Project Management Using

Network Analysis

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 “A Project”

Temporary endeavor undertaken to create a

unique Product, Service or Result

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 Project Characteristics
Temporary:

means every Project has a finite duration (a definite

beginning and a definite end). Projects are not ongoing
efforts.

Temporary characteristics of a Project applies to

Opportunity
Project team working as a unit

Temporary characteristics of a Project does not apply to:

Product, Service or result generated by the Project.

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 Project Characteristics (continued)
The driving forces that create stimuli for a Project are
typically referred to as Problems, Opportunities or
Business requirements.

End of Project is reached when

Projects objectives have been achieved.

When it becomes clear that the Project objectives will not

or cannot be met and the Project is terminated.

The need for the Project no longer exists and the Project is
terminated.

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 Project Characteristics (continued)
Uniqueness an important characteristic of Product, Service
or Result

Project can create

A Product or artifact which is quantifiable, and which is

either an end item itself or a component item.

A capability to perform a service, such as business functions

supporting production or distribution.

A result such as outcomes or documents

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 Relation between Product and Project Life Cycle

Upgrade
Product
Life Business

Operations

Divestment
Cycle Plan
I
D
E

Product
A

Project Life Initial Intermediate Final

Cycle

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 Project v/s Operational work

Organization

Performs Work
to achieve objectives

Projects Operations
. Temporary and Unique . Ongoing & repetitive
. Purpose to achieve objective . Objective is to sustain
And then terminate business

Both Projects & Operations are performed by people, constrained by

resources & are planned, executed and controlled

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 Some examples of Projects

• Developing a new Product or Service

• Effecting a change in organization structure
• Designing a new transportation vehicle
• Developing a new or modified Information system
• Constructing a building
• Building a water system for a community
• Running a campaign for a Political Party
• Implementing a new business Process
• Responding to a contract solicitation

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 Projects and Strategic Planning

Projects are a means of organizing activities that cannot

be addressed with the organizational normal operational
limits

Projects are often utilized as a means of achieving an

organizations strategic plans

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 Projects and Strategic Planning

Strategic considerations that lead to Project authorization

. Market demand
. Organizational need
. Customer request
. Technological advance
. Legal Requirement

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• Industrial / Commercial projects are
complex in nature.

• Handling of these projects calls for a

systematic approach which takes into
account
– Identification of numerous activities
– Required time and other resources
– Availability of these resources
– Coordination and control

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 Program Evaluation and Review
Technique - PERT
• Developed by US Department of Navy for their
“Polaris missile” program in 1958.
• Is a form of network analysis technique
consisting of
– Translating the proposed job into a model by drawing
a network of activities involved.
– Evaluating the network and manipulating it to the
extent possible so as to ensure that there will be a
reasonable chance of achieving the objective (viz.
completing the job) with in the constraints of time and
other resources.
– Using the network to monitor and control the job.

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 PERT
• Is of special relevance to
– One-time tasks such as construction of dams,
factories, bridges etc.
– Manufacture of ships, missiles and such other
activities which though repetitive are of huge
proportion
– R&D projects
– Major repairs and overhaul of plant /
machinery
– Organization of large events / conferences.

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 Critical Path Method (CPM)
• CPM originated in Du Pont de Nemours
company almost at the same time in 1958.

• CPM is also a Network analysis method

and differs from PERT only in the
approach to the network analysis.

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 Gantt Chart
• A planning and control tool used for
scheduling jobs and depicting the progress
made from time to time.

• In a Gantt chart, a division of space

represents both an amount of time and an
amount of work to be done in that time

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10/3/2020 Project Management Using Network Analysis
 Gantt Chart
• Merits
– Remarkably compact for the amount of
information it provides for planning and
controlling jobs.
– Easy to draw and read
– Its pictorial representation of time serves as
an aid to minimize idleness and loss of time.
• Demerits
– Does not depict the interdependencies of jobs
– Does not aid getting information on the
probability of completion of a job.
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 Stages in application of
PERT/CPM
• Drawing the network
– The purpose of this is to identify all the events /
activities that are essential for completion of a Project
and to bring out their interrelationship to satisfy the
technological / logical sequencing requirements.
• Network Analysis
– By incorporating the time required for completing
each of the activities in the network, the project
duration as well as the criticality of the activity can be
found out. At this stage it is also possible to compute
the probability of completing the Project or part of the
project in a given specified time
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 Stages in application of
PERT/CPM

• Resource Allocation and Scheduling

– Based on the network calculation and assessment of
resources required for each of the activities, the plan
is translated into a time schedule. If it is possible to
expedite the activities by incurring additional cost, the
economics of doing so are also examined before
finalizing the schedule.

