# OPERATIONS MANAGEMENT

CHAPTER :PERT & CPM By :- Prof. B.R.Narielwala

PROJECT DESIGN AND NETWORK ANALYSIS
 Execution of a project follows a definite path of planning, scheduling and controlling.  Project design defines individual activities which go into corpus of project and their interrelationship.  Network techniques help in performing various functions efficiently and effectively.

ORIGIN OF PERT AND CPM
PERT, CPM AND MOST ARE THREE DIFFERENT NAMES GIVEN TO NETWORK ANALYSIS
PERT - PROGRAMME EVALUATION AND REVIEW TECHNIQUES
 It coordinates and synchronize various parts of overall job, expedite completion of project to accomplish a pre determined job.  Communication facility to report developments

STEPS IN PERT
1. Development of project work 2. Time estimation 3. Determination of critical path, event slacks And activity floats 4. Development of project schedule 5. Calculation of variability duration and Probability of completion in a given time
In PERT, time is basic measure. It is expressed in calendar Weeks of completion of project within stipulated time. Three time estimates employed are:

1. 2. 3.

OPTIMISTIC TIME : PESSIMISTIC TIME : MOST LIKELY TIME :

Shortest possible time if Everything goes perfectly well. Longest time conceived due to Unusual delays. Best estimates of what normally would occur.

CPM : Critical Path Method CPM has two time cost estimate for each activity :  One for normal situation &  Other for crash situation Basic assumption is that there is a precise known time for each activity of project It identifies most critical elements and thus more Attention can be paid to these activities CPM is difficult to use to control activity as fresh Evaluation is required each time when changes are Introduced into network CPM is static planning model .

Probabilistic model with uncertainty in activity duration CPM 1). . Activity oriented (cost based) 2). Deterministic model with well-known activity time based. Allowance for uncertainty 3). No such allowance 3). Event-oriented (time-based) 2). Three time estimates 4). Only one time estimate.DIFFERENCE BETWEEN PERT AND CPM Though fundamental network of PERT and CPM are identical. Emphasis on cost 4). there are certain differences in details as per the chart given below: PERT 1).

Suitable for reasonable precision time estimates 7). No demarcation for critical/non-critical activities 6).DIFFERENCE BETWEEN PERT AND CPM PERT (Continue) 5). No averaging of time involved 8). Greatest reduction in completion time with least increase in project cost . Crashing concept is applied 9). Time is averaged 8). Suitable for high precision time estimates 7). Marking of critical activity 6). Based on reduction of execution time without too much cost implications CPM (Continue) 5). Concept of crashing is not applied 9).

2) b = (2. Activity on node (aon) system AOA SYSTEM : Activity is graphically represented by an Arrow represents the start and the head shows the end of activity.3) AON SYSTEM : Activities are represented by circles or nodes and arrows are used to show only dependency relationship between the activity nodes. 1 a 2 b 3 Where a & b are activities. a b c .APPLICATION OF NETWORK ANALYSIS Two types of graphs are used in CPM/PERT: 1. Activity on the arrow (aoa) system 2. this can be represented by the Numbers of nodes like a = (1.

10 b.8 AON Showing time needed for activity DUMMY ACTIVITIES 3 a b 1 c 4 2 g e 6 i f 7 d 5 h .GRAPHS OF AOA & AON 1 10 days 2 8 days 3 AOA For showing needed time a.

a is an immediate predecessor of d alone. 10 days 6 5 f.b is common immediate predecessor of both d and e . 10 days 4 d. 10 days 1 b. and c is one of e . 20 days 3 e. 30 days 1-4-5-6 (100) & 1-2-3-6 ( 40) . 60 days Longest path in net work 2 CRITICAL PATH SLACK PERIOD = ( 100 . Hence f and g are dummy jobs introduced to indicate precedence relationship CRITICAL PATH a.40 ) = 60 c.

CRASHING CPM NETWORKS Time estimates are developed under conditions of normal Working and known as normal time estimates.cost ratio for each activity in the network TIME-COST RATIO = = Increase in cost Decrease in time Crash cost . This Reduced time estimates is called crash time estimate . If it is desired to reduce total duration of the project to be below normal duration. STEPS IN NETWORK CRASHING STEP NO. It does not take into consideration overtime working or use of Abnormal resources for completion of an activity. it is necessary to analyze the critical path for a possible reduction of the original time estimates for some of the activities on critical path.1 : Determine the time .crash time .normal cost Normal time .

