Project Management CPM/PERT

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What exactly is a project?
PM 1 – I’m in charge of the construction of a retail development in the centre of a large town. There are 26 retail units and a super market in the complex. My main responsibilities are to co-ordinate the work of the various contractors to ensure that the project is completed to specification, within budget and on time. PM 2 – I am directing a team of research scientists. We are running trials on a new analgesic drug on behalf of a pharmaceutical company. It is my responsibility to design the experiments and make sure that proper scientific and legal procedures are followed, so that our results can be subjected to independent statistical analysis. PM 3- The international aid agency which employs me is sending me to New Delhi to organize the introduction of multimedia resources at a teachers’ training college. My role is quite complex. I have to make sure that appropriate resources are purchased- and in some cases developed within the college. I also have to encourage the acceptance of these vikramthadeshvar@hotmail.com 2 resources by lecturers and students within the college.

PM 1 – I’m in charge of the construction of a retail development in the centre of a large town. There are 26 retail unitsland a super market in the p ex m coco-ordinate the work of the complex. My main responsibilities are to ng pithe project is completed to various contractors to ensure that hop A s and on time. specification, within budget PM 2 – I am directing a team of research scientists. We are running trials on a new analgesic drugA behalf of a pharmaceutical company. It is my on responsibility to design the new experiments and make sure that proper drug so that our results can be scientific and legal procedures are followed, subjected to independent statistical analysis. PM 3- The international aid agency which employs me is sending me to New Delhi to organize the introduction of multimedia resources at a students sure teachers’ training college. My role is quiteching I have to make complex. d of teaand in some cases developed w metho that appropriate resources are purchasedA ne within the college. I also have to encourage the acceptance of these resources by lecturers and students within the college. Project is not defined by the type of outcome it is set up to achieve
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Project
A project is a temporary endeavour 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 qRequires the completion of a large number of interrelated activities qEstablished to achieve specific objective qResources, such as time and/or money, are limited qTypically has its own management structure qNeed leadership
q

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Examples
– constructing houses, factories, shopping malls, athletic stadiums or arenas – developing military weapons systems, aircrafts, new ships – launching satellite systems – constructing oil pipelines – developing and implementing new computer systems – planning concert, football games, or basketball tournaments – introducing new products into market
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com 6 . complex. cost and quality constraints. • One of these techniques was the use of networks to represent a system of related activities vikramthadeshvar@hotmail. when the military authorities used the techniques of operational research to plan the optimum use of resources. one time task within time. • Its origins lie in World War II.What is project management • The application of a collection of tools and techniques to direct the use of diverse resources towards the accomplishment of a unique.

com 7 – shows who is responsible for work in a project • • • . and expected result of a project Statement of work – written description of objectives of a project Organizational Breakdown Structure – a chart that shows which organizational units are responsible for work items Responsibility Assignment Matrix vikramthadeshvar@hotmail. justification.Project Management Process • • • • • • • Project planning Project scheduling Project control Project team – made up of individuals from various areas and departments within a company Matrix organization – a team structure with members from functional areas. depending on skills required Project Manager – most important member of project team Scope statement – a document that provides an understanding.

com 8 . assignment of responsibilities and measurement and control of the project • It is foundation of project planning • It is developed before identification of dependencies and estimation of activity durations • It can be used to identity the tasks in the CPM and PERT vikramthadeshvar@hotmail. activities and tasks) in a hierarchical structure which can be scheduled and cost • It defines tasks that can be completed independently of other tasks.Work breakdown structure • A method of breaking down a project into individual elements ( components. subcomponents. facilitating resource allocation.

Work Breakdown Structure for Computer Order Processing System Project vikramthadeshvar@hotmail.com 9 .

com 10 .Project Planning • Resource Availability and/or Limits – Due date. early completion incentives – Budget • Activity Information – Identify all required activities – Estimate the resources required (time) to complete each activity – Immediate predecessor(s) to each activity needed to create interrelationships vikramthadeshvar@hotmail. late penalties.

com 11 .Project Scheduling and Control Techniques Gantt Chart Critical Path Method (CPM) Program Evaluation and Review Technique (PERT) vikramthadeshvar@hotmail.

com 12 .Gantt Chart Graph or bar chart with a bar for each project activity that shows passage of time Provides visual display of project schedule vikramthadeshvar@hotmail.