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 Stages in application of
PERT/CPM

• Project control
– This stage calls for periodic updating of the network
amongst other things to monitor the progress of the
Project, and making necessary changes in the
schedules to ensure completion of the Project as
close to the target time as possible.

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 Concepts / Definitions

• Project
Temporary endeavor undertaken to create a unique Product,
Service or Result.
• Work breakdown structure (WBS)
A work breakdown structure is a deliverable oriented grouping of
project elements that organizes and defines the total scope of the
project.
Work not in the WBS is outside the scope of the project.
As with the scope statement, the WBS is often used to develop or
confirm a common understanding of project scope. Each
descending level represents an increasingly detailed description of
the project elements.

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 Concepts / Definitions

• Activity
Is a task or item of work to be done, that consumes time, effort,
money or other resources.

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 Concepts / Definitions

• Event
– Events do not consume resources.
– Events are represented by circle
– An Event is realized only when all activities
terminating at it are completed.

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 Concepts / Definitions
• Network diagram
– Shows how the tasks will flow from beginning
to end

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 Steps involved in drawing a
Network
• Identify the End objective and define the events which
are precedent to the End objective
• List out the activities required to accomplish these events
• Draw the events and activities and connect them
according to the defined logic.
• Now for every activity answer the following questions
– What should precede it
– What needs to follow it
– What can be done concurrently
• Modify redraw the diagram to suit answers for above.
• Check for errors
• Number the events as per convention.

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 Activity sequencing: tools and
techniques
• Network diagram
– Shows how the tasks will flow from beginning
to end
– Types
• Precedence diagramming method (PDM)
• Arrow diagramming method (ADM)

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 Activity sequencing: tools and
techniques

• Precedence diagramming method (PDM) :

method of constructing a project network diagram to represent
the activities using nodes and to represent dependencies using
arrows

• Also called activity on node

A C

start finish

B D

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 Activity sequencing: tools and
techniques

• PDM could have four types of

dependencies
– Finish-to-start
– Finish-to-finish
– Start-to-start
– Start-to-finish

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 Activity sequencing: tools and
techniques

• Arrow diagramming method (ADM) : method

of constructing project network diagram using arrows to
represent activities and connecting them at nodes to show their
dependencies. The nodes are Events

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 Concepts / Definitions
• Activity
Is a task or item of work to be done, that consumes time, effort,
money or other resources.
It is represented by an arrow with its head indicating direction of the
progress in the project. i.e. The tail of the arrow marks the
commencement of the activity and the Head of the arrow marks the
completion of the activity.

The number 5 over the arrow indicates the Time required for completion of the
activity

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 Concepts / Definitions
• Event
– An activity is bound by 2 events referred to as Tail
event and Head event.
– Events do not consume resources.
– Events are represented by circle
– An Event is realized only when all activities
terminating at it are completed.
Hea
Tail Activity d
Eve
Eve
nt
nt

A
1 2
5

Activity A or 1-2 requiring 5 units of time, Event 1 Event 2

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 Concepts / Definitions
• Network
– A network is a graphic representation of a
Project’s operation and is composed of
activities and events
Event 1 is Start of Event 5 is End of Project
Project and does not 2 and does not have any
have any activity before A D
activity after it
it
B E
F is a Dummy 1 4 5
activity C
It does not consume F G
any resource
It is introduce in 3
Network to preserve
logic
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 Rules for drawing a Network
• Only 1 activity may connect any 2 Events
• Except for the Start and the End event,
every event must have at least 1 activity
entering it and at least 1 activity leaving it.
• Every activity must have a Tail event and
a Head event.
• There must be no loops in the Network,
i.e. no continuous path must go through
one Event 2 times.
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 Network
Errors in drawing Network -
Looping

1 2

How to determine Looping in a Network

Head event must always have number higher than Tail event

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 Network
Errors in drawing Network -
Dangling
1 2 3

Event 1 is Start of Project Event 3 is end of Project

Ways to avoid Dangling

a) All Activities must start and finish with an Event
b) Except for the Start and End Event, each event must have
at least 1 activity entering and 1 activity leaving it.

