HUT 310 MANAGEMENT FOR ENGINEERS

MODULE 4
 Project management using PERT and CPM
 A project is defined as a combination of inter related activities that must be
executed in a certain order before the entire task can be completed.
 An activity in a project is usually viewed as a job requiring time and recourses for
its completion.
 Network analysis is the general name given to certain specific techniques which
can be used for the planning, management and control of projects.
Objectives of network analysis
 

1. Minimize total project cost and time.

2. Effective utilization of resources.
3. Minimizing delays and interruption of the project.
Advantages:
1. Planning, Scheduling and Controlling complicated projects
2. Evaluating performance level of actual performance with planned target.
3. Determine technological interdependence of diff. activities.
4. Proper coordination and Communication between various parts of the
project.
5. Deals with time cost tradeoff and provides the optimum schedule of the
project
Disadvantages:
6. N/w construction of complex project- difficult and time consuming.
7. Actual time estimation of various activities is difficult
8. Analysis of a project difficult – a no. of resource constraints.
9. Time cost tradeoff is difficult.
 Types of network
1. AOA Network (Activity On Arc Network)

1 A 2 B 3 C 5

AOA network
2. AON Network (Activity On Node)
a) Finish to Start A
n
B
Lag
Finish to Start AON
n

b) Start to Start
A B

Start to Start AON

n

c) Finish to Finish
A B

Finish to Finish AON

n

d) Start to Finish
A B

Start to Finish AON

 Terms related to network planning methods (AOA)

2
4
6
A C
3
1 F 4 5
E
4 4
B D
3

Critical path in network

 Network diagram –It is a diagram which represents all the events and activities in
sequence (in which they are required to be performed to complete the project),
along with their inter relationships and with their interdependencies.
 Event – An event is a specific instant of time which marks start or the end of an
activity. Event consumes neither time nor resources. It is represented by a circle
and the event number is written within the circle.
 Activity – Every project consists of a number of tasks which are called activities.
Activities are classified as critical activities, non-critical activities and dummy
activities.
 Terms related to network planning methods (AOA)

2
4
6
A C
3
1 F 4 5
E
4 4
B D
3

Critical path in network

 Critical activities – In a network diagram, critical activities are those, if consume

more than their estimated time, the project will be delayed.
 Non-critical activities – Such activities have provision (float or slack), so that
even if they consume time over and above the estimated time, the project will not
be delayed.
 Dummy activity – When two activities start at the same instant of time the head
events are joined by a dotted arrow and this is known as dummy activity.
 Critical path – It is that sequence of activities which decide the total project
duration. Critical path is formed by critical activities.
 Terms related to network planning methods (AOA)
2
4
6
A C
3
1 F 4 5
E
4 4
B D
3

Critical path in network

 Duration – Duration is the time required to complete a task or an activity.

 Earliest Start Time (EST) – It is the earliest possible time at which an activity can
start and is calculated by moving from first to last event in a network diagram.
 Earliest Finish Time (EFT) – It is the earliest possible time at which an activity
can finish.
 Latest Finish Time (LFT) – It is the latest time by which the operation must be
completed so that scheduled date for the completion of the project may not be
delayed.
 Latest Start Time (LST) – It is the latest possible time by which an activity can
start.
 Float or Slack – Float or slack means spare time or extra time over and above
 Numbering of events – Fulkerson’s rule

2
4
6
A C
3
1 F 4 5
E
4 4
B D
3

Critical path in network

The steps involved in numbering of the events as per the Fulkerson’s rule are :-
 

1. The initial event, which has all outgoing arrows and no incoming arrow, is
numbered as 1.
2. Delete all the arrows coming out from the node just numbered (i.e., 1). This step
will create some more nodes (at least one) into initial events. Number these
events in ascending order (i.e., 2, 3, etc.).
3. Continue the process until the final or terminal node which has all arrows
coming in, with no arrow going out, is numbered.
Some of the common combination of activity in a project
SL. No. Diagram Logic
Activity 'A' is preceding activity
of 'B'. i.e., activity ‘A' need to be
1. A B
completed before start of activity
'B'. In other words 'B' starts after
'A' is finished.

