Network Models and Project

Management
Maximal-Flow Problem
• Determine the maximum amount of material that can flow from
one point (the source) to another (the sink) in a network
• Road network problem
• Traffic flows in both directions
FIGURE 1 – Road Network for Waukesha

Capacity in Hundreds of Cars per Hour

1 2 2
2
3 1 East
West 1 6
1 2 Point
Point 0 1 1 0
10 4
1
6
3 1
2 5
0 3
2
Maximal-Flow Problem
• Four Steps of the Maximal-Flow Technique
1. Pick any path from the start (source) to the finish (sink) with some
flow. If no path with flow exists, then the optimal solution has been
found.
2. Find the arc on this path with the smallest flow capacity available. Call
this capacity C.
3. For each node on this path, decrease the flow capacity in the direction
of flow by the amount C. For each node on this path, increase the flow
capacity in the reverse direction by the amount C.
4. Repeat these steps until an increase in flow is no longer possible.

3
Maximal-Flow Problem
FIGURE 2 – Capacity Adjustment for Path 1–2–6 Iteration 1

Add 2

2
1 2
2
6
3
1

Subtract 2
Old Path

0
3 2
4
6
1
1
New Path

4
Maximal-Flow Problem
FIGURE 3 – Second Iteration for Waukesha Road System

Add 1
3 2
1 1 6
1
1
1 1

4 2 0
4 4
0 6
2
Subtract 1 0 0
1 2
Old Path
10 2 0
0
4
1
6
1
0 3 5
2
3
New Network
5
Maximal-Flow Problem
FIGURE 4 – Third and Final Iteration for Waukesha Road System

4 2 0
4
0 6
2
0 2
1 2
8 2 0
0
4
1
4
3
3 5
2 0
3

6
 FLOW
Maximal-Flow Problem PATH (CARS PER HOUR)
1-2-6 200
FIGURE 5 – Third and Final Iteration for Waukesha Road System 1-2-4-6 100
1-3-5-6 200
Total 500
4 2 0
4
0 6
2
0 2
1 2
8 2 0
0
4
1
4
3
3 5
2 0
3

7
Shortest-Route Problem
• Find the shortest distance from one location to another
• Shortest-Route Technique
• Transport furniture from factory to warehouse
• Find shortest route
FIGURE 6 – Roads from Ray’s Plant to Warehouse

200
2 4
Plant

1 50 150 6

40 Warehouse
3 5

8
Shortest-Route Problem
• Steps of the Shortest-route Technique
1. Find the nearest node to the origin (plant). Put the distance in a box
by the node.
2. Find the next-nearest node to the origin (plant), and put the distance
in a box by the node. In some cases, several paths will have to be
checked to find the nearest node.
3. Repeat this process until you have gone through the entire network.
The last distance at the ending node will be the distance of the
shortest route. You should note that the distance placed in the box by
each node is the shortest route to this node. These distances are
used as intermediate results in finding the next-nearest node.

9
Shortest-Route Problem
FIGURE 7 – First Iteration for Ray Design

100
Plant 200
2 4

1 50 150 6

40
3 5
Warehouse

FIGURE M8.8 – Second Iteration for Ray Design

100
200
2 4

1 50 150 6

40
3 5

150

10
Shortest-Route Problem
FIGURE 8 – Third Iteration for Ray Design

100
200
2 4

1 50 150 6

40
3 5

150 190
100
200
2 4
FIGURE M8.10 – Fourth and Final 290
Iteration for Ray Design
1 50 150 6

40
3 5

150 190
11
Minimal-Spanning Tree Problem
• Connecting all points of a network together while minimizing the
total distance of the connections
• Linear programming can be used but is complex
• Minimal-spanning tree technique is quite easy

12
Minimal-Spanning Tree Problem
Steps for the Minimal-Spanning Tree Technique
1. Select any node in the network.
2. Connect this node to the nearest node that minimizes the total
distance.
3. Considering all of the nodes that are now connected, find and
connect the nearest node that is not connected. If there is a tie for the
nearest node, select one arbitrarily. A tie suggests there may be more
than one optimal solution.
4. Repeat the third step until all nodes are connected.