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ACTIVITY Predecess
or
A -
B -
C B C E
D A
B B
D B
E A
F A
F G I
G F A F F

H C.E,G
I F G
H
E

F
4

2 G
A E I

H
1 5
6

C
B
D
3

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• A Project consists of a series of activities labeled A, B, C, D, E, F, G,
H, and I. The interdependency of activities is as follows
A<D,E; B,D<F; C<G; B<H; F,G<I and G<H.

D B C G B H
F
A
E D
G
I
G H
F

2 E
A D
5
1 B D F 9
41 D H
7 I
C 2
G D3 D4 8
3 6

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Earliest Event Time Latest Event Time

E G(19) E

2 5
L L H(4)
C(20)
D1
D2
0
B(8) E F(18) E
1 E I(10)
0 4 6 7
L L
L
A(23)
D(16)
E(24)
E

3
L

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 E G(19) E
2 L
5 L H(4)
C(20)
D1
D2
0 B(8) E F(18) E I(10) E
1 0 4 L 6 7 L
L
A(23)
D(16)
E(24)
E
3 L
Determination of Earliest Event Time of Event
Start from the 1st Event i.e. Start of the Project. The Earliest Event time for it = 0
Consider the next event 2.
Consider all activities terminating at that event i.e. C. C starts at event 1 and
requires 20 days. For event 2 occur activity C has to be completed. Hence event 2
can occur only after the time event 1 has occurred and after C is completed
i.e after 0 + 20 days = 20 days
Similarly event 3 will occur after event 1 has occurred and activity A is completed
i.e. after 0 +23 days = 23 days
For event 4 to occur we need to complete activities B and D. The earliest that
event 4 can occur is after the completion of activity B and D. i.e. Maximum of (0 +
8), (23 + 16) = 39 days
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 20 39, 39

20 G(19) 39

2 5
L L H(4)
C(20)
D1
8,39 D2
43, 67, 47
0 39, 57
B(8) F(18)
39 67
57 I(10)
1
0 4 6 7
L L
L
A(23)
D(16)
E(24)
23
23
3
L
Hence earliest completion of Project time
is 67 days

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 20 G(19) 39
2 5
L L H(4)
C(20)
D1
D2
0 B(8) 39 F(18) 57 I(10) 67
1
0 4 6 7
L L L
A(23)
D(16)
E(24)
23
3
L

Determination of Latest Event Time of Event

Start from the last Event i.e. End of the Project. The Latest Event time for it = Project completion time =
67 days
Consider the next earlier event 6.
Consider all activities starting from that event i.e. I. I requires 10 days. Latest time that event 6 can occur
With out delaying the Project completion time is 67 – 10 = 57 days
Similarly Latest Time for event 5 = Minimum of (57 – 0) or 67 – 4 = 57 days.
For event 4 Latest time is Minimum of (57 – 0) or (57 – 18) = 39 days
For event 3 the latest event time = Minimum of (39 – 16) or (67 – 24) = 23 days
For event 2 the latest event time = 57 -19 = 38 days
For event 1 Latest time is Minimum of (38 – 20), (39 – 8), (23 – 23) = 0

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 57, 63
20 G(19) 39
2 38 5
38 57 H(4)
C(20)
D1
D2
0 B(8) 39 F(18) 57 I(10) 67
1
0 4 39, 57
6 57 7
39 57 67
0, 31, 18 A(23)
D(16)
E(24)
23
3
23 23, 43

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 20 G(19) 39
2 5
38 57 H(4)
C(20)
D1
D2
0 B(8) 39 F(18) 57 I(10) 67
1
0 4 6 7
39 57 67
A(23)
D(16)
E(24)
23
3
23
Earliest Time Latest Time Total Float or
Activity I,j Normal Time Slack
Start Finish Start Finish available

C (1-2) 20 0 20 18 38 18

Activities that have Total float A (1-3) 23 0 23 0 23 0

= 0 or No Slack available are B (1-4) 8 0 8 31 39 31
the activities on the critical
G (2-5) 19 20 39 38 57 18
path.
D (3-4) 16 23 39 23 39 0
Hence Critical path is A-D-F-I E (3-7) 24 23 47 43 67 20

D1 (4-5) 0 39 39 57 57 18

F (4-6) 18 39 57 39 57 0

D2 (5-6) 0 39 39 57 57 18

H (5-7) 4 39 43 63 67 24

I (6-7) 10 57 67 57 67 0

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 Free Float, Interference Float, Independent Float
7
2 F (5)
A (7) 13

