Network analysis

• Network analysis is the general name given to certain

specific techniques which can be used for the planning,
management and control of projects.
One definition of a project:

• “A project is a temporary endeavour undertaken to

create a "unique" product or service”

1
 HISTORY
• PERT
– Program Evaluation and Review Technique
– Developed by U.S. Navy for Polaris missile project
– Developed to handle uncertain activity times
• CPM
– Critical Path Method
– Developed by Du Pont & Remington Rand
– Developed for industrial projects for which activity
times generally were known
• Today’s project management software packages have
combined the best features of both approaches.

2
 Introduction
• Most realistic projects are large and complex
• Tens of thousands of steps and millions of rupees may be involved
• Managing large-scale, complicated projects effectively is a difficult
problem and the stakes are high
• The first step in planning and scheduling a project is to develop the work
breakdown structure
• Time, cost, resource requirements, predecessors, and people required
are identified for each activity
• Then a schedule for the project can be developed

3
 Introduction(cond.)
• The program evaluation and review technique (PERT) and the critical
path method (CPM) are two popular quantitative analysis techniques to
help plan, schedule, monitor, and control projects
• Originally the approaches differed in how they estimated activity times
• PERT used three time estimates to develop a probabilistic estimate of
completion time
• CPM was a more deterministic technique
• They have become so similar they are commonly considered one
technique, PERT/CPM

4
 Characteristics of Projects
• Single unit
• Relatively low frequency
• Defined starting points and ending points
• Defined outcomes / goals
• Complex interrelated tasks, often
transcending functional boundaries
• Require special management tools

5
 Project Management Activities
Planning Scheduling
 Objectives  Project activities
 Resources  Start & end times
 Work break-down  Network
structure
 Organization

Controlling
 Monitor, compare, revise,
action

6
 Project Planning, Scheduling, and
Controlling

Before Start of project During

project Timeline project 7
 Project Planning, Scheduling, and
Controlling

Before Start of project During

project Timeline project 8
 Project Planning, Scheduling, and
Controlling

Before Start of project During

project Timeline project 9
Project Planning, Scheduling & Controlling

10
 Project Planning, Scheduling,
Time/cost
Budgets
estimates and
Controlling
Engineering diagrams
Cash flow charts
Material availability details

Budgets
Delayed activities report
Slack activities report

CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules

Before Start of project During

project Timeline project 11
WBS – Work Breakdown Structure
A statement of all work that has to be
completed. A list of all activities or tasks
that constitute the project.

Project
Major tasks in the project
Subtasks in the major tasks
Activities (or work packages) to be
completed

12
 Work Breakdown Structure
• Work Breakdown Structure
–Method by which a project is divided into tasks and
subtasks.

Level
1 Program
2 Project
3 Task
4 Subtask
5 Work Package

13
 Different
Formats for
Presenting
a Work
Breakdown
Structure

14
Part of a Work Breakdown Structure
for Opening a New Restaurant

15
 A Good Work Breakdown Structure:
• Allows the activities to be worked on independently.
• Makes activities manageable in size.
• Gives authority to carry out the program.
• Monitors and measure the program.
• Provides the required resources.

16
 Project Scheduling
 Identifying precedence © 1995 Corel Corp.

relationships
 Sequencing activities
 Determining activity times &
costs
 Estimating material & worker
requirements
 Determining critical activities

17
Project Management Techniques
• Gantt chart
• Critical Path Method (CPM)
• Program Evaluation & Review
Technique (PERT)

18
 Gantt Chart

 Graph or bar chart with a bar for each project

activity that shows passage of time
 Provides visual display of project schedule
 Slack
 amount of time an activity can be delayed
without delaying the project
 Example of Gantt Chart
Month
0 | 2 | 4 | 6 | 8 | 10
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials

Build house

Select paint

Select carpet

Finish work

1 3 5 7 9
Month
20
 Six Steps PERT & CPM

1. Define the project and prepare the work

breakdown structure
2. Develop relationships among the activities
- decide which activities must precede and
which must follow others
3. Draw the network connecting all of the
activities

21
 Six Steps PERT & CPM

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

22
 Questions PERT & CPM
Can Answer
1. When will the entire project be completed?
2. What are the critical activities or tasks in the
project?
3. Which are the noncritical activities?
4. What is the probability the project will be
completed by a specific date?

