Management Science Notes by N.Aruna Kumari, Asst. Prof.

Humanities & Sciences

Chapter-5: Project Management & Network Analysis

1. Introduction:
The project or task consists of many activities interrelated with each other. To perform the task,
it is required to arrange the activities I logical sequence with precedence and follow-up
relationships. These process of arranging activities in logical sequence for outlook and to
estimate time & tasks of project.

2. Application of Project Management:

Project management is generally applied for constructing large industrial projects, public
utilities and organizing mega events. And it is an important field in production scheduling. For
example, Fabrication of boilers, construction of railway coaches, launching satellites, organizing
R&D activities, etc. Some of the typical projects under project management are as follows:
a. House construction
b. Commissioning factory
c. Construction of ships, bridges, dams, etc.
d. Power plant setup
e. Maintenance of major equipment’s / Plants
f. Admission process at state / central level
g. New product / service launching
h. Launching of new weapon system
i. Develop new technology, etc.

3. Tools of Project Management:

Before PERT and CPM, Gantt Charts and mile stone charts were used tools to monitor the
project progress in complex projects.
a. Gantt’s bar chart: Gantt chart is a bar chart, which was developed by Henry Gantt
around 1900. It consists of two coordinate axes. One represents the ‘time’ and the
other represents ‘jobs or activities’ performed.
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

b. Mile stone chart: This is an improvement over Gantt chart. This becomes good bridge
between ‘Gantt Chart’ and ‘PERM & CPM’. Every task represented by bar in Gantt’s bar
chart, is subdivided in terms event or point of time.

c. PERT & CPM: As the network analysis undergone several changes due to variance in
Human & Physical systems, PERT and CPM continue to be very popular with handling of
time, cost, resources, probabilities & combinations. PERT is abbreviated as “Program
Evaluation Review Technique” and CPM is abbreviated as “Critical Path Method”.

4. Constructing network with PERT & CPM techniques:

a. Rules and guidelines of constructing network under PERT diagrams:
i. To frame the network, the actual activity of project need to be identified and is
called ‘branch / arc” which consumes time and resource
ii. Each Branch/Arc represented by Arrow (→)
iii. The starting point and ending points of arrows are called as Node/Event which
is represented by circle (O) contains serial number on it.
iv. The starting event of arrow is called ‘tail node’ and ending event is called ‘head
node’
v. No two activities should have same starting node and same ending node.
vi. In any network no activity should represented by more than one arc (→).
vii. Any activity representation should not intersect, bend and moving backwards.
viii. Relations of activities: For any activity, the precedence relation provide the
following information:
a. The activities that precede it
b. The activities that follow it
c. The activities that may be concurrent with it
ix. “Dummy activity” is an imaginary activity which is used in case of sae starting &
same ending nodes for more than one actual activities.
x. ‘Dummy activity’ has zero time duration and represented by dotted arrow(---->)
b. Critical Path Method:
Critical Path is defined as longest path of the network or maximum duration of
project completion. Critical path consumes the maximum amount of time and
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

resources. This path has ‘zero’ slack value. Slack is the time takes to delay the particular
event without affecting the project completion time.
Hence, Slack = LFT – EFT ; EFT = EST + Duration of activity ; LST=LFT – Duration of Activity

• LFT=Latest Finish Time

• EFT=Earliest Finish Time
• EST = Earliest Start Time
• LST = Latest Start Time
Float: This represents the difference between the maximum time to finish the activity
and the actual time required to complete it. The difference between slack and float time
is, slack is used with reference to events, float is used with respect to activity. Floats are
three types, (i) Total Floats, (ii) Free Float & (iii) Independent Float.

• Total float is the additional time which non critical activity can consume without
increasing the project duration. Total Float = LST – EST (or) LFT – EFT. However,
total float may affect the floats in previous and subsequent activities.
• Free float refers to the time by which an activity can expand without affect
succeeding activities. Free float = EST of Head event – Est of Tail event – Activity
duration. (FF=ESTHE – ESTTE – AD)
• Independent float means, the time by which an activity may be delayed or
extended without affecting the preceding or succeeding activities in any way.
IF=ESTHE – LFTTE – AD.