STEP NO.2 and 3. If so. till activities are crashed to reduce the project duration to the desired time period. calculate time-cost ratio for the activities in the new critical path. STEP NO.2 : Identify activities on the critical path and select that activity on the critical path which has the smallest time-cost ratio and crash that activity to the extent possible.4: Repeat step no.e.STEP NO. . any other path becomes critical.3: Observe whether there is any change in the critical path i.

but both must be completed before activity c can begin 1 3 2 B 4 .COMMONLY USED NETWORK SYMBOLS: SYMBOL MEANING  Activity  Dummy activity  Event A B 1 A 2 C 3  Activity a must be completed before activity b can begin  Activities a and b can occur concurrently.

. but c can begin independently of d and vice versa.1 A 3 C 4 2 B D 5  Activites a and b must be completed before activities c and d can begin.

. Activity c (dotted line with arrow head) is a dummy activity which shows a precedence relationship but has a zero time duration.A C B D E  Activities a and b can occur concurrently. Activity e can occur only after activity b is completed. but both must be completed before activity d can begin.

ACTIVITY:. A Activity1 B 3).An activity that must occur before another activity 3 Activity a is a predecessor activity for activity b . EVENT:begins A beginning.g:11& 2 A 2 events. completion point or milestone A accomplishment within the project.TERMS USED IN NETWORK BASED SCHEDULING TECHNIQUES 1). An activity 1 2 and ends with an evente. Predecessor Activity:.An effort that is required to complete a part of a ( ) project 2).

In PERT. used in PERT. that is the consensus best estimates. if everything goes wrong used in pert.5 Activity duration In CPM. the expected time or average time to complete an activity. (te) . The time for completing an activity. 6 Optimistic time (to) Pessimistic time (tp) Most likely time (tm) 7 8 9 Expected time The average time for completing an activity. The time for completing an activity if all goes well. this means the best estimate of the time to complete an activity. The time for completing an activity. used in pert.

This problem is solved by inserting a dummy activity as shown below: . no two activities can be represented by the same set of event numbers.10 DUMMY ACTIVITY An activity that consumes no time (zero time duration) but shows precedence between events. L 1 2 M 3 DUMMY ACTIVITY N P 4 5 The above network diagram shows that both activities m and n begin with event number 2 and end with event number 3 as a rule.

.11 Earliest start The earliest that an activity can start. 12 Earliest finish (ef) 13 Latest start (ls) The earliest that an activity can finish. 14 Latest finish The latest that an activity can finish. without causing a delay in the completion of the project. from the (lf) beginning of the project. without causing a delay in the completion of the project. from the beginning of the project. from the (es) beginning of the project. The latest that an activity can start. It is also know as float . from the beginning of the project. 15 Slack The amount of time that an activity or group of activities can slip without causing a delay in the completion of the project.

An activity with zero slack. 17 CRITICAL PATH ********************* . The chain of critical activities for the project and is the longest path through the network. if it slips the entire project completion will slip.16 CRITICAL ACTIVITY An activity that has no room for schedule slippage.

LATEST (PERMITTED) STARTING TIME OF THE ACTIVITY EARLIEST (POSSIBLE) ENDING TIME OF THE ACTIVITY LATEST (PERMITTED) ENDING TIME OF THE ACTIVITY EARLIEST (POSSIBLE) TIME OF THE EVENT LATEST (PERMITTED) TIME OF THE EVENT TOTAL FLOT OF THE ACTIVITY FREE FLOR OF THE ACTIVITY .CPM ± TIME ANALYSIS TIME SYMBOLS USED ARE: D ESA LSA EEA LEA EE LE TF FF DURATION OF ACTIVITY (HOURS OR DAYS OR WEEKS OR MONDAYS) EARLIEST (POSSIBLE) STARTING TIME OF THE ACTIVITY.

IF INDEPENDENT FLOAT OF THE ACTIVITY MODE OF REPRESENTATION I Ei Lt J Ej Lj EXPECTED TIME (te) = to + 4 tm + tp 6 ACTIVITY STANDARD DEVIATION : EVENT STANDARD DEVIATION: .

e. Lea-esa>d In such cases certain time reserves are ensuing which are termed as floats or slacks Slack analysis is done to indentify sub-critical paths i.ASSESSMENT OF FLOATS OR SLACKS  If difference between earliest starting time (esa) and Latest ending time (lea) of an activity exceeds its duration then the respective activity is not critical i.e. if slack period moves up beyond available slack period   . Which activity is likely to become critical.

Event or Activity: (A) event slack = latest event time . Slack analysis is done from two stand points i.It follows that activities with zero slack value represent activities on critical path .Provides margin of allowance available for commencement and completion of various activities.earliest event time All events having zero slack represent critical path (B) Activity slack analysis .e.Three types of activity slacks or floats are identified: (I) Total float or slack (II) Free float or slack (III) Independent float or slack . .