23
 Questions PERT & CPM
Can Answer
5. Is the project on schedule, behind schedule,
or ahead of schedule?
6. Is the money spent equal to, less than, or
greater than the budget?
7. Are there enough resources available to
finish the project on time?
8. If the project must be finished in a shorter
time, what is the way to accomplish this at
least cost?
24
 DEFINITION OF TERMS IN A NETWORK
• Activity : any portions of project (tasks) which required
by project, uses up resource and consumes
time – may involve labor, paper work,
contractual negotiations, machinery operations

• Event : beginning or ending points of one or more

activities, instantaneous point in time, also
called ‘nodes’

• Network : Combination of all project activities and the events

PRECEEDING SUCCESSOR
ACTIVITY
A B C D
EVENT

25
 Situations in network diagram
B
A
A must finish before either B or C can start

A C
C both A and B must finish before C can start

A
C both A and B must finish before either of C or D can
start
B
D

A
B
A must finish before B can start
Dummy both A and C must finish before D can start

C
D 26
 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

27
 A Comparison of AON and AOA
Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

A comes before
(a) A B C B, which comes
before C A B C

A A
A and B must both
(b) C be completed
before C can start C
B B

B
B and C cannot
(c) A begin until A is B
completed A
C C
28
 A Comparison of AON and AOA
Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

A C C and D cannot A C
begin until both
(d) A and B are
B D completed
B D

C cannot begin until

A C both A and B are A C
completed; D
(e) cannot begin until B Dummy activity
B D is completed. A
dummy activity is B D
introduced in AOA
29
 A Comparison of AON and AOA
Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

B and C cannot
begin until A is
completed. D A B D
A B D cannot begin until
(f) both B and C are
completed. A Dummy C
C dummy activity is activity
again introduced
in AOA.

30
 AON Example
Milwaukee Paper Manufacturing's
Activities and 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 A, B
E Build high-temperature burner C
F Install pollution control system C
G Install air pollution device D, E
H Inspect and test F, G
 AON Network for Milwaukee
Paper
Activity A Precedes Activity C

A C

Start

B D

Activities A and B Precede

Activity D
32
 AON Network for Milwaukee
Paper

F
A C

E
Start H

B D G

Arrows Show Precedence

Relationships
33
 AOA Network for Milwaukee
Paper
C
2 4
(Construct
Stack)

H
1 Dummy 6 7
Activity (Inspect/
Test)

D
3 5
(Pour
Concrete/
Install Frame)
34
 Determining the Project Schedule

Perform a Critical Path Analysis

 The critical path is the longest path
through the network
 The critical path is the shortest time in
which the project can be completed
 Any delay in critical path activities delays
the project
 Critical path activities have no slack time

35
 Determining the Project Schedule

Perform a Critical Path Analysis

Activity Description Time (weeks)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total Time (weeks) 25

36
 Determining the Project Schedule

Perform a Critical Path Analysis

Earliest start (ES) = earliest time at which an activity can start,
Activity Description
assuming all predecessors have Time (weeks)
been
A Build internal
completedcomponents 2
EarliestBfinish (EF)
Modify roof andtime
= earliest floorat which an activity can3be
C finished
Construct collection stack 2
D start (LS)
Latest Pour=concrete andatinstall
latest time whichframe 4
an activity can start
E so as to not delayburner
Build high-temperature the completion time 4 of
F the entirecontrol
Install pollution projectsystem 3
Latest
G finish (LF) = air
Install latest time by
pollution which an activity has to
device 5 be
finished so as to not delay the completion
H Inspect and test 2
time of the entire project
Total Time (weeks) Table
25 3.2
37
 Arc with ES & EF time
EF = earliest finish time