5. Problems on PERT & CPM:

5.1. Draw the PERT diagram and find the critical path from the following data:

Activity A B C D E F
Predecessor - A B A D C,E
Duration in days 14 16 15 14 13 13

Critical Path:
Method-1
(a) 1 – 2 – 3 – 5 – 6 = 14+16+15+13=58 (Duration of critical path)
(b) 1 – 2 – 4 – 5 – 6 = 14+14+13+13=54
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Method-2

5.2 Draw the PERT diagram and find the critical path from the following data:

Activity A B C D E F G H I J
Predecessor - A A A D D E F,G C,H B
Duration in 1 4 2 2 3 3 2 1 3 2
(months)

Hence, Critical path is = 1-2-4-5-6-7-8 ; Total duration is = 1+2+3+2+1+3=12 months

5.3 Draw the PERT diagram and find the critical path from the following data:

Activity A B C D E F G H
Predecessor - - A A A,B C,D F E,G
Duration in weeks 6 8 3 9 10 7 8 4

Hence, Critical path is = 1-3-5-6-7-8 ; Total duration is = 8+10+7+8+4=37 weeks

Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

5.4 Draw the PERT diagram and find the critical path from the following data:

Activity A B C D E F G H I J K L M N O P Q
Predecessor - - - A A B B C C D E F G H I J,K,L M,N,O
Duration in 4 8 5 4 5 7 4 8 3 6 5 4 12 7 10 5 8
weeks

Hence, Critical path is = 1-3-8-12-13 ; Total duration is = 8+4+12+8=32 weeks

5.5 Draw the PERT diagram and find the critical path from the following data:

Activity A B C D E F G
Predecessor - - A C D B,E F
Duration in 1 4 2 2 3 3 2
(months)

Hence, Critical path is = 1-2-3-4-5-6-7 ; Total duration is = 1+2+2+3+3+2=11 months

Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

5.6 Draw the PERT diagram and find the critical path from the following data:

Activity A B C D E F G H I J K L M N
Predecessor - - A B A C,D F E,G H I J,L A K M
Duration in 8 9 7 6 5 4 6 8 9 3 4 4 1 6
(months)

Hence, Critical path is = 1-2-4-5-6-7-8-9-10-11-12 (or) 1-3-4-5-6-7-8-9-10-11-12

Total duration is = 8+7+4+6+8+9+3+4+1+6=56 months (or) 9+6+4+6+8+9+3+4+1+6=56 months
5.7 Draw the PERT diagram and find the critical path from the following data:

Activity A B C D E F G H I J K L M N
Predecessor - - - B A A B C,D C E F,G,H F,G,H I K
Duration in 2 6 4 3 6 8 3 7 2 5 4 3 13 7
(months)

Hence, Critical path is = 1-3-5-7-8-10 ; Total duration is = 6+3+7+4+7=27 months

Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

5.8 Draw the PERT diagram and find the critical path from the following data:

Job 1-2 3-4 5-8 7-9 2-3 3-5 6-7 8-9 2-4 4-6 6-10 9-10

Duration 2 3 5 4 7 5 8 1 3 3 4 7
in (Weeks)

Hence, Critical path is = 1-2-3-4-6-7-9-10 ; Total duration is = 2+7+3+3+8+4+7=27 weeks

5.9 Draw the PERT diagram and find the critical path from the following data:

Job 1-2 1-3 1-4 2-5 2-6 3-6 4-7 5-7 6-7

Duration in 3 2 6 2 5 3 3 1 2
(Weeks)

Hence, Critical path is = 1-2-6-7 ; Total duration is = 3+5+2=10 weeks

Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Problems with estimated time duration:

Types of time duration estimations: in reality, activity durations may be probabilistic. Hence,
probabilistic considerations are incorporated while obtaining time durations of activities in a
project. The following three estimates are used:
a. Optimistic time: The time estimation of execution goes extremely good
b. Pessimistic time: The time estimation of execution goes very badly
c. Most likely time: The time estimation if execution goes notmal.
The formula for mean and variance or estimated time(te) of time distribution is:
𝑡0 + 4𝑡𝑚 + 𝑡𝑝
𝑀𝑒𝑎𝑛(𝜇) =
6
The range of time estimates are always from ‘a’ to ‘b’ or ‘t0 to tp’. Then tm will be in between
t0 & tp.
5.10 Find the estimated time duration from the following data and draw the network to
find critical path.