(I) Total float : It is the amount of time an activity can be delayed beyond its earliest starting time without delaying the project s completion.EE (a) . for the event (a) the latest and for the event (b) the earliest times of occurrence shall be maintained * Independent float : EE(b)-LE(a)-D .EE(a) -D (III) Independent float : It indicates the time span by which the activity (a-b) can be expanded/shifted if. if other activities take their estimated duration Total float for activity = (a-b) * LE(b) .D (II) Free float : It is the amount of time on the basis of which an activity can be delayed without delaying the early start of a successor activity * Free float for activity (a-b) = EE (b).

Since a negative float has not meaning. independent float is taken as zero.Independent float can be negative also. EE (i) LE (i) EE (j ) LE (j) Time Total float D Free float D Independent float RELATIONSHIP BETWEEN 3 TYPES OF FLOATS EE= Earliest time for event LE = Latest event time for event . if negative.

SOLUTION (PART I) 4 B 1 A 2 C 3 E 6 G Dummy activity D 5 F 7 H 8 The dummy activity 3-4 has been introduced here because b and c both precede activity d and activity c precedes activity e . .

(PART II) Network diagram .Based on Predecessor Activity 3 20 22 B (8) 1 0 0 E (12) F (18) 5 34 34 H (4) 7 38 38 A (12) 2 12 12 C (4) D 4 16 16 G (5) (3) 6 21 29 J (6) 8 44 44 I (9) Critical path = Events having no slacks to be connected = A C F H J And project duration time is 12+4+18+4+6 = 44 Months .

(PART III) Step No. : 1 FORMULA : Calculate expected time (te) For each activity te = to +4tm+tp 6 tm = Most likely Time tp = Pessimistic Time to = Optimistic Time Activity 1-2 Expected time for the activity (te) 2+4X5+8 = 5 6 4+4X19+28 = 18 6 5 + 4X11+17 = 11 6 3+3X9+27 = 11 6 1-4 1-5 2-3 .

2-6 3+4X6+15 = 7 6 2+4x5+14 = 6 6 3+4x4+7 = 7 6 1+4x4+7 = 4 6 2+4x5+14 = 6 6 6+4x12+30 =14 6 2+4x5+8 = 5 6 3-6 4-6 5-7 5-8 6-8 7-8 .

Step No.2 DRAW PERT NETWORK DIAGRAM 5-7 5 11 30 1-5 (11) 1 0 0 1-4 (18) 4 18 18 4-6 (7) 6 25 25 6-8 (14) (4) 5-8 (6) 7 15 34 7-8 (5) 8 39 39 1-2 (5) 2-6 (7) 2 5 8 2-3 (11) 3-6 (6) 3 16 19 CRITICAL PATH : 1-4 4-6 6-8 18 + 7 + 14 = 39 weeks .

Mean time for each activity expected time = te Standard deviation for each activity = tp-to ACTIVITY STANDARD DEVIATION (WEEKS) Z 6 1-2 8-2 = 1 7-8 8-2 = 1 6 6 *1-4 28-4 = 4 *4-6 15-3 =2 6 2 1-5 17-5 = 2 6 2-3 27-3 = 6 6 2-6 15-3 = 2 6 3-6 14-2 = 2 6 5-7 7-1 = 1 6 5-8 14-2 = 2 6 *5-8 30-6 = 4 6 (B) .

(C) To determine std. Deviation 1= 4 2= 2 3= 4 Std. deviation for critical path : Activity 1-4 4-6 6-8 Std. Deviation for critical path= cp = 1 2 + 2 2+ 3 2 = (4)2 + (2)2 + (4)2 = 6 weeks .

Lei) . free float and independent float for each activity Total float for activity Free float for activity Independent float (I-j) = (Lej).D (I-j) = (Eej-Eei) . .(EEi) . 1 2 3 4 5 6 7 8 Slack (weeks) NIL 8-5 = 3 19-16 = 3 18-18 = NIL 30-11 = 19 25-25 = NIL 34-15 = 19 39-39 = 0 (E) To calculate total float.D (I-j) = (Eej . Then independent float is negative hence no meaning hence zero.(D) Calculation of slacks for events : Event no.D If D > (EEJ-LEI).

Calculation of float : Activity 1-2 *1-4 1-5 2-3 2-6 3-6 *4-6 5-7 5-8 *6-8 Total Float (8-0)-5 = 3 (18-0)-18 = 0 (30-0)-11 = 19 (19-5)-11 = 3 (25-5)-7 = 13 (25-16)-6 = 3 (25-18)-7 = 0 (34-11)-4 = 19 (39-11)-6 = 22 (39-25)-14 = 0 Free Float (5-0)-5 = 0 (18-0)-18 = 0 (11-0)-11 = 0 (16-5)-11 = 0 (25-5)-7 = 3 (25-16)-6 = 3 (25-18)-7 = 0 (15-11)-4 = 0 (39-11)-6 = 22 (39-25)-14 = 0 Independent Float (5-0)-5 = 0 (18-8)-18 = 0 (11-0)-11 = 0 (16-8)-11 = (-3) (25-8)-7 = 10 (25-19)-6 = 0 (25-18)-6 = 1 (15-30)-4 = (-) (39-30)-6 = 3 (39-25)-5 = 0 (39-34)-5 = 0 7-8 (39-15)-5 = 19 (39-15)-15 = 19 *Floats are nil for critical path .