ES = earliest start time

Activity

1
t = expected activity
time

38
 Determining the Project Schedule

Perform a Critical Path Analysis

Activity Name or
Symbol

A Earliest
Earliest Finish
Start ES EF

Latest LS LF Latest
Start 2 Finish

Activity Duration
39
 Forward Pass
Begin at starting event and work forward
Earliest Start Time Rule:

 If an activity has only a single immediate

predecessor, its ES equals the EF of the
predecessor
 If an activity has multiple immediate
predecessors, its ES is the maximum of all
the EF values of its predecessors

ES = Max {EF of all immediate predecessors}

40
 Forward Pass
Begin at starting event and work forward
Earliest Finish Time Rule:
 The earliest finish time (EF) of an
activity is the sum of its earliest start
time (ES) and its activity time

EF = ES + Activity time

41
ES/EF Network for Milwaukee Paper

ES EF = ES + Activity time
Start
0 0

42
 ES/EF Network for Milwaukee Paper

EF of A =
ES ES of A + 2
of A
A
Start 0 2
0 0

43
 ES/EF Network for Milwaukee Paper

A
0 2

2 EF of B =
ES ES of B + 3
0
Start
0 of B
B
0 0 3

3
44
 ES/EF Network for Milwaukee Paper

A C
0 2 2 4

2 2

Start
0 0

B
0 3

45
 ES/EF Network for Milwaukee Paper

A C
0 2 2 4

2 2

Start
0 0
= Max (2, 3) D
0
3 7
B
0 3

3
4
46
 ES/EF Network for Milwaukee Paper

A C
0 2 2 4

2 2

Start
0 0

B D
0 3 3 7

3 4

47
 ES/EF Network for Milwaukee Paper

A C F
0 2 2 4 4 7

2 2 3

Start E H
0 0 4 8 13 15

0 4 2

B D G
0 3 3 7 8 13

3 4 5

48
 Backward Pass
Begin with the last event and work backwards

Latest Finish Time Rule:

 If an activity is an immediate predecessor for
just a single activity, its LF equals the LS of the
activity that immediately follows it
 If an activity is an immediate predecessor to
more than one activity, its LF is the minimum
of all LS values of all activities that
immediately follow it

LF = Min {LS of all immediate following activities}

49
 Backward Pass
Begin with the last event and work backwards

Latest Start Time Rule:

 The latest start time (LS) of an activity is
the difference of its latest finish time
(LF) and its activity time

LS = LF – Activity time

50
 LS/LF Times for
Milwaukee Paper
A C F
0 2 2 4 4 7

2 2 3

Start E H
0 0 4 8 13 15
13 15
0 4 2

B D – Activity timeG
LS = LF
0 3 3 7 8 13

3 4 5 LF = EF
of Project
51
 LS/LF Times for
Milwaukee Paper
A C F
0 2 2 4 4 7

10 13
2 2 3

Start E H
0 0 LF = Min(LS
4 of 8following 13 15
activity)
13 15
0 4 2

B D G
0 3 3 7 8 13

3 4 5

52
 LS/LF Times for
LF = Min(4, 10)
Milwaukee Paper
A C F
0 2 2 4 4 7

2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

4 8 13 15
0 4 2

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

53
 LS/LF Times for
Milwaukee Paper
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

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

54
 Computing Slack Time
After computing the ES, EF, LS, and LF times for
all activities, compute the slack or free time for
each activity

 Slack is the length of time an activity

can be delayed without delaying the
entire project

Slack = LS – ES or
Slack = LF – EF

55
 Computing Slack Time
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

56
 Critical Path for
Milwaukee Paper
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3

Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

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

57
58
59
60
61
62
63
64
65
66
 Another example
Immediate Completion
• Activity Description Predecessors Time (days)
• A Initial Paperwork --- 3
• B Build Body A 3
• C Build Frame A 2
• D Finish Body B 3
• E Finish Frame C 7
• F Final Paperwork B,C 3
• G Mount Body to Frame D,E 6
• H Install Skirt on Frame C 2