com . (1957) for construction of new chemical plant and maintenance shut-down – 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) 13 vikramthadeshvar@hotmail.History of CPM/PERT • Critical Path Method (CPM) – E I Du Pont de Nemours & Co.

a time consuming effort that is required to perform a part of the work.• Network analysis is the general name given to certain specific techniques which can be used for the planning. a point in time where one or more activities start and/or finish. management and control of projects • Use of nodes and arrows Arrows ² An arrow leads from tail to head directionally – Indicate ACTIVITY.com 14 – Does not require any time of effort Project Network • • . Activity – A task or a certain amount of work required in the project – Requires time to complete – Represented by an arrow Dummy Activity – Indicates only precedence relationships vikramthadeshvar@hotmail. Nodes  A node is represented by a circle .Indicate EVENT.

Project Network • Event – Signals the beginning or ending of an activity – Designates a point in time – Represented by a circle (node) • Network – Shows the sequential relationships among activities using nodes and arrows Activity-on-node (AON) nodes represent activities. and arrows show precedence relationships Activity-on-arrow (AOA) arrows represent activities and nodes are events for points in time vikramthadeshvar@hotmail.com 15 .

com .AOA Project Network for House Lay foundation 3 2 1 Order and receive materials 0 Dummy Build house 3 1 1 Finish work 1 1 3 Design house and obtain financing 2 4 Select paint 6 Select carpet 7 5 AON Project Network for House Lay foundations Build house 2 2 Start 1 3 3 1 materials 4 3 Finish work 7 1 5 1 Select paint Design house and obtain financing 6 1 Select carpet 16 Order and receive vikramthadeshvar@hotmail.

Situations in network diagram A A B A B A B Dummy C vikramthadeshvar@hotmail.com B A must finish before either B or C can start C C both A and B must finish before C can start C D both A and C must finish before either of B or D can start A must finish before B can start both A and C must finish before D can start 17 D .

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The key question is: How long will it take to complete this project ? vikramthadeshvar@hotmail.Network example Illustration of network analysis of a minor redesign of a product and its associated packaging.com 19 .

com 20 . vikramthadeshvar@hotmail. this list is kept to a minimum by specifying only immediate relationships. that is relationships involving activities that "occur near to each other in time".For clarity.

Questions to prepare activity network • • • • • Is this a Start Activity? Is this a Finish Activity? What Activity Precedes this? What Activity Follows this? What Activity is Concurrent with this? vikramthadeshvar@hotmail.com 21 .

com 22 . determines the project duration • Critical Activities – All of the activities that make up the critical path vikramthadeshvar@hotmail.CPM calculation • Path – A connected sequence of activities leading from the starting event to the ending event • Critical Path – The longest path (time).

Forward Pass • Earliest Start Time (ES) – earliest time an activity can start – ES = maximum EF of immediate predecessors • Earliest finish time (EF) – earliest time an activity can finish – earliest start time plus activity time Backward Pass EF= ES + t Latest Start Time (LS) Latest time an activity can start without delaying critical path time LS= LF .com 23 LS = minimum LS of immediate predecessors .t Latest finish time (LF) latest time an activity can be completed without delaying critical path time vikramthadeshvar@hotmail.

EF – Float is the maximum amount of time that this activity can be delay in its completion before it becomes a critical activity.ES = LF .e.e. i. delays completion of the project • Find the critical path is that the sequence of activities and events where there is no “slack” i.CPM analysis • Draw the CPM network • Analyze the paths through the network • Determine the float for each activity – Compute the activity’s float float = LS .com 24 ... Zero slack – Longest path through a network • Find the project duration is minimum project completion time vikramthadeshvar@hotmail.

13 c. 9 j. 8 d. 6 b. 17 i. 12 . 15 a. 9 vikramthadeshvar@hotmail.com 25 h. 6 g.CPM Example: • CPM Network f. 5 e.

12 e. 13 j. 6 h. 5 0 5 vikramthadeshvar@hotmail. 6 0 6 b. 9 d. 17 i.com f. 8 0 8 c. 15 g. 9 26 .CPM Example • ES and EF Times a.

6 h. 9 5 14 j. 5 0 5 vikramthadeshvar@hotmail. 9 d. 15 6 21 g. 6 0 6 b. 13 8 21 e. 8 0 8 c. 17 6 23 i.com f.CPM Example • ES and EF Times a. 12 27 .