0 B (6)
1 8 E (3) 17 I (10) 28
0 4 6 7
15 18 28

C (8) D K (3)
H (5)
8 G (4) 12 J (16)
3 5
Activity I: 8 12
Total Float = 28 – 17 - 10 = 1 day
Activity F:
Total Float = 18-7-5 =6 days
If F absorbs all its float then I has no float, but if F absorbs only 5 days of its float then I still has its 1 day float
The float in an activity which can be used with out affecting float of any succeeding activity is called as Free Float

Interference Float = Difference between Total float and Free float

Consider activity K: If the tail event of this K activity is reached as late as possible and the Head event of the
activity starts as early as possible then the float for K is 17-8-3 = 6 days. This float of 6 days whose absorption
does not affect neither preceding activity nor the subsequent activity is called Independent Float

Total Float = Free float + Interference Float

Total Float = Lj – Ei – t, Free Float = Ej – Ei – t,. Interference Float = Lj – Ej,, Independent Float = Ej – Li - t

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 UPDATING PROJECT
• Can be done in 2 ways
– Use the revised time estimate of incomplete activities
and calculate from initial event the earliest completion
time and the latest completion time of each event in the
usual manner to know the Project completion time.
– Change the complete work to zero duration and
represent all the activities already finished by an arrow
called the Elapsed time arrow. Events in the revised
network are renumbered.

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• The network for a project is shown below. A review of the project
after 15 days reveals that
– Activities 1-2, 1-3, 2-3, 2-4 and 3-4 are completed.
– Activities 3-5 and 4-6 are in progress and need 2 and 4 days more resp.
– The revised estimate shows that activity 8-9 will take only 8 days but
activity 7-9 will need 10 days.
• Draw the new network after updating the Project and determine
the Critical path.

Network at the start of the Project

3 13 3 16
7
2 4 6 12
3 13 16

3
8
24 10 34
0 6
4 8 9
1
24 34
0
9
2

7 7 14 19 8
3 5 5 7
7 15 26

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 Network at the start of the Review at the end of 15th day

Project 3 7 1 3 1 Activity Time reqd. Activity

2 4 3 6 6 1 (Days) Status
3 1 1 2
3 6 1-2 0 completed
3
8 1-3 0 completed
2 1 3
0 6 2-3 0 completed
4 8 4 0 9 4
1 2 3
0 2-4 0 completed
9 4 4
2 3-4 0 completed

7 8 3-5(13-15) 2 In Progress
7 1 1
3 5 4 5 7 9 4-6(14-16) 4 In Progress
7 1 2
5 6 5-7(15-17) 5 Not started
5-8(15-18) 9 Not started
6-8(16-18) 8 Not started
6-9(16-19) 12 Not started
Updated Network after day 15 of the 7-9(17-19) 10 Not started
(Finished
Project 3 1 4-6) 2
1 4 1 8-9(18-19) 8 Not started
7 1 5
2 4 3 1 9
4 1
3 1
3
5
6 1
9
1
New critical path
3
8 2

8
1-2-3-4-14-16-18-19
6 2 3
0 7 5
4 1 1
1 8 9
2 3
0 9
7 5
2
1
Project duration
7
(Finished
3-5) 8
1
5
2 1 2
0
increased by 1 day
1 7 2
3 1 1
7
3 1
5
5 1
8
5
7 2
5
to 35 days

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 Network at the start of the Review at the end of 15th day

Project Activity Time reqd. Activity

(Days) Status
3 7 13 3 16
2 4 6 1-2 0 completed
12
3 13 16
1-3 0 completed
3
8 2-3 0 completed
24 10 34
0 6 2-4 0 completed
4 8 9
1 24 34
0 3-4 0 completed
2 9
3-5(10-15) 2 In Progress

7 7 14 19 8 4-6(10-16) 4 In Progress
3 5 5 7
7 15 26 5-7(15-17) 5 Not started
5-8(15-18) 9 Not started
6-8(16-18) 8 Not started

2nd Method 6-9(16-19)

7-9(17-19)
12
10
Not started
Not started
8-9(18-19) 8 Not started
Updated Network after day 15 of the
Project
19
New critical path
12
16
19 1-10-16-18-19
4 8
27 8 35
18 19