Duration in weeks te=

Activity Predecessor Optimum Most likely Pessimistic 0 𝑡 + 4𝑡𝑚 + 𝑡𝑝
time(t0) time (tm) time (tp) 6
A - 1 2 3 2
B - 2 2 8 3
C A 6 7 9 7
D B 1 2 3 2
E A 1 4 7 4
F C,D 1 5 9 5
G C,D,E 1 2 3 2
H F 1 2 9 3

Hence, Critical path is = 1-2-5-6-7 ; Total duration is = 2+7+5+3=17 weeks

Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

5.11 Find the estimated time duration from the following data and draw the network to
find critical path.

Duration in weeks te=

Activity Predecessor Optimum Most likely Pessimistic 0 𝑡 + 4𝑡𝑚 + 𝑡𝑝
time(t0) time (tm) time (tp) 6
A - 6 7 8 7
B - 1 2 9 3
C - 1 4 7 4
D A 1 2 3 2
E A,B 1 2 9 3
F C 1 5 9 5
G C 2 2 8 3
H E,F 4 4 4 4
I E,F 4 4 10 5
J D,H 2 5 14 6
K I,G 2 2 8 3

Hence, Critical path is = 1-2-3-5-6-8 ; Total duration is = 7+0+3+4+6=20 Weeks

Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

5.12 Find the estimated time duration from the following data and draw the network to
find critical path.

Duration in weeks te=

Job Optimum Most likely Pessimistic 0 𝑡 + 4𝑡𝑚 + 𝑡𝑝
time(t0) time (tm) time (tp) 6
1-2 3 4 7 4
2-3 1 2 4 2
2-4 2 3 5 3
3-5 3 4 6 4
4-5 1 3 7 3
4-6 3 3 9 4
5-7 4 5 7 5
6-7 6 7 9 4
7-8 2 4 8 5
7-9 1 2 5 2
8-10 4 6 9 6
9-10 3 5 8 5

Hence, Critical path is = 1-2-3-5-7-8-10 ; Total duration is = 4+2+4+5+5+6=26 weeks (or)

= 1-2-4-5-7-8-10 ; Total duration is = 4+3+3+5+5+6=26 weeks (or)
= 1-2-4-6-7-8-10 ; Total duration is = 4+3+3+4+4+5+6=26 weeks (or)
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

6. Project Crashing under PERT & CPM techniques:

Project crashing means, breaking the project activities in the PERT diagram with the help of
time and cost. The project duration measured with time and costs. Hence, the relationship
between project time and project cost useful to crash the project with different probabilities.
While, crashing the project, the concept of cost slope, optimum cost and optimum duration are
ensured. Hence, crashing means breaking the network activities and calculating costs.
Project costs: Costs associated with project can be classified into two categories, (i) Direct costs
and (ii) Indirect cost.
(i) Direct cost means which are directly proportional to the number of activities in the project.
(ii) Indirect cost means temporally determined per day / week / month with additional
requirements.
The cost in project network calculated twice, once as Normal cost(Nc) and next as Crash cost(Cc).
The scope of calculating normal cost and crash cost is to reduce the time of activities.
Project time: This is also measured twice as Normal time(Nt) and Crash time(Ct). By increasing
the costs, the normal time becomes lower, which considered as crash time.
Cost Slope: This is the amount that has to be spent over and above the normal direct cost for
reducing the duration by one unit of time (day / week / month / year). Cost slope is defined as
the additional cost for reducing one unit of time assuming a given rate of increase in direct cost
with a decrease in indirect cost.
𝐶𝐶 −𝑁𝐶
Hence formula for calculating cost slope =
𝑁𝑇 −𝐶𝑇

Problems on Crashing:
6.1. Find the optimal crashed project completion time with the following data consider and
indirect costs per week is INR 1500.