A Activity ‘A and ‘B’ are

concurrent. Activity ‘C’ cannot
2. C
start until both the activities ‘A’
B
and ‘B’ are completed.

A B
Activity ‘D’ cannot begin until
both A and ‘C’ is completed. But,
‘B’ can start after ‘A’ is
Z completed. The activity ‘Z’,
3.
represented by dashed arrow, is a
C D dummy activity. This does not
consume any resource i.e., have
zero time to complete.
 Example :

10 10

3
(6) (5)
0 0 4 4 15 15 18 18
C
B
(4) (3)
1 2 5 6
A (4) 80 12
0 (3) F
D E
EST LST
4

Network diagram
 Problems on construction of network diagram
1. Construct the network diagram for the following set of sequential activities
for installation of water supply by digging well and installation of pump
given below.
SL. Preceding Time
Activity Symbol
No. activity (Days)
1. Site selection A —— 7
2. Digging well B A 3

3. Laying field channels C B 15

4. Procurement of pump D A 7

5. Installation of pump E D, B 3

6. Test run F C, E 2
Problem 1: Solution
SL. No. Activity Symbol Preceding activity Time (Days)
1. Site selection A —— 7
2. Digging well B A 3
3. Laying field channels C B 15
4. Procurement of pump D A 7
5. Installation of pump E D, B 3
6. Test run F C, E 2

3 C
B
(3) (15)
A F
1 2 5 6
(7) (2)
D E
(7) 4 (3)
 Problem 2 :
2. A project consists of 9 jobs with the following precedence relations and time
estimates. Draw the project network and identify the critical path.

Job Predecessor Time (Days)

A —— 15
B —— 10
C A, B 10
D A, B 10
E B 5
F D, E 5
G C, F 20
H D, E 10
I G, H 15
Problem 2: Solution
Job Predecessor Time (Days)
A —— 15
B —— 10
C A, B 10
D A, B 10
E B 5
F D, E 5
G C, F 20
H D, E 10
I G, H 15

E
(5)
B H
(15) (20)
I
D F
(5) (15)
(10)
A G
(10) (10)
C
(10)
 Critical Path Method (CPM)
 CPM is a technique used for planning and controlling the logical and economic
sequence of operations for accomplishing a project.
 CPM model of the project includes the following.
1. A list of all activities required to complete the project,
2. The time (duration) that each activity will take to completion, and
3. The dependencies between the activities.
 Using these values, the longest path of planned activities to the end of the project,
and the earliest and latest time that each activity can start and finish without making
the project longer is calculated.
 This process determines which activities are ‘critical’ (i.e., on the longest path) and
which have ‘float’ (i.e., can be delayed without making the project longer).
 CPM-Problems : #1
1. Mark the critical path and find total project duration for the network diagram
shown below. Also, calculate EST, LST, EFT, LFT and floats.

2
D
A
8 10

1 B 3 E 5 G 6
4 6 4

C F
6 8
4

CPM-Problem-1
CPM-Problems : #1
8 8
2

D
A 10
0 0 8 4 12 18 18 22 22

1 B 3 E 5 G 6
4 6 4

6 6 14 F
C 8
EST LST 4

CPM-Problem-1-Solution

Activity Duration (Days) EST EFT LST LFT Float = LST-EST

A(1-2) 8 0 8 0 8 0
C(1-4) 6 0 6 8 14 8
B(1-3) 4 0 4 8 12 8
D(2-5) 10 8 18 8 18 0
E(3-5) 6 4 10 12 18 8
G(5-6) 4 18 22 18 22 0
F(4-6) 8 6 14 14 22 8
 Program (or Project) Evaluation Review Technique (PERT )

 Program (or Project) Evaluation Review Technique, commonly abbreviated as

PERT, is a model for project management designed to analyze and represent the
tasks involved in completing a given project.
Steps involved in PERT
 

1. The project is broken down into various activities systematically.

2. Arrange all activities in logical sequence.
3. Construct the network diagram.
4. Events and activities are numbered.
5. Using three time estimate, the expected time for each activity is calculated.
6. Standard Deviation and variance of each activity are calculated.
7. EST and LFT are calculated.
8. Expected time, earliest starting time and latest finishing times are marked on
the network diagram.
9. Slack is calculated.
10. Critical paths are identified and marked on the network diagram.
11. Length of critical path or total project duration is found out.
12. Lastly the probability that the project will finish at due date is calculated.
 Program (or Project) Evaluation Review Technique (PERT )