1
0 15
10
15 27 35
Project duration
0 15

2
9
10 increased by 1 day
17 22
15
18 5 17
25
to 35 days
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 Probability Assessment in PERT Network
• 3 time estimates are used for every activity
• Most optimistic time (to): it is the duration of the
activity when everything goes well. It is assumed
that such performance can be improved only in
about 1% of the cases
• Most likely time (tm): Normal time the activity would
take. It is the time that would occur most often if the
activity was to be repeated several times under the
same conditions.
• Most Pessimistic time (tp): It is the longest duration
expected under the assumption that every thing
goes wrong. There is only 1 % chance that the
activity will extend beyond this value.
• Expected Time (te) is given by (to + 4 tm + tp)/6
• Standard Deviation ( σ ) is given by (tp - to)/6
• Variance is given by ( σ )2

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 Probability Assessment in PERT Network
• The range specified by optimistic time
and pessimistic time is assumed to
enclose every possible estimate of the
duration of the activity.
• The most likely time estimate may not
coincide with the midpoint (to+ tp)/2.
• Hence it is justified to assume that the
duration of each activity follows Beta
(β) distribution with its unimodal point
occurring at tm and its end points at to
& tp

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 Probability Assessment in PERT Network

In a PERT Network the critical path comprises of 6 activities whose estimated

duration in days is given below If the Project is scheduled for completion with
in 42 days, what is the probability of achieving the schedule

Activity Optimistic Time Most likely Time Pessimistic Time

1 3 6 12

2 8 9 10

3 6 8 10

4 2 5 8

5 3 9 12

6 3 4 5

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 Activity Optimistic Time Most likely Time Pessimistic Time
1 3 6 12
2 8 9 10
3 6 8 10
4 2 5 8
5 3 9 12
6 3 4 5

Activity Time Estimate Expected Time Std. Dev. σ Variance (σ)2

T
t1 t2 t3

1 3 6 12 6.5 1.5 2.25

2 8 9 10 9.0 0.33 0.11
3 6 8 10 8.0 0.67 0.45
4 2 5 8 5.0 1.00 1.00
5 3 9 12 8.5 1.5 2.25
6 3 4 5 4.0 0.33 0.11
TE = 41 6.17

Expected Time for completion of Project, TE = 41 days

Variance of Project Time = 6.17
Hence σ for project = √6.17 = 2.48 days
Scheduled time of the Project TS = 42 days
Standard normal variate = Z = (TS – TE)/σ = (42 -41)/2.48 = 0.4
From table for area under the normal curve for value Z = 0.4 The area = 0.5 + 0.1544 = 0.6554
Hence the probability of completing the project by schedule time is 65.54%

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 Example
The following table gives the data for the activities of a small Project. Draw the
Network and determine the Expected completion of the Project. What is the
probability that the Project would take 5 more days for completion from the
Expected completion time. Find the Project completion time that will have 95%
probability of success (2010, MU)

Activity Optimistic Time Most likely Time Pessimistic Time

1-2 1 4 7

1-3 5 10 17

2-4 3 3 3

2-6 1 4 7

3-4 8 15 26

3-5 2 4 8

4-5 5 5 5

5-6 2 5 8

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10/3/2020 Project Management Using Network Analysis
 PERT CPM
The result of analysis are expressed in The results of calculations are
terms of events. PERT is hence said to considered in terms of activities of the
be Event oriented Project. CPM is activity oriented
The duration of activity is computed CPM uses only single time estimates
from multiple time estimates. This is and hence does not consider time
done to take into account time uncertainties
uncertainties. These estimates are used
to arrive at the probable achievement of
any given scheduled date of Project
completion.
Does not usually consider costs Attempts to bring out relationship
between Project duration and cost on
the premise that it would be possible to
manipulate project duration with in
certain limits by incurring certain costs.
Thus a shorter duration means
deployment of additional resources and
hence incidence of additional costs.
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 Time-Cost Trade-Off
• Project costs
– Direct costs
• Those expenses that can be directly charged to
each and every activity of the Project. E.g.
Manpower costs, material consumed,
equipment cost, etc.
– Indirect costs
• These are related to overall Project duration.
E.g. service and administration costs.
• Any reduction in the Project duration leads to
reduction of these costs.