Time in Weeks Cost in INR Cost Slope

Activity Normal time Crash time Normal cost Crash Cost 𝑪 𝑪 − 𝑵𝑪
(Nt) (Ct) (Nc) (Cc) 𝑵𝑻 − 𝑪 𝑻
1-2 6 4 70000 84000 7000
1-3 12 10 30000 70000 20000
1-4 4 2 20000 36000 8000
2-3 8 6 90000 100000 5000
2-4 4 2 60000 76000 8000
2-5 15 8 10000 38000 4000
3-5 8 3 50000 96000 9200
4-5 6 4 40000 50000 5000
Total: 73 39 370000 550000 5294
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Critical Path:
1-3-5 = 12+8 = 20 weeks
1-2-3-5 = 6+8+8 = 22 weeks – Critical path
1-2-5 = 6+15 = 21 weeks
1-2-4-5 = 6+4+6 = 16 weeks
1-4-5 = 4+6 = 10 weeks

Total Costs = Direct cost + Indirect cost

= 37000 + (1500X22) = 70000 INR

Priorities chart:

Critical activities Cost slope(INR) Possible time reduction(Weeks)

1-2 7000 2
2-3 5000 2
3-5 9200 5

Priority – 1: Crashing 2-3 activity by 2 weeks as this activity has low cost slope per week

Critical Path:
1-3-5 = 12+8 = 20 weeks
1-2-3-5 = 6+6+8 = 20 weeks
1-2-5 = 6+15 = 21 weeks (Critical path)
1-2-4-5 = 6+4+6 = 16 weeks
1-4-5 = 4+6 = 10 weeks

Total Costs = Direct cost + Indirect cost

= 37000 + (5000X2)+(1500X21) = 78500 INR

According to the above priority the total cost increased upto INR 78500/- by reducing only
one week. Hence this priority is not preferable, instead we can crash this by only one week.
Priority – 2: Crashing 2-3 activity by 1 week

Critical Path:
1-3-5 = 12+8 = 20 weeks
1-2-3-5 = 6+7+8 = 21 weeks: Critical path
1-2-5 = 6+15 = 21 weeks: Critical path
1-2-4-5 = 6+4+6 = 16 weeks
1-4-5 = 4+6 = 10 weeks

Total Costs = Direct cost + Indirect cost

= 37000 + (5000X1)+(1500X21) = 73500 INR
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Hence, the total cost is INR 73500 with 21 weeks duration after crashing 2-3 activity by 1
week, and it is high cost than normal total cost.
Priorities chart:

Critical Critical Cost slope Possible time

path activities (INR) reduction (Weeks)
1 1-2 7000 2
2-3 5000 1(1-completed)
3-5 9200 5
2 1-2 7000 2
2-5 4000 7
According to the above priority chart let us try one more time crashing from each critical path,
i.e. 2-3 and 2-5 parallelly.
Priority-3: Crashing 2-3 and 2-5 activities parallelly:

Critical Path:
1-3-5 = 12+8 = 20 weeks: Critical path
1-2-3-5 = 6+6+8 = 20 weeks: Critical path
1-2-5 = 6+14 = 20 weeks: Critical path
1-2-4-5 = 6+4+6 = 16 weeks
1-4-5 = 4+6 = 10 weeks

Total Costs = Direct cost + Indirect cost

= 37000 + (5000X2)+4000+(1500X20) = 81000 INR

Hence, from all three priorities, that total cost is constantly increasing by decreasing only one
week. So, it is not advised to reduce more than 3 activities as we got 3 critical paths as of now.
But the total cost is reduced at priority 2 than priority 1 after crashing 2-3 activity by 1 week.
Hence it is considered as optimum cost and duration with 21 weeks and total cost of INR73500.
6.2. Find the optimal crashed project completion time with the following data consider and
indirect costs per day is INR 20000.