67
 Variability in Activity Times

 CPM assumes we know a fixed time

estimate for each activity and there is no
variability in activity times
 PERT uses a probability distribution for
activity times to allow for variability

68
 Variability in Activity Times

 Three time estimates are required

 Optimistic time (a) – if everything goes
according to plan
 Pessimistic time (b) – assuming very
unfavorable conditions
 Most likely time (m) – most realistic estimate

69
 Variability in Activity Times
Estimate follows beta distribution
Expected time:
t = (a + 4m + b)/6
Variance of times:
v = [(b – a)/6]2

70
 PERT Probability Approach to Project Scheduling
• Activity completion times are seldom known with cetainty.
• PERT is a technique that treats activity completion times as random
variables.
• Completion time estimates can be estimated using the Three Time
Estimate approach. In this approach, three time estimates are
required for each activity:

– Results from statistical studies

– Subjective best estimates

71
 3-Time Estimate Approach
Probability Distribution
• With three time estimates, the activity completion time can be
approximated by a Beta distribution.
• Beta distributions can come in a variety of shapes:

a m b a m b a m b
 Mean and Standard Deviation for
Activity Completion Times
• The best estimate for the mean is a weighted average of
the three time estimates with weights 1/6, 4/6, and 1/6
respectively on a, m, and b.
• Since most of the area is with the range from a to b (b-a),
and since most of the area lies 3 standard deviations on
either side of the mean (6 standard deviations total), then
the standard deviation is approximated by Range/6.

a + 4m + b
 = the mean completion time =
6
b-a
 = the standard deviation = 73
6
 PERT Assumptions
• Assumption 1
– A critical path can be determined by using the mean
completion times for the activities.
– The project mean completion time is determined solely
by the completion time of the activities on the critical
path.
• Assumption 2
– There are enough activities on the critical path so that the
distribution of the overall project completion time can be
approximated by the normal distribution.
• Assumption 3
– The time to complete one activity is independent of the
completion time of any other activity.
74
The Project Completion Time Distribution

The three assumptions imply that the overall

project completion time is normally distributed,
with:

 = Sum of the ’s on the critical path

2 = Sum of the 2 ’s on the critical path

75
 The Probability Approach
(76 + 4(86) +120)/6 (120-76)/6 (7.33)2

Activity Optimistic Most Likely Pessimistic   222

A 76 86 120 90 7.33 53.73
B 12 15 18 15 1.00 1.00
1.00
C 4 5 6 55 0.33 0.11
0.11
D 15 18 33 20
20 3.00
3.00 9.00
9.00
9.00
E 18 21 24 21
21 1.00
1.00 1.00
1.00
1.00
F 16 26 30 25
25 2.33
2.33 5.43
5.43
5.43
G 10 13 22 14
14 2.00
2.00 4.00
4.00
4.00
H 24 28 32 28
28
28
1.33
1.33
1.33
1.77
1.77
1.77
I 22 27 50 30
30
30
4.67
4.67
4.67
21.81
21.81
21.81
J 38 43 60 45
45
45
3.67
3.67
3.67
13.47
13.47
13.47
 Distribution For Klone Computers
• The project has a normal distribution.
• The critical path is A-F-G-D-J.
μ  μA  μF  μG  μD  μJ
 90  25  14  20  45 
194

σ 2  σ 2A  σ 2F  σ G2  σ 2D  σ 2J
 53.78  5.44  4  9  13.44 
85.66

σ  σ 2  85.66 
9.255
 Standard Probability Questions
1. What is the probability the project will be finished within 194
days?
• P(X < 194)
2. Give an interval within which we are 95% sure of completing
the project.
• X values, xL, the lower confidnce limit, and xU, the upper confidnce limit,
such that P(X<xL) = .025 and P(X>xU) = .025
3. What is the probability the project will be completed within
180 days?
• P(X < 180)
4. What is the probability the project will take longer than 210
days.
• P(X > 210)
5. By what time are we 99% sure of completing the project?
• X value such that P(X < x) = .99