13
Minimal-Spanning Tree Problem
FIGURE 9 – Network for
• Lauderdale Construction Lauderdale Construction

• Housing project in
Panama City Beach 2
3
5
• Determine the 3
5
4
3 7
least expensive 7
1
way to provide 2 2
water and power 3
3 8
to each house 5
2 6
1

6
4

Gulf
14
Minimal-Spanning Tree Problem
FIGURE 12 – First Iteration
Step 1 – Arbitrarily select node 1
Step 2 – Connect node 1 to node 3 (nearest)
3
2 5
4
3
5
3 7
7
1 2 2
3
3 8
5 1
2 6
6
4

Gulf
15
Minimal-Spanning Tree Problem
Step 3 – Connect next nearest unconnected node, node 4
Continue for other unconnected nodes
FIGURE 13 – Second and Third Iterations

3 3
2 5 2 5
4 4
3 3
5 5
3 7 3 7
7 7
1 2 1 2
2 2
3 3
3 8 3 8
5 1 5 1
2 6 2 6
6 6
4 4
(a) Second Iteration (b) Third Iteration
16
Minimal-Spanning Tree Problem
Step 4 – Repeat the process
FIGURE 14 – Last Four Iterations

3 3
2 5 2 5
4 4
3 3
5 5
3 7 3 7
7 7
1 2 1 2
2 2
3 3
3 8 3 8
5 1 5 1
2 6 2 6
6 6
4 4
(a) Fourth Iteration (b) Fifth Iteration

17
Minimal-Spanning Tree Problem
Step 4 – Repeat the process
FIGURE 15 – Last Four Iterations

3 3
2 5 2 5
4 4
3 3
5 5
3 7 3 7
7 7
1 2 1 2
2 2
3 3
3 8 3 8
5 1 5 1
2 6 2 6
6 6
4 4
(c) Sixth Iteration (d) Seventh Iteration

18
Minimal-Spanning Tree Problem
TABLE 16 – Summary of Steps in Lauderdale Construction Minimal-Spanning Tree Problem

CLOSE
CONNECTED UNCONNECTED UNCONNECTED ARC ARC TOTAL
STEP NODES NODES NODES SELECTED LENGTH DISTANCE
1 1 2, 3, 4, 5, 6, 7, 8 3 1–3 2 2
2 1, 3 2, 4, 5, 6, 7, 8 4 3–4 2 4
3 1, 3, 4 2, 5, 6, 7, 8 2 or 6 3–2 3 7
4 1, 2, 3, 4 5, 6, 7, 8 5 or 6 2–5 3 10
5 1, 2, 3, 4, 5 6, 7, 8 6 3–6 3 13
6 1, 2, 3, 4, 5, 6 7, 8 8 6–8 1 14
7 1, 2, 3, 4, 5, 6, 8 7 7 8–7 2 16

19
Project Management

20
Introduction
• The program evaluation and review technique (PERT) and
the critical path method (CPM) are two popular quantitative
analysis techniques for complex projects
• PERT uses three time estimates to develop a probabilistic estimate of
completion time
• CPM is a more deterministic technique
• They are so similar they are commonly considered one technique,
PERT/CPM

21
Six Steps of PERT/CPM
1. Define the project and all of its significant activities or tasks.
2. Develop the relationships among the activities. Decide which activities must
precede others.
3. Draw the network connecting all of the activities.
4. Assign time and/or cost estimates to each activity.
5. Compute the longest time path through the network; this is called the critical
path.
6. Use the network to help plan, schedule, monitor, and control the project.

The critical path is important since any delay in these

activities can delay the completion of the project
22
PERT/CPM
• Questions answered by PERT
1. When will the entire project be completed?
2. What are the critical activities or tasks in the project, that is, the ones
that will delay the entire project if they are late?
3. Which are the noncritical activities, that is, the ones that can run late
without delaying the entire project’s completion?
4. If there are three time estimates, what is the probability that the
project will be completed by a specific date?