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 Time-Cost Trade-Off

• Normal duration of an activity

– That duration of the activity for which the cost is
minimum
• Normal cost of the activity
– The minimum cost of the activity at its normal
duration

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 Time-Cost Trade-Off
• Cost Slope
– Cost Slope for an activity =
(Crash cost – Normal cost) / (Normal
time – Crash time)
Total Project Cost Time Relationship

Project Total Cost Curve

Project Total Cost

Project Indirect Cost Curve

Optimum Project Cost

Project Direct Cost Curve

Minimum Project Time

Project Duration

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 Time-Cost Trade-Off
• Optimal Project Duration
– Is the one which results in minimum overall cost
of the Project.
– To determine this optimal duration we should
know
• Normal duration of each activity
• Normal cost of each activity
• Cost of crashing the activity and hence the Cost slope of
the activity
• Extend to which the activity can be crashed and
• Indirect cost of Project per unit time of Project duration

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 Example for determination of Optimal Project
duration and Minimum Project cost
• The following table shows details of a Project.The indirect cost is Rs.
400/- per day of Project duration.
• Determine the optimum Project Duration and minimum Project cost
Activi Imme Norm Cras Norm Cras Cost
ty diate al h al h Slope
10, 13, 14
Pred Time Time Cost Cost (Rs.’
0
A(10)
eces (Wee (Wee (Rs.’ (Rs.’ 000)
1
0 14 sor ks) ks) 000) 000)
13 4
14 26, 21 A - 10 7 20 30 3.33
4, 0 13 D1(0)
G(12)
3 14 26
B(8) 14 B - 8 6 15 20 2.5
6
26
14 D(6)
C B 5 4 8 14 6
8 C(5) 16
F(5)
8 D B 6 4 11 15 2
16
2 E(8)
8 5
21 E B 8 5 9 15 2

9, 8, 13 21 F E 5 4 5 8 3

G A, D, 12 8 3 4 0.25
C

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 • The following table shows details of a Project.The indirect cost is Rs.
400/- per day of Project duration. Activi Imme Norm Cras Norm Cras Cost
10, 13, 14
ty diate al h al h Slope
0
A(10)
Pred Time Time Cost Cost (Rs.’
1
0 14 eces (Wee (Wee (Rs.’ (Rs.’ 000)
13 4 sor ks) ks) 000) 000)
14 26, 21
4, 0 13 D1(0)
G(12) A - 10 7 20 30 3.33
3 14 26
B(8) 14
6
26 B - 8 6 15 20 2.5
14 D(6)
8 C(5) 16
F(5) C B 5 4 8 14 6
8
16
2 E(8) 5
D B 6 4 11 15 2
8
21
E B 8 5 9 15 2
9, 8, 13 21
F E 5 4 5 8 3
Normal Project Time = 26 days
Normal direct cost = Rs. 71,000/- G A, D, 12 8 3 4 0.25
Indirect cost = 400*26 = 10,400 C
Total Project cost
= Normal direct cost + Indirect cost
= 71,000 + 10,400 = Rs. 81,400/-
Critical path B-D-G (1-2, 2-4, 4-6)
Crashing critical activity with minimum cost slope i.e. activity G by 4 days, we get

0 A(10) 14
1 4 G(8)
0 14
D1(0)
13
22
3
14 6
22
B(8)
D(6)
C(5) F(5)
16
8
5
2 21
8
E(8)

10/3/2020 Project Management Using Network Analysis

 • The following table shows details of a Project.The indirect cost is Rs.
400/- per day of Project duration. Activi Imme Norm Cras Norm Cras Cost
ty diate al h al h Slope
0 A(10) 14
1 4
Pred Time Time Cost Cost (Rs.’
G(8)
0 14 eces (Wee (Wee (Rs.’ (Rs.’ 000)
D1(0) sor ks) ks) 000) 000)
13
22
3 A - 10 7 20 30 3.33
14 6
22
B(8)
D(6) B - 8 6 15 20 2.5
C(5) F(5)
16
8 C B 5 4 8 14 6
5
2 21
8
E(8)
D B 6 4 11 15 2

Project Time = 22 days E B 8 5 9 15 2

Direct cost = Rs. 71,000/- + 4*250 = 72,000/-
Indirect cost = 400*22 = 8,800 F E 5 4 5 8 3
Total Project cost
G A, D, 12 8 3 4 0.25
= Direct cost + Indirect cost
C
= 72,000 + 8,800 = Rs. 80,800/-
Critical path B-D-G (1-2, 2-4, 4-6)
Critical activity G has reached its crash limit and hence cannot be crashed further
Crashing other critical activity with minimum cost slope i.e. activity D by 1 day, we get