CPM Example • ES and EF Times a. 12 21 33 Project’s EF = 33 28 . 17 6 23 i. 6 0 6 b. 5 0 5 vikramthadeshvar@hotmail.com f. 15 6 21 g. 13 8 21 e. 8 0 8 c. 9 5 14 j. 9 21 30 d. 6 23 29 h.

17 i. 8 0 8 c. 9 5 14 j. 9 21 30 24 33 d. 13 8 21 e. 12 21 33 21 33 29 . 6 0 6 b.com f.CPM Example • LS and LF Times a. 5 0 5 vikramthadeshvar@hotmail. 6 23 29 27 33 6 23 h. 15 6 21 g.

5 0 5 7 12 vikramthadeshvar@hotmail. 9 21 30 24 33 a. 17 6 23 10 27 d. 9 5 14 12 21 h. 12 21 33 21 33 30 . 8 0 8 0 8 c.com i. 13 8 21 8 21 e. 6 0 6 4 10 b. 15 6 21 18 24 g.CPM Example CPM Example • LS and LF Times f. 6 23 29 27 33 j.

com 31 . 6 g. 12 0 0 8 0 8 21 0 21 33 8 21 21 33 c. 15 3 6 21 h. 13 0 8 j. 8 d. 5 e. 6 4 3 0 6 10 27 3 9 4 23 29 27 33 b.• Float CPM Example CPM Example f. 9 0 5 7 7 12 7 5 14 12 21 vikramthadeshvar@hotmail. 9 9 24 3 21 30 a. 17 24 33 6 23 i.

6 b. 9 vikramthadeshvar@hotmail. 6 f.com 32 h. 13 c. 15 g. 9 j. 5 e. 17 i. 12 .CPM Example • Critical Path a. 8 d.

the time the activity would take if things did go well Mean (expected time): te = tp + 4 tm + to 6 2 vikramthadeshvar@hotmail.the time the activity would take if things did not go well – most likely time (tm ) .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 ) .com Variance: Vt =σ 2 = tp .the consensus best estimate of the activity’s duration – optimistic time (to ) .to 6 33 .

PERT analysis • Draw the network. • The length of the critical path is the mean of the project duration probability distribution which is assumed to be normal • The standard deviation of the project duration probability distribution is computed by adding the variances of the critical activities (all of the activities that make up the critical path) and taking the square root of that sum • Probability computations can now be made using the normal distribution table. • Analyze the paths through the network and find the critical path. vikramthadeshvar@hotmail.com 34 .

com 35 .Probability computation Determine probability that project is completed within specified time x-µ σ where µ = tp = project mean time σ = project standard mean time x = (proposed ) specified time Z= vikramthadeshvar@hotmail.

com 36 .vikramthadeshvar@hotmail.

C 1 1.5 vikramthadeshvar@hotmail.5 5 H E.) Time (Hr.F 5 6 7 I E.5 5 C A 3 3 3 D A 4 5 6 E A 0.5 F B.PERT Example Immed. Time (Hr.F 2 5 8 J D.) Time (Hr.C 3 4 5 G B.5 2.I 3 5 7 .75 4.H 2.) A -4 6 8 B -1 4. Optimistic Most Likely Pessimistic Activity Predec.com 37 K G.5 1 1.

PERT Example PERT Network D A E H J C B F G vikramthadeshvar@hotmail.com 38 I K .

PERT Example Activity A B C D E F G H I J K vikramthadeshvar@hotmail.com Expected Time 6 4 3 5 1 4 2 6 5 3 5 Variance 4/9 4/9 0 1/9 1/36 1/9 4/9 1/9 1 1/9 4/9 39 .

com EF 6 4 9 11 7 13 11 19 18 22 23 LS 0 5 6 15 12 9 16 14 13 20 18 LF 6 9 9 20 13 13 18 20 18 23 23 Slack 0 *critical 5 0* 9 6 0* 7 1 0* 1 0* 40 0 0 6 6 6 9 9 13 13 19 18 .PERT Example Activity ES A B C D E F G H I J K vikramthadeshvar@hotmail.