23
General Foundry Example
• General Foundry, Inc. has long been trying to avoid the expense of
installing air pollution control equipment
• The local environmental protection group has recently given the foundry
16 weeks to install a complex air filter system on its main smokestack
• General Foundry was warned that it will be forced to close unless the
device is installed in the allotted period
• They want to make sure that installation of the filtering system progresses
smoothly and on time

24
General Foundry Example
TABLE 1 – Activities and Immediate Predecessors

IMMEDIATE
ACTIVITY DESCRIPTION
PREDECESSORS
A Build internal components —
B Modify roof and floor —
C Construct collection stack A
D Pour concrete and install frame B
E Build high-temperature burner C
F Install control system C
G Install air pollution device D, E
H Inspect and test F, G

25
Drawing the PERT/CPM Network
• Two common techniques for drawing PERT networks
• Activity-on-node (AON) – nodes represent activities
• Activity-on-arc (AOA) – arcs represent the activities
• The AON approach is easier and more commonly found in software
packages
• One node represents the start of the project, one node for the end of
the project, and nodes for each of the activities
• The arcs are used to show the predecessors for each activity

26
Drawing the PERT/CPM Network
FIGURE 17 – Network for General Foundry

A C F
Build Internal Construct Install Control
Components Collection Stack System

E H
Start Build Burner Inspect Finish
and Test

B D G
Modify Roof Pour Concrete Install Pollution
and Floor and Install Frame Device

27
Activity Times
• In some situations, activity times are known with certainty
• CPM assigns just one time estimate to each activity and this is used to
find the critical path
• In many projects there is uncertainty about activity times
• PERT employs a probability distribution based on three time estimates
for each activity, and a weighted average of these estimates is used for
the time estimate and this is used to determine the critical path

28
Activity Times
• The time estimates in PERT are
Optimistic time (a) = time an activity will take if everything goes
as well as possible. There should be only a
small probability (say, 1/100) of this
occurring.
Pessimistic time (b) = time an activity would take assuming very
unfavorable conditions. There should also
be only a small probability that the activity
will really take this long.
Most likely time (m) = most realistic time estimate to complete
the activity.

29
Activity Times PERT often assumes time
estimates follow a beta
• The time estimates in PERT are probability distribution

Optimistic time (a) = time an activity will take if everything goes

as well as possible. There should be only a
small probability (say, 1/100) of this
occurring.
Pessimistic time (b) = time an activity would take assuming very
unfavorable conditions. There should also
be only a small probability that the activity
will really take this long.
Most likely time (m) = most realistic time estimate to complete
the activity.

30
Activity Times
FIGURE 18 – Beta Probability Distribution with Three Time Estimates

Probability of 1 in 100
of a Occurring
Probability

Probability of 1 in 100
of b Occurring

Activity Time
Most Most Most
Optimistic Likely Pessimistic
Time Time Time
(a) (m) (b)

31
Activity Times
• To find the expected activity time (t), the beta distribution weights the
estimates as follows
a + 4m + b
t=
6
• To compute the dispersion or variance of activity completion time

æb – aö
2

Variance = ç ÷
è 6 ø

32
Activity Times
TABLE 19 – Time Estimates (Weeks) for General Foundry, Inc.

MOST EXPECTED
OPTIMISTIC, LIKELY, PESSIMISTIC, TIME, VARIANCE,
ACTIVITY a m b t = [(a + 4m + b)/6] [(b – a)/6]2

A 1 2 3 2 4/36
B 2 3 4 3 4/36
C 1 2 3 2 4/36
D 2 4 6 4 16/36
E 1 4 7 4 36/36
F 1 2 9 3 64/36
G 3 4 11 5 64/36
H 1 2 3 2 4/36
25

33
Activity Times
FIGURE 20 – General Foundry’s Network with Expected Activity Times

A 2 C 2 F 3

E 4 H 2
Start Finish

B 3 D 4 G 5

34
How to Find the Critical Path
• We accept the expected completion time for each task as the
actual time
• The total of 25 weeks does not take into account that some of
the tasks could be taking place at the same time
• To find out how long the project will take we perform the critical
path analysis for the network
• The critical path is the longest path through the network

35
How to Find the Critical Path
• To find the critical path, determine the following quantities for
each activity
1. Earliest start (ES) time: the earliest time an activity can begin
without violation of immediate predecessor requirements
2. Earliest finish (EF) time: the earliest time at which an activity can
end
3. Latest start (LS) time: the latest time an activity can begin without
delaying the entire project
4. Latest finish (LF) time: the latest time an activity can end without
delaying the entire project