0 A(10)
13
1
0 4 G(8)
D1(0) 13
13
3 21
B(8) 13
6
D(5) 21

C(5)
16
F(5)
8 5
16
2 E(8)
8

10/3/2020 Project Management Using Network Analysis

 • The following table shows details of a Project.The indirect cost is Rs.
400/- per day of Project duration. Activi Imme Norm Cras Norm Cras Cost
ty diate al h al h Slope
Pred Time Time Cost Cost (Rs.’
0 A(10) eces (Wee (Wee (Rs.’ (Rs.’ 000)
13
1 sor ks) ks) 000) 000)
0 4 G(8)
D1(0) 13
13 A - 10 7 20 30 3.33
3 21
B(8) 13 B - 8 6 15 20 2.5
6
D(5) 21

C(5) C B 5 4 8 14 6
16
F(5)
8 5
16 D B 6 4 11 15 2
2 E(8)
8
E B 8 5 9 15 2

F E 5 4 5 8 3

Project Time = 21 days G A, D, 12 8 3 4 0.25

Direct cost = Rs. 72,000/- + 2000/- = 74,000/- C
Indirect cost = 400*21 = 8,400
Total Project cost
= Direct cost + Indirect cost
= 74,000 + 8,400 = Rs. 82,400/-
This Total Project cost (Rs. 82,400/- ) is > the Total Project cost for 22 days viz. Rs. 80,800/-
Hence Optimal Project Duration is 22 days and Minimum Total Project cost is Rs. 80,800/-

10/3/2020 Project Management Using Network Analysis

 Example for determination of Optimal Project
duration and Minimum Project cost
• The network given below gives the normal activity durations and the
table given below gives the data on the various costs and crash times.
The indirect cost is Rs. 120/- per day of Project duration.
• Determine the optimum Project Duration and minimum Project cost

Activity Normal Crash Normal Crash Cost

11 Time Time Cost Cost Slope
3 (days) (Days) (Rs.) (Rs.) (Rs.)
11 6
9
1-2 5 4 170 240 70
0
17
1 1-3 9 6 310 550 80
0 4
6 17
2-3 6 4 80 200 60
5
5 2-4 10 8 130 230 50
10
2
5 3-4 6 4 110 290 90

10/3/2020 Project Management Using Network Analysis

 Activity Normal Crash Normal Crash Cost
11
Time Time Cost Cost Slope
3
11 6
(days) (Days) (Rs.) (Rs.) (Rs.)
9
1-2 5 4 170 240 70
0
17
1
4 1-3 9 6 310 550 80
0 6 17
2-3 6 4 80 200 60
5
5 2-4 10 8 130 230 50
10
2
5 3-4 6 4 110 290 90

Critical Path

11
3
11 6
9

0
17
1
0 4
6 17

5
5
10
2 10
5
3
10 6
9
Normal Project Time = 17 days 0
16
Normal direct cost = Rs. 800/- 1 4
0
Total Project cost 5 16
= Normal direct cost + Indirect cost / day x Duration of the Project
= 800 + 120 x 17 = Rs. 2840 5
5
Critical path 1-2, 2-3, 3-4 10
2
Activity 1-3 and 2-4, each have a float of 2 days 5
Crashing activity critical with minimum cost slope i.e. activity 2-3 we get
10/3/2020 Project Management Using Network Analysis
 10 Activity Normal Crash Normal Crash Cost
3 Time Time Cost Cost Slope
10
9
6 (days) (Days) (Rs.) (Rs.) (Rs.)

0
1-2 5 4 170 240 70
16
1
0 4 1-3 9 6 310 550 80
5 16

2-3 6 4 80 200 60
5
5
10 2-4 10 8 130 230 50
2
5
3-4 6 4 110 290 90

9
3
Project Time = 16 days 9 6
9
Direct cost = Rs. 800/- + 60 = Rs. 860
0
Total Project cost 15
1
= Direct cost + Indirect cost / day x Duration of the Project 0 4
4
15
= 860 + 120 x 16 = Rs. 2780
Critical path 1-2, 2-3, 3-4
5
Activity 1-3 and 2-4, each have a float of 1 days 5
10
Crashing critical activity with minimum cost slope i.e. activity 2-3 we get 2
5