5 + .23)/σ = (24-23)/1.com 41 .71) = .71 From the Standard Normal Distribution table: P(z < .414 = .414 σpath z = (24 .7612 vikramthadeshvar@hotmail.PERT Example Vpath = VA + VC + VF + VI + VK = 4/9 + 0 + 1/9 + 1 + 4/9 = 2 = 1.2612 = .

com 42 .PROJECT COST vikramthadeshvar@hotmail.

com 43 . • When there is more than one critical path. • As a result of a reduction in an activity’s time. • If the length of the project needs to be reduced further. • If each activity requires the expenditure of an amount of money to reduce its duration by one unit of time. then the project manager selects the least cost critical activity. reduces it by one time unit. vikramthadeshvar@hotmail. the process is repeated. and traces that change through the remainder of the network. or accelerate the completion of the project.Cost consideration in project • Project managers may have the option or requirement to crash the project. a new critical path may be created. • This is accomplished by reducing the length of the critical path(s). • The length of the critical path is reduced by reducing the duration of the activities on the critical path. each of the critical paths must be reduced.

Project Crashing • Crashing – reducing project time by expending additional resources • Crash time – an amount of time an activity is reduced • Crash cost – cost of reducing activity time • Goal – reduce project duration at minimum cost vikramthadeshvar@hotmail.com 44 .

Activity crashing Crash cost Activity cost Crashing activity Slope = crash cost per unit time Normal cost Normal Activity Normal time Activity time 45 Crash vikramthadeshvar@hotmail.com time .

com time 46 . Crashing costs increase as project duration decreases  Indirect costs increase as project duration increases  Reduce project length as long as crashing costs are less than indirect costs Time-Cost Relationship Time-Cost Tradeoff Min total cost = optimal project time cost Total project cost Indirect cost Direct cost vikramthadeshvar@hotmail.

com 47 .Project Crashing example 2 8 1 12 4 12 7 4 3 4 6 4 5 4 vikramthadeshvar@hotmail.

com 7 5 3 9 1 1 3 5000 3500 7000 71000 1100 1100 22000 110700 5 3 1 3 3 3 1 400 500 3000 7000 200 200 7000 48 .Time Cost data Activity Normal Normal Crash Crash Allowable slope time cost Rs time cost Rs crash time 1 2 3 4 5 6 7 12 8 4 12 4 4 4 3000 2000 4000 50000 500 500 1500 75000 vikramthadeshvar@hotmail.

R500 2 8 1 12 R7000 4 12 Project duration = 36 R700 7 4 From….com = R2000 1 7 R400 3 4 R3000 5 4 R200 6 4 R200 49 .. R400 3 4 R3000 5 4 R200 6 4 R200 R500 2 8 R7000 4 12 R700 7 4 To…. Project duration = 31 Additional cost vikramthadeshvar@hotmail..

com cost? to do this at the least . behind schedule or ahead of schedule? •If the project has to be finished earlier than planned. what is the best 50 way vikramthadeshvar@hotmail.Benefits of CPM/PERT • • • • • Useful at many stages of project management Mathematically simple Give critical path and slack time Provide project documentation Useful in monitoring costs CPM/PERT can answer the following important questions: •How long will the entire project take to be completed? What are the risks involved? •Which are the critical activities or tasks in the project which could delay the entire project if they were not completed on time? •Is the project on schedule.

Monte Carlo simulations can be performed on the network to eliminate the optimistic bias vikramthadeshvar@hotmail.com 51 . but the actual distribution may be different • PERT consistently underestimates the expected project completion time due to alternate paths becoming critical To overcome the limitation. independent and stable activities Specified precedence relationships Over emphasis on critical paths Deterministic CPM model Activity time estimates are subjective and depend on judgment PERT assumes a beta distribution for these time estimates.Limitations to CPM/PERT • • • • • • Clearly defined.

) PowerProject (ASTA Development Inc.) vikramthadeshvar@hotmail.) Primavera Project Planner (Primavera) Project Scheduler (Scitor Corp.com 52 .Computer Software for Project Management • • • • • • Microsoft Project (Microsoft Corp.) MacProject (Claris Corp.) Project Workbench (ABT Corp.

Practice Example A social project manager is faced with a project with the following activities: Activity Description Duration Social work team to live in village Social research team to do survey Analyse results of survey Establish mother & child health program Establish rural credit programme Carry out immunization of under fives 5w 12w 5w 14w 15w 4w Draw network diagram and show the critical path. Calculate project duration. vikramthadeshvar@hotmail.com 53 .

Practice problem Activity Description 1-2 1-3 3-4 2-4 3-5 4-5 Social work team to live in village Social research team to do survey Analyse results of survey Establish mother & child health program Establish rural credit programme Carry out immunization of under fives 4 5 3 vikramthadeshvar@hotmail.com 54 Duration 5w 12w 5w 14w 15w 4w 2 1 .

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