36
How to Find the Critical Path
• Activity times are represented in the nodes
ACTIVITY t
ES EF
LS LF

• Earliest times are computed as

Earliest finish time = Earliest start time
+ Expected activity time
EF = ES + t

Earliest start = Largest of the earliest finish times of

immediate predecessors
ES = Largest EF of immediate predecessors

37
How to Find the Critical Path
• At the start of the project we set the time to zero
• Thus ES = 0 for both A and B

A t =2
ES = 0 EF = 0 + 2 = 2

Start

B t =3
ES = 0 EF = 0 + 3 = 3

38
How to Find the Critical Path
FIGURE 21 – General Foundry’s Earliest Start (ES) and Earliest Finish (EF) Times

A 2 C 2 F 3
0 2 2 4 4 7

E 4 H 2
Start 4 8 13 15 Finish

B 3 D 4 G 5
0 3 3 7 8 13

39
How to Find the Critical Path
FIGURE 22 – General Foundry’s Earliest Start (ES) and Earliest Finish (EF) Times
Use a forward pass
through the network

A 2 C 2 F 3
0 2 2 4 4 7

E 4 H 2
Start 4 8 13 15 Finish

B 3 D 4 G 5
0 3 3 7 8 13

40
How to Find the Critical Path
• Compute latest start (LS) and latest finish (LF) times for each activity by
making a backward pass through the network
Latest start time = Latest finish time
– Expected activity time
LS = LF – t

Latest finish time = Smallest of latest start times

for following activities
LF = Smallest LS of following activities
For activity H
LS = LF – t = 15 – 2 = 13 weeks
41
How to Find the Critical Path
FIGURE 23 – General Foundry’s Latest Start (LS) and Latest Finish (LF) Times

A 2 C 2 F 3
0 2 2 4 4 7
0 2 2 4 10 13

E 4 H 2
Start 4 8 13 15 Finish
4 8 13 15

B 3 D 4 G 5
0 3 3 7 8 13
1 4 4 8 8 13

42
How to Find the Critical Path
• Once ES, LS, EF, and LF have been determined, find the amount of slack time for
each activity
Slack = LS – ES, or Slack = LF – EF
• Activities A, C, E, G, and H have no slack time
• These are called critical activities and they are said to be on the critical path
• The total project completion time is 15 weeks
• Industrial managers call this a boundary timetable

43
How to Find the Critical Path
TABLE 24 – General Foundry’s Schedule and Slack Times

EARLIEST EARLIEST LATEST LATEST ON

START, FINISH, START, FINISH, SLACK, CRITICAL
ACTIVITY ES EF LS LF LS – ES PATH?
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes

44
How to Find the Critical Path
FIGURE 25 – General Foundry’s Critical Path (A–C–E–G–H)

A 2 C 2 F 3
0 2 2 4 4 7
0 2 2 4 10 13

E 4 H 2
Start 4 8 13 15 Finish
4 8 13 15

B 3 D 4 G 5
0 3 3 7 8 13
1 4 4 8 8 13

45
Probability of Project Completion
• The critical path analysis helped determine the expected project
completion time of 15 weeks
• Variation in activities on the critical path can affect overall project
completion
• If the project is not complete in 16 weeks, the foundry will have to close
• PERT uses the variance of critical path activities to help
determine the variance of the overall project

variances of activities on
Project variance = ∑ the critical path
46
Probability of Project Completion
• From Table we know
ACTIVITY VARIANCE
A 4/36
C 4/36
E 36/36
G 64/36
H 4/36

• Hence, the project variance is

Project variance = 4/36 + 4/36 + 36/36 + 64/36 + 4/36 = 112/36 = 3.111

47
Probability of Project Completion
• We know the standard deviation is the square root of the variance, so

Project standard deviation = s T = Project variance

= 3.111 = 1.76 weeks

• We assume activity times are independent and that total project completion
time is normally distributed
• A bell-shaped curve can be used to represent project completion dates

48
Probability of Project Completion
FIGURE 26 – Probability Distribution for Project Completion Times

Standard Deviation = 1.76 Weeks

15 Weeks
Expected Completion Time

49