Time in Days Cost in INR Cost Slope

Activity Normal time Crash time Normal cost Crash Cost 𝑪 𝑪 − 𝑵𝑪
(Nt) (Ct) (Nc) (Cc) 𝑵𝑻 − 𝑪 𝑻
1-2 4 3 10000 20000 10000
1-3 2 1 15000 35000 10000
2-4 2 1 5000 9000 4000
2-5 5 3 10000 40000 15000
3-4 3 1 10000 20000 5000
4-5 2 1 8000 10000 2000
Total: 18 10 58,000 1,34,000 46000
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Critical Path:
1-2-5 = 4+5 = 9 days (Critical path)
1-2-4-5 = 4+2+2 = 8 days
1-3-4-5 = 2+3+2 = 7 days

Total Costs = Direct cost + Indirect cost

= 58000 + (20000X9) = 2,38,000 INR
Priorities chart:

Critical activities Cost slope(INR) Possible time reduction(Weeks)

1-2 10000 1
2-5 15000 2

Priority-1: Crashing 1-2 activity by 1 day as it has less cost slope:

Critical Path:
1-2-5 = 3+5 = 8 days (Critical path)
1-2-4-5 = 3+2+2 = 7 days
1-3-4-5 = 2+3+2 = 7 days

Total Costs = Direct cost + Indirect cost

= 58000 + 10000+(20000X8) = 2,28,000 INR
Hence, total cost is reduced after crashing 1-2 activity by one day for which crashing is acceptable.
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Priority-2: Crashing 2-5 activity by 2 days:

Critical Path:
1-2-5 = 3+3 = 6 days
1-2-4-5 = 3+2+2 = 7 days (Critical path)
1-3-4-5 = 2+3+2 = 7 days (Critical path)

Total Costs = Direct cost + Indirect cost

= 58000 + 10000+(15000X2)+(20000X7) = 2,38,000 INR

Here, if project crashed by 2 days, total cost incurred INR 2,38,000 by reducing only one day. Hence it
is not acceptable priority, instead we can crash it by only one day.

Priority-3: Crashing 2-5 activity by 1 day:

Critical Path:
1-2-5 = 3+4 = 7 days (Critical path)
1-2-4-5 = 3+2+2 = 7 days (Critical path)
1-3-4-5 = 2+3+2 = 7 days (Critical path)

Total Costs = Direct cost + Indirect cost

= 58000 + 10000+15000+(20000X7) = 2,23,000 INR

As all activities comes under critical activities, the priorities have changed according to the
cost slope which is next lowest.
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Priority-4: Crashing 2-5 activity by 1 day and 4-5 activity by 1 day simultaneously:

Critical Path:
1-2-5 = 3+3 = 6 days (Critical path)
1-2-4-5 = 3+2+1 = 6 days (Critical path)
1-3-4-5 = 2+3+1 = 6 days (Critical path)

Total Costs = Direct cost + Indirect cost

= 58000 + 10000+(2X15000)+2000+(20000X6) = 2,20,000 INR

Hence, the final optimum duration is 6 days with total optimum cost of INR 2,20,000/-
***
6.3. What is the critical path and the estimated complete time to shorten the project by 3
weeks, which tasks will be shortened and what will be the total cost.

Time in weeks Cost in INR Cost Slope

𝑪 𝑪 − 𝑵𝑪
Activity Predecessor(s) 𝑵𝑻 − 𝑪 𝑻
Normal Crash Normal Crash Cost
time (Nt) time (Ct) cost (Nc) (Cc)
A - 4 2 10000 11000 500
B A 3 2 6000 9000 3000
C A 2 1 4000 6000 2000
D B 5 3 14000 18000 2000
E B,C 1 1 9000 9000 0
F C 3 2 7000 8000 1000
G E,F 4 2 11000 25000 6000
H D,E 4 1 11000 18000 2333
I H,G 6 5 20000 29000 9000
Total: 32 19 92000 133000 25833
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Critical path = 1-2-3-6-8-9 (or) 1-2-3-6-7-8-9, Duration is =4+3+5+4+6=22 weeks

