdependencies
– Time estimates
– Level of networks

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• Forward pass
• Backward pass
• Total slack : total slack for an activity is the difference
between its LF and EF or that between its LS and ES.
• Free slack : Free slack can occur for only those
activities whose head events are merge events(or
combined merge and burst events) and this slack is
available only to the activity concerned and not to its
successor.

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• If the activity concerned cannot make use of
free slack , it is no longer available to any of its
succeeding activities.
• Independent slack: Some activities may have
some slack which they do not share with any
of their predecessors or any of their
successors.

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• Critical path : If the project has to be finished at
its earliest completion then some activities
cannot be delayed at all.
• These are activities with zero slack and they are
called critical activities as their timely
completion is critically important for the timely
completion of the project.
• The path obtained by joining the critical
activities is called the critical path of the project.
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• The critical path is also the longest path from
the start of the project to its finish.
• However ,a project may have more than one
critical path.
• While a project is under execution ,critical
activities need to be monitored very closely as
any delay in their completion is immediately
reflected as a delay in the project completion.

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 CPM
• . CPM - Critical Path Method
• DuPont developed a Critical Path Method (CPM) designed
to address the challenge of shutting down chemical plants
for maintenance and then restarting the plants once the
maintenance had been completed.
• Complex project, like the above example, require a series
of activities, some of which must be performed
sequentially and others that can be performed in parallel
with other activities.
• This collection of series and parallel tasks can be modeled
as a network.
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• CPM models the activities and events of a
project as a network. Activities are shown as
nodes on the network and events that signify
the beginning or ending of activities are
shown as arcs or lines between the nodes.

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 Probabilistic duration
• In many projects there are activities whose time
durations cannot be estimated very precisely because
of high degree of uncertainty associated with them.
• In fact ,it may become impossible to get satisfactory
time estimates for some activities because of the
uncertainty in their duration.
• For some activities where the degree of uncertainty is
high ,it may be easier and more appropriate to get
three estimates for each activity duration rather than
trying to get the best estimate.
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• Optimistic time: If all conditions are favorable ,
then the minimum time in which an activity
can be finished is called the optimistic time of
the activity concerned.
• Pessimistic Time :This is the reverse of
optimistic time . If all conditions are
unfavorable , then the maximum time in which
an activity will be finished is called its
pessimistic time
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• Most likely time: In reality , some factors may be
favorable and some others unfavorable for the
timely finish of an activity and so in almost all
cases the actual time to finish an activity will be
somewhere between the optimistic and the
pessimistic times.
• The most likely time is that duration of the activity
which has the highest probability of occurrence
among all possible values of the activity duration.

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• Network techniques: Network techniques
helps managers to plan when to start various
tasks to allocate resources so that tasks can be
carried out within schedule.
• The network diagram may be defined as a
graphical representation of the projects
activities showing the planned sequence of
work.

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Critical path method : Complex projects ,require
a series of activities , some of which must be
performed sequentially and others that can be
performed in parallel with other activities.
This collection of series and parallel tasks can be
modeled as a network. CPM models the
activities and events of a project as a network.

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• CPM is a technique which is used for the
projects where the time needed for completion
of project is already known.
• It is majorly used for determining the
approximate time within which a project can be
completed.
• Critical path is the largest path in project
management which always provide minimum
time taken for completion of project.
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• CPM benefits:
– Provides a graphical view of the project
– Predicts the time required to complete the project
– Shows which activities are critical to maintaining
the schedule and which are not.
• Limitations :
– While CPM is easy to understand and use, it does
not consider the time variations that can have a
great impact on the completion time of a project.
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– CPM was developed for complex but fairly routine
projects with minimum uncertainty in the project
completion times.
– For less routine projects there is more uncertainty
in the completion times, and the uncertainty limits
its usefulness.

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 PERT
• PERT : The program evaluation and review
technique is a network model that allows for
randomness in activity completion times. It
has the potential to reduce both the time and
cost required to complete a project.
• Benefits :
– Expected project completion times
– Probability of completion before a specified date

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– The critical path activities that directly impact the completion
times.
– The activities that have slack time and can lend resources to
critical path activities.
– Activities start and end dates.
– PERT is appropriate technique which is used for the projects
where the time required or needed to complete different
activities are not known.
– PERT is majorly applied for scheduling, organization and
integration of different tasks within a project. It provides the
blueprint of project and is efficient technique for project
evaluation

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• Limitations :
– The activity time estimates are some what subjective
and depend on judgment. In cases where there is
little experience in performing an activity , the
numbers may be only a guess. In other cases, if the
person or group performing the activity estimates
the time there may be bias in the estimate.
– The underestimation of the project completion time
due to alternate paths becoming critical is perhaps
the most serious.

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• The Program Evaluation and Review Technique (PERT) is a network
model that allows for randomness in activity completion times. PERT
was developed in the late 1950's for the U.S. Navy's project having
thousands of contractors. It has the potential to reduce both the time
and cost required to complete a project.
• The Network Diagram
• In a project, an activity is a task that must be performed and an event
is a milestone marking the completion of one or more activities.
Before an activity can begin, all of its predecessor activities must be
completed. Project network models represent activities and
milestones by arcs and nodes. PERT is typically represented as an
activity on arc network, in which the activities are represented on the
lines and milestones on the nodes.