10/3/2020 Project Management Using Network Analysis

 9 Activity Normal Crash Normal Crash Cost
3 Time Time Cost Cost Slope
9
9
6 (days) (Days) (Rs.) (Rs.) (Rs.)

0
1-2 5 4 170 240 70
15
1
0 4 1-3 9 6 310 550 80
4 15

2-3 6 4 80 200 60
5
5
10 2-4 10 8 130 230 50
Project Time = 15 days 2
5
Direct cost = Rs. 860/- + 60 = Rs. 920 3-4 6 4 110 290 90
Total Project cost
= Direct cost + Indirect cost / day x Duration of the Project
= 920 + 120 x 15 = Rs. 2720
Critical path: All paths are critical viz. 1-2-3-4; 1-2-4 & 1-3-4
Now Activity 1-3 and 2-4, do not have any float
Activity 2-3 has reached its crash duration and cannot be reduced further
Crashing options
a) Crash 1-2 & 1-3 at a crash cost of 70+80=Rs.150
b) Crash 2-4 & 3-4 at a crash cost of 50+90=Rs. 140

8 9
3 3
8 6 9 5
8 9

0 0
14 14
1 1
0 4 0 4
4 14 4 14

4 5
4 5
10 9
2 2
4 5

10/3/2020 Project Management Using Network Analysis

Crashing options Activity Normal Crash Normal Crash Cost
a) Crash 1-2 & 1-3 at a crash cost of 70+80=Rs.150 Time Time Cost Cost Slope
(days) (Days) (Rs.) (Rs.) (Rs.)
b) Crash 2-4 & 3-4 at a crash cost of 50+90=Rs. 140
1-2 5 4 170 240 70

1-3 9 6 310 550 80

2-3 6 4 80 200 60

a 8 9 2-4 10 8 130 230 50

b
3 3
8 6 9 5
8 9 3-4 6 4 110 290 90

0 0
14 14
1 4 1 4
0 4 14 0 4 14

4 5
4 5
10 9
2 2
4 5

Option B looks to be the most beneficial

Project Time 14 days

Direct cost = 920+140=1060
Indirect cost = 14x120=1680
Hence Total Project cost = 1680+1060=2740

10/3/2020 Project Management Using Network Analysis

Crashing options Activity Normal Crash Normal Crash Cost
a) Crash 1-2 & 1-3 at a crash cost of 70+80=Rs.150 Time Time Cost Cost Slope
(days) (Days) (Rs.) (Rs.) (Rs.)
b) Crash 2-4 & 3-4 at a crash cost of 50+90=Rs. 140
1-2 5 4 170 240 70

1-3 9 6 310 550 80

2-3 6 4 80 200 60

a 8 9 2-4 10 8 130 230 50

b
3 3
8 6 9 5
8 9 3-4 6 4 110 290 90

0 0
14 14
1 4 1 4
0 4 14 0 4 14
9
3
4 5 9 5
4 5 9
10 9
2 2 0
4 5 c 14
1
0 4
5 14

4
4
10
Option c) 2
4
Activity 2-3 which was at crash time has been relaxed by 1 day to 5 days. By
doing this it would be still at a time < its normal time.
Activity 1-2 has been crashed by 1 day to 4 days while activity 2-4 has been
relaxed to original 10 days
The crash cost from the original network would be 70+60+90=Rs.220
Therefore the Direct cost for this option of 14 days Project Time = 800+220=1020.
Indirect cost = 14x120=1680
Hence Total Project cost = 1680+1020=2700
Hence this c) option would be the best option

10/3/2020 Project Management Using Network Analysis

 Activity Normal Crash Normal Crash Cost
9
d Time Time Cost Cost Slope
3
9 5
(days) (Days) (Rs.) (Rs.) (Rs.)
9
1-2 5 4 170 240 70
0
14
1
4 1-3 9 6 310 550 80
0 5 14
2-3 6 4 80 200 60
4
4 2-4 10 8 130 230 50
10
2
4 3-4 6 4 110 290 90

Project Time = 14 days,

Total Project cost
= Direct cost + Indirect cost / day x Duration of the Project
= 1020 + 120 x 14 = Rs. 2700
9
3
9 4
9
All activities are critical
Activity 1-2 is at its crash time & hence cannot be further crashed 0
13
For a Project duration of 13 days the crashing options are 1
0 4
5 13
a) Crash 2-4 and 3-4 at a crash cost of 50+90=140
b) Crash 1-3, 2-3 and 2-4 at a crash cost of 80+60+50=190
4
Choosing a option we get 4
9
2
4

Total Project Cost:

= Direct costs + Indirect cost / day x Duration of the project
= 1020+140 + 120x13 = Rs. 2720/-
This total Project cost is > Rs. 2700/
Hence Optimal Project duration at a minimum Total cost of Rs. 2700/- is 14 days

10/3/2020 Project Management Using Network Analysis

 End of Chapter

10/3/2020 Project Management Using Network Analysis