Crashing of CPM Network .

) 2000 3000 1000 1000 500 250 .[Answer 1] STEP : 1 Time Cost Ratio Per Week Activity A B C D E F Crash Cost Normal Cost Normal Time Crash Time T/C Ratio Per Week (Rs.

000/B D F 3 + 3 + 4 = 10 weeks .STEP 2 : DRAW NETWORK DIAGRAM 4 A (6) (4) B 3 D 3 2 C (3) (8) (8) E 6 (14) F 4 ( ) Normal Time Crash Time NORMAL: CRITICAL PATH DURATION COST CRASH: CRITICAL PATH COST B D F 4 + 8 + 8 = 20 weeks Rs.000/A C F 4 + 2 + 4 = 10 weeks Rs. 54. 36.

F B.E B.F B.500 41.1000 3000.D B.500 3000.250 3000.1000 3000.D.D B.-----3000. 1000 250 -----.D.1000.E B.500 F F F E F E D E D E D E D E D E E 250 250 250 500 250 500 1000 500 1000 500 1000 500 1000 500 1000 500 500 36.1000.E B.500 3000.500 3000.000 45.D B.D B.D.E B.500 3000.D B.E 3000.250 3000.E B B.500 3000 3000.000 42.E B.500 37250 38.1000 3000.Step : 3 Current Project Completi on Time Critical Path (s) Activities which can be Crashed Cost of Crashing Activities Selected Normal Cost Rs.D.000 39.F B.250 36.500 3000.E B.500 3000.000 19 18 17 16 15 14 13 12 11 10 Cannot be crashed further .500 44.500 46.1000 3000.F B.000 Cost Total Cost Time 20 19 18 17 16 15 14 13 12 11 B-D-F B-D-F B-D-F B-E B-D-F B-E B-D-F B-E B-D-F B-E B-D-F B-E B-D-F B-E B-D-F B-E B-D-F B-E B.36.1000 3000.

000 45.000 11. .000/CRITICAL ACTIVITIES B.500 Therefore.500 Project Time Direct Cost 10 11 46.) 56.1.000 56.000 Total Cost (Rs.SUMMARY: Overhead Cost @ Rs.000/per week 10. Optimal Time of Crashing duration 10 weeks Cost Rs. 56.E after crashing.

[Answer 2] STEP : 1 Activity 1-2 (A) 1-3 (B) 1-4 (C) 2-4 (D) 3-4 (E) 4-5 (F) T/C Ratio Per Week (Rs.) 20 25 30 10 15 40 .

STEP : 2 NETWORK DIAGRAM 2 C 10 (15) 3 A 1 6 D 3 (5) E 6 (10) 4 B 5 (8) F (2) 1 5 ( ) Normal Time Crash Time NORMAL: CRITICAL PATH DURATION CRASH: CRITICAL PATH B E F 8 + 10 + 2 = 20 days B E F 5 + 6 + 1 = 12 days (Minimum) .

E.10.D.F C.40 20.F B.40 25.D.F C.40 20.F B.15.F C.40 25.40 20.40 30.15.F A.40 30.40 30.E.F B.F A.10.40 25.F C.F F A - Cost of crashing 25.F A.15.F C.40 25.15.40 20.E.40 30.F A.40 25.STEP : 3 Project Completion Time (Days) L L-1 L-2 L-3 20 19 18 17 Project Crashing Critical Path(s) B-E-F B-E-F B-E-F B-E-F C-F B-E-F C-F A-D-F A-D-F C-F B-E-F A-D-F C-F B-E-F A-D-F C-F B-E-F A-D-F C-F B-E-F Activities which can be crashed B.F B.40 40 20 - Activity selected E E E E C B C D D C B A C B A C F A - Cost 15 15 15 15 30 25 30 10 10 30 25 20 30 25 20 30 40 20 - Time 19 18 17 16 15 L-4 16 L-5 15 14 L-6 14 13 L-7 13 12 11 L-8 12 (No further Crashing) .E.40 25.F B.F B.40 30.

) Rs.385 Adding overhead Cost Rs.day 12 385 720 1105 11 405 660 1065 Optimal length schedule for each job A 6 days B 5 days C 10 days D 3 days E 6 days F 1 day Minimum Crashing Cost Rs.1105 Minimum Number of Weeks 12 .60/.SUMMARY Total Cost Project Time Crashing Cost Overhead Cost @ (Rs.

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