Estimation of activity times in PERT

1. to (optimistic time)  

2. tm(most likely time)  

3. tp(pessimistic time)
t o  ( t m  4)  t p
4. te(estimated time), t e  6
Estimation of variability of activity times
t p  to
S t (standard deviation) =
6
2
 t p  to 
Vt (variance ) =  
 6 
Length of the critical path or the total project duration
 

Total project duration = Sum of the duration of each critical activity.

 

Variance of the critical path

Variance of the critical path  Sum of the variance of the each critical activity.
Standard deviation, St  Variance of the critical path
 Program (or Project) Evaluation Review Technique (PERT )

The probability that the project will meet the schedule or the due date
 The probability of completing the project within the scheduled time may be
obtained by using the standard normal variate, where ‘D’ is the expected time of
project completion.
D  Te
Z 
St
where, Z = Normal deviation ( Standard normal variate)
D = Due or schedule date (time) (desired time)
S t = Standard deviation
Te = Total project duration

 Probability of completion of project that corresponds to ‘Z’ is obtained from the

standard normal table.
 PERT-Problems : #1

1. The data regarding the activities in a project are given below. It is given that the
schedule date of completion of project is 38 days. Draw the network diagram, find
the critical path and find the probability that project can be completed at schedule
time.

to tm tp
Activity
(Optimistic time) (Most likely time) (Pessimistic time)
1-2 2 5 14
1-6 2 5 8
2-3 5 11 29
2-4 1 4 7
3-5 5 11 17
4-5 2 5 14
6-7 3 9 27
5-8 2 2 8
7-8 7 13 31
 PERT-Problems : #1

Solution :
to  ( tm  4)  t p t p  to  t p  to 
2

We know, te  , St  , Vt   
6 6  6 
Estimated time, standard deviation and variance for the rest of the activities are
computed and tabulated in the table below.

te St Vt
Activity
(Estimated time) (Standard deviation) (Variance)
1-2 6 2 4
1-6 5 1 1
2-3 13 4 16
2-4 4 1 1
3-5 11 2 4
4-5 6 2 4
6-7 11 4 16
5-8 3 1 1
7-8 15 4 16
PERT-Problems : #1
Network diagram is drawn as below.
19 19
6 6 3 30 30
(13) (11)
2 5 33 33
10 24 (6) (3)
(4) 8
(6) 4
0 0
16 18 (15)
5 7
1 EST LST
6 7
(5) (11)
PERT-Problem-1-Solution

Values LST, EST, EFT and LFT of other activities are calculated and are tabulated in
the table below.
Activity EST LST Total slack = LST–EST
1-2 0 0 0
1-6 0 2 2
2-3 6 6 0
2-4 6 20 14
3-5 19 19 0
4-5 10 24 14
6-7 5 7 2
5-8 30 30 0
7-8 16 18 2
 PERT-Problems : #1
Length of the critical path or the total project duration =
 

= Sum of the duration of each critical activity = 6 + 13 + 11 + 3= 33 days.

Variance of the critical path = Sum of the variance of each critical activity
= 4 + 16 + 4 + 1 = 25
Standard deviation, St  Variance of the critical path  25  5

The probability that the project will meet the schedule or the due date
 

D = the due or schedule date(time) (Desired Time) = 38 days

 

Total project duration = Te = 33

 

Substituting different values in the equation, we get,

D  Te 38  33
Z  = =1
St 5

The corresponding value of probability can be read from the normal distribution table
and is 0.841.
 Project crashing
 The process of reducing the time of the project by reducing the scheduled time of
some of the activities is called crashing.
 Project crashing is accomplished by subcontracting, overtime, extra shifts,
increasing the number of workers, additional capacity installation, etc.
 Important terms used in project crashing
Activity cost

Crash Crash
cost

Normal
Normal
cost

Crash Normal Activity

time time duration
Cost slope-Project crashing
 

1. Normal time – It is the time taken by an activity when it is performed in the

normal way.
2. Normal cost – It is the cost for carrying out an activity when it is performed in
the normal way.
 