Total normal cost of project is = INR 92000
1. Crashing 1-2 activity by 2 days as this has less cost slope:

Critical path = 1-2-3-6-8-9 (or) 1-2-3-6-7-8-9, Duration is =2+3+5+4+6=20 weeks

Total normal cost of project is = 92000 + (2x500) = 93000
1. Crashing 3-6 activity by 1 day:

Critical path = 1-2-3-6-8-9 (or) 1-2-3-6-7-8-9, Duration is =2+3+4+4+6=19 weeks

Total normal cost of project is = 92000 + (2X500)+2000 = 95000
***
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

6.4. Find the optimal crashed project completion time with the following data consider and
indirect costs per day is INR 2000.

Time in Weeks Cost in INR Cost Slope

Job Normal Crash Normal Crash Cost 𝑪 𝑪 − 𝑵𝑪
time (Nt) time (Ct) cost (Nc) (Cc) 𝑵𝑻 − 𝑪 𝑻
1-2 7 4 7000 8500 500
1-3 5 3 5000 7000 1000
1-4 8 5 6000 12000 2000
2-5 9 7 8000 12500 2250
3-5 5 3 7000 10000 1500
3-6 6 5 11000 13000 2000
4-6 7 5 12000 14500 1250
5-7 2 1 4000 5000 1000
6-7 3 2 5000 8500 3500
Total: 52 35 65000 91000 15000

Critical Path:
1-2-5-7 = 7+9+2 = 18 weeks (Critical path)
1-3-5-7 = 5+5+2 = 12 weeks
1-3-6-7 = 5+6+3 = 14 weeks
1-4-6-7 = 8+7+3 = 18 weeks (Critical path)
Total Costs = Direct cost + Indirect cost = 65000 + (2000X18) = 1,01,000 INR
Priorities chart: Critical path-1

Critical activities Cost slope(INR) Possible time reduction(Weeks)

1-2 500 3
2-5 2250 2
5-7 1000 1

Priorities chart: Critical path-1

Critical activities Cost slope(INR) Possible time reduction(Weeks)

1-4 2000 3
4-6 1250 2
6-7 3500 1
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Priority-1: Crashing by 1 week in 1-2 and 4-6 simultaneously:

Critical Path:
1-2-5-7 = 6+9+2 = 17 weeks (Critical path)
1-3-5-7 = 5+5+2 = 12 weeks
1-3-6-7 = 5+6+3 = 14 weeks
1-4-6-7 = 8+6+3 = 17 weeks (Critical path)
Total Costs = Direct cost + Indirect cost

= 1,01,000 +(500+1250) – 2000 = 1,00,750 INR

Priority-2: Crashing by 1 more week in 1-2 and 4-6 simultaneously:

Critical Path:
1-2-5-7 = 5+9+2 = 16 weeks (Critical path)
1-3-5-7 = 5+5+2 = 12 weeks
1-3-6-7 = 5+6+3 = 14 weeks
1-4-6-7 = 8+5+3 = 16 weeks (Critical path)
Total Costs = Direct cost + Indirect cost = 100750 +(500+1250) – 2000 = 1,00,500 INR
Management Science Notes by N.Aruna Kumari, Asst. Prof. Humanities & Sciences

Priority-3: Crashing by 1 more week in 1-2 and 1-4 simultaneously:

Critical Path:
1-2-5-7 = 4+9+2 = 15 weeks (Critical path)
1-3-5-7 = 5+5+2 = 12 weeks
1-3-6-7 = 5+6+3 = 14 weeks
1-4-6-7 = 7+5+3 = 15 weeks (Critical path)
Total Costs = Direct cost + Indirect cost = 1,00,500 + (500+2000) – 2000 = 101000 INR

Hence, Priority -3 has higher total cost than priority-2 which suggest to stop crashing.
Therefore, optimum project duration is 16 weeks with total optimum cost of INR 100500/-
***