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 Steps

• PERT planning involves the following steps:

– 1. Identify the specific activities and milestones.
– 2. Determine the proper sequence of the activities.
– 3. Construct a network diagram.
– 4. Estimate the time required for each activity.
– 5. Determine the critical path.
– 6. Update the PERT chart as the project progresses.

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• Estimate activity times
• Weeks are a commonly used unit of time for activity completion,
but any consistent unit of time can be used. A distinguishing
feature of PERT is its ability to deal with uncertainty in activity
completion times. For each activity, the model usually includes
three time estimates:
– • Optimistic time (OT) - generally the shortest time in which the activity
can be completed.
– • Most likely time (MT) - the completion time having the highest
probability. This is different from expected time. Seasoned managers have
an amazing way of estimating very close to actual data from prior
estimation errors.
– • Pessimistic time (PT) - the longest time that an activity might require.

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• The expected time for each activity can be
approximated using the following weighted
average:
• Expected time = (OT + 4 x MT+ PT) / 6
• This expected time might be displayed on the
network diagram.
• Variance for each activity is given by: [(PT - OT) /
6]
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• PERT is useful because it provides the
following information:
– • 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.
– • Activities start and end dates.

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• Limitations of PERT
• The following are some of PERT's limitations:
• The activity time estimates are somewhat subjective and
depend on judgment. In cases where there is little
experience in performing an activity, the numbers may be
only a guess.
• In other cases, if the person or group performing the activity
estimates the time there may be bias in the estimate.
• The underestimation of the project completion time due to
alternate paths becoming critical is perhaps the most serious

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 Difference
• . PERT is that technique of project
management which is used to manage
uncertain (i.e., time is not known) activities of
any project.
• CPM is that technique of project management
which is used to manage only certain (i.e.,
time is known) activities of any project.

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• PERT is event oriented technique which means
that network is constructed on the basis of
event.
• CPM is activity oriented technique which
means that network is constructed on the
basis of activities.
• PERT is a probability model whereas CPM
is a deterministic model

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• PERT majorly focuses on time as meeting time
target or estimation of percent completion is
more important.
• CPM majorly focuses on Time-cost trade off as
minimizing cost is more important.
• PERT is appropriate for high precision time
estimation.
• CPM is appropriate for reasonable time
estimation.
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• PERT has Non-repetitive nature of job.
• CPM has repetitive nature of job.
• In PERT, there is no chance of crashing as
there is no certainty of time.
• In CPM ,there may be crashing because of
certain time foundation.

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• PERT doesn’t use any dummy activities.
• CPM uses dummy activities for representing
sequence of activities.
• PERT is suitable for projects which required
research and development.
• CPM is suitable for construction projects.

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• The critical path method is used to estimate the
minimum project duration. This will help determine
the amount of scheduling flexibility available on
network paths. It calculates the early start, early
finish, late start, and late finish dates for all tasks.
• These do not consider any resource limitations by
performing a forward and backward pass analysis
through the schedule network, as shown in Figure.
We would be using the term task and activity
interchangeably.
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• In this example the longest path includes tasks A, C, and D, and,
therefore, the sequence of A-C-D is the critical path. The critical path
is the sequence of activities that represents the longest path through
a project.
• This determines the shortest possible project duration. The resulting
early and late start and finish dates are not necessarily the project
schedule. They show the time periods within which the task could be
executed.
• They use the parameters entered in the schedule model for activity
duration, logical relationships, leads, lags, and other known
constraints. The critical path method is used to determine the
amount of scheduling flexibility on the network paths within the
schedule model.

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• On any network path, the schedule flexibility is measured by the amount of
time that a schedule activity can be delayed or extended from its early start
date without delaying the project finish date or violating a schedule
constraint. This is termed as “total float.” A CPM critical path is normally
characterized by zero total floats on the critical path.
• Critical paths may have positive, zero, or negative total float depending on
constraints applied. Any activity on the critical path is called a critical path
activity. Positive total float is caused when the backward pass is calculated
from a schedule constraint that is later than the early finish date that has
been calculated during forward pass calculation.
• Negative total float is caused when a constraint on the late dates is violated
by duration and logic. Schedule networks may have multiple near-critical
paths. Many software packages allow the user to define the parameters
used to determine the critical path(s).