3. Crash time – The crash time refers to the shortest possible time to complete an
activity with additional resources.
 

4. Crash cost – The crash cost refers to the activity cost under the crashing activity
time.
 
Crash cost  Normal cost
5. Crash cost per period =
Normal time  Crash time
 Problems on project crashing : #1
1. The table given below summarizes the time-cost information for the activities. The
owner wants to finish the project in 110 days. Find the minimum possible cost for
the project to finish it on 110 days.

Normal Crash
Preceding Normal Crash
Activity duration Duration
activity cost cost
(days) (days)

A – 120 100 ₹12000 ₹14000

B – 20 15 ₹1800 ₹2800

C B 40 30 ₹16000 ₹22000

D C 30 20 ₹1400 ₹2000

E D, F 50 40 ₹3600 ₹4800

F B 60 45 ₹13500 ₹18000
 Problems on project crashing : #1
Solution :
From the given data, the network diagram is drawn as below (Crashing problem-1-
Stage-1). A
120

B C D E
20 40 30 50
F
60
Crashing problem-1-Stage-1
Crash cost  Normal cost
We have, Crash cost slope =
Normal time  Crash time

Activity Crash cost slope

A 100
B 200
C 600
D 60
E 120
F 300
 Problems on project crashing : #1
A
120

B C D E
20 40 30 50
F
60
Crashing problem-1-Stage-1
The normal cost for the project is ₹48300 and the normal duration is the duration of
activities in the critical path, which is 140 days. Activity having least-cost slope is
activity D. Maximum of 10 days can be cut from this activity by reducing the
duration of activity D to the crash duration of 20 days.
A
120

B C D E
20 40 30 50
F 20
60
Crashing problem-1-Stage-2
Now, the overall duration is 130 days and there are multiple critical paths, viz., B-F-
E and B-C-D-E. Total project cost at this stage is the normal cost of ₹48300 plus the
cost of crashing the activity D by 10 days (₹2000–₹1400), which gives the value
₹48900.
 Problems on project crashing : #1
The next activity to be crashed would be the activity E, since it has the least-cost slope
(₹120 per day) of any of the activities on the critical path. Activity E can be crashed
by a total of 10 days. Crashing the activity E by 10 days will cost an additional ₹120
per day or is ₹1200. Modified network diagram is drawn as below ( Crashing problem-
A
1-Stage-3).
120

B C D E
20 40 30 50
F 20 40
60
Crashing problem-1-Stage-3
The project duration is now 120 days and the total project cost is ₹50100. There are
now three critical paths (A, B-C-D-E, and B-F-E). Activity A is paired with each of
the other activities to determine which has the least overall cost slope, i.e., activity A
and activity B are combined and crashed we get the least-cost slope, i.e., Activity A
(₹100/day) + Activity B (₹200/day) = ₹300/day.
The least-cost slope will be activity A plus activity B for a cost increase of ₹300 per
day. Reducing the project duration by 5 days will add 5 x 300 = ₹1500 crashing cost
and the total project cost would be ₹51600.
Problems on project crashing : #1
A
120
115
B C D E
20 40 30 50
15 F 20 40
60
Crashing problem-1-Stage-4
Final step in crashing the project to 110 days would be accomplished by reducing
the duration of activity A by 5 days to 110 days, reducing activity C by 5 days to 35
days, and reducing activity F by 5 days to 55 days. The combined cost slope for the
simultaneous reduction of activity A, activity C, and activity F would be ₹1000 per
day. For 5 days of reduction this would be an additional ₹5000 in total project cost.
A
120
115 110
B C D E
20 40 30 50
15 35 F 20 40
60 55
Crashing problem-1-Stage-5
 Discussions
1. Explain the concept and objectives of network analysis. What are its different stages? Discuss its
advantages and limitations.
2. Explain PERT and its importance in network analysis?
3. Define organizing and explain the importance of organizing in the present business environment.
4. Explain the concepts of crashing and dummy activity in project management.
5. Differentiate between CPM and PERT.