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• Adjustments to task duration may be required. For example, if
more resources or less scope can be arranged, logical
relationships (if the relationships were discretionary, to begin
with), leads and lags, or other schedule constraints may be
necessary to produce network paths with a zero or positive
total float.
• Once the total float for a network path has been calculated,
then the free float—the amount of time that a schedule activity
can be delayed without delaying the early start date of any
successor or violating a schedule constraint—can also be
determined. For example, the free float for Activity B, in Figure,
is 5 days

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• Framework for PERT and CPM:

– Define the project

– Project should have a single start and finish task
– Develop relationships among the tasks
– Draw the "network" connecting all the tasks
– Assign time and/or cost estimates to each task
– Compute the critical path
– Use the network to help plan, schedule, monitor and
control the project
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• Task / Activity:

• PERT activity: The actual performance of a task which consumes time

and requires resources. It can be representing the time, effort, and
resources required to move from one event to another. A PERT activity
cannot be performed until the predecessor event has occurred or
completed.
• PERT sub-activity: A PERT activity can be further decomposed into a
set of sub-activities. For example, activity P1 can be decomposed into
P1.1, P1.2, and P1.3. Sub-activities have all the properties of activities;
in particular, a sub-activity has predecessor or successor events just
like an activity. A sub-activity can be decomposed again into finer-
grained sub-activities.

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• Event:

• PERT event: It is a point that marks the start or completion of one or

more tasks. It consumes no time and uses no resources. When it marks
the completion of one or more tasks, it is not "reached" (does not occur)
until all the tasks leading to that event have been completed.
• Predecessor event: This is an event that immediately precedes some
other event without any other events intervening. An event can have
multiple predecessor events and can be the predecessor of multiple
events.
• Successor event: This is an event that immediately follows some other
event without any other intervening events. An event can have multiple
successor events and can be the successor of multiple events.

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• Float or slack: Is a measure of the excess time and resources
available to complete a task. It is the amount of time that a
project task can be delayed without causing a delay in any
subsequent tasks (free float) or the whole project (total float).
Positive slack would indicate ahead of schedule; negative slack
would indicate behind schedule, and zero slack would indicate
on schedule.
• Critical path: The longest possible continuous pathway taken
from the initial event to the terminal event. It determines the
total calendar time required for the project; and, therefore, any
time delays along the critical path will delay the reaching of the
terminal event by at least the same amount.

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• Critical Activity: An activity on a critical path is a critical activity.
This has total float equal to zero. There could be activities with
zero float buy that may not necessarily be on the critical path since
its path may not be the longest.
• Lead Time: The time by which a predecessor event must be
completed in order to allow enough time for the activities that
must elapse before a specific PERT event reaches completion.
• Lag Time: The earliest time by which a successor event can follow
a specific PERT event.
• Fast Tracking: Here one would be performing more critical
activities in parallel
• Crashing critical path: Shortening duration of critical activities.

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• For proper planning, scheduling ,and control
of the activities of a project , given their
interrelationship and constraints on the
availability of resources ,network techniques
have been found useful.
• PERT is applied mostly to projects
characterized by uncertainty ;its orientation is
probabilistic.

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• CPM is applied to projects which are relatively
risk free ; its orientation is deterministic. Widely
diverse projects are amenable to analyze by PERT
and CPM.
• The network diagram is constructed in terms of
activities and events. An activity is a definite task,
job or function to be performed in a project. An
event is a specific point of time indicating the
beginning or end of one or more activities.

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• The rules to be observed in constructing the
network diagram are :
– Each activity must have a preceding and
succeeding event.
– Each event should have a distinct number.
– There should be no loops in the project network.
– Not more than one activity can have the same
preceding and succeeding events.

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 Dummy activity
• To ensure that each activity is uniquely
numbered ,it may be necessary to introduce
dummy activities .
• A dummy activity is an imaginary activity which
can be accomplished in zero time and which
does not consume resources.
• A dummy activity may also be used to represent
a constraint necessary to show the proper
relationship between activities.
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• Once the network diagram with single time
estimates have been developed ,the critical
path, event slacks, activity floats are calculated
along with earliest occurrence time, critical and
slack path .
• The early start schedule refers to the schedule
in which all activities start as early as possible.
• The late start schedule reflects a desire to
commit the resources late, as late as possible.
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• In reality , there may be restrictions on
availability of resources . In the face of these
,various schedules may have to be considered
to find out which one is most appropriate in
the light of these restrictions.
• Once the standard deviation and mean of
critical path duration is known, the probability
of completion by a specified date , can be
calculated.
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• The usual assumptions underlying CPM analysis
are :
• The costs associated with a project can be divided
into two components direct costs and indirect costs.
The activities of the projects can be expedited by
crashing which involves employing more resources.
Crashing reduces time but enhances direct costs .
Indirect costs associated with the project increases
linearly with project duration.

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• CPM analysis seeks to examine the consequences of
crashing on total costs (direct and Indirect).
• The procedure used is :
– Obtain the critical path in normal network
– Determine the project duration and direct costs.
– Examine the time cost slope of activities on the critical path
obtained and crash the activities which has the least slope .
– Construct the new critical path after crashing.
– Repeat the above till all activities on the critical path are
crashed.

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• To provide a vehicle for cost planning and
control of projects , the network cost systems
was developed . This represents a useful
supplement to the traditional time oriented
network analysis.
• The network cost systems consists of costs are
planned , measured, and controlled in terms
of project activities.

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• As the project progresses , the following may
be measured /estimated periodically for
purpose of monitoring and control :
– Costs incurred to-date
– Budgeted costs to-date
– Value of work done to-date
– Costs overrun to-date
– Time overrun to-date.

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