78
 Variability in Activity Times
Estimate follows beta distribution
Expected time:
t = (a + 4m + b)/6
Variance of
Probability
1 in 100 of
oftimes:
Probability of
Probability

< a occurring v = [(b − a)/6]2 1 in 100 of > b

occurring

Activity
Time

Optimistic Most Likely Time Pessimistic Time

Time (a) (m) (b)

79
 Computing Variance
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 .11
B 2 3 4 3 .11
C 1 2 3 2 .11
D 2 4 6 4 .44
E 1 4 7 4 1.00
F 1 2 9 3 1.78
G 3 4 11 5 1.78
H 1 2 3 2 .11

Table 3.4
80
Probability of Project Completion
Project variance is computed by
summing the variances of critical
activities
p2 = Project variance
= (variances of activities
on critical path)

81
Probability of Project Completion
Project variance is computed by
summing the variances of critical
Project variance
activities
2p = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

p = Project variance
= 3.11 = 1.76 weeks
82
Probability of Project Completion

PERT makes two more assumptions:

 Total project completion times follow a

normal probability distribution
 Activity times are statistically independent

83
Probability of Project Completion

Standard deviation = 1.76 weeks

15 Weeks
(Expected Completion Time)
Figure 3.13
84
Probability of Project Completion
What is the probability this project can be
completed on or before the 16 week
deadline?
due expected date
Z= date – of completion /p

= (16 wks – 15 wks)/1.76

= 0.57 Where Z is the number of standard

deviations the due date or target date lies
from the mean or expected date

85
Probability of Project Completion
From Appendix I
What is the probability
.00 .01this project
.07 can.08
be
completed on or before the 16.52790
.1 .50000 .50399
week .53188
deadline?.2 .53983 .54380 .56749 .57142
due expected date
.5 Z.69146 − of completion
= date .69497 .71566 /
.71904
p
.6 .72575 .72907 .74857 .75175
= (16 wks − 15 wks)/1.76

= 0.57 Where Z is the number of standard

deviations the due date or target date lies
from the mean or expected date

86
Probability of Project Completion

0.57 Standard deviations

Probability
(T ≤ 16 weeks)
is 71.57%

15 16 Time
Weeks Weeks
Figure 3.14
87
 Determining Project Completion
Time

Probability of
0.99

Probability of
0.01

2.33 Standard Z
From Appendix I deviations
0 2.33
Figure 3.15
88
 Limitations to CPM/PERT
 Clearly defined, 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, but the actual
distribution may be different
 PERT consistently underestimates the expected project completion time due to
alternate paths becoming critical

89
Determine late starts and late finish times
ES=4
EF=6

ES=0 ES=2 ES=3 D, 2 ES=9 ES=14

EF=2 EF=3 EF=4 EF=14 EF=15
LS=7
LF=9
A, 2 B, 1 C, 1 F, 5 G, 1
ES=4
EF=9
LS=9 LS=14
? LF=14 LF=15
E, 5

LS=4
LF=9
90
 Don’t delay the project
ES=4
EF=6

ES=0 ES=2 ES=3 D, 2 ES=9 ES=14

EF=2 EF=3 EF=4 EF=14 EF=15
LS=7
LF=9
A, 2 B, 1 C, 1 F, 5 G, 1
ES=4
EF=9
LS=0 LS=2 LS=3 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E, 5

LS=4
LF=9
91
 Critical Path & Slack
ES=4
Slack=(7-4)=(9-6)= 3 Wks
EF=6

ES=0 ES=2 ES=3 D, 2 ES=9 ES=14

EF=2 EF=3 EF=4 EF=14 EF=15
LS=7
LF=9
A, 2 B, 1 C, 1 F, 5 G, 1
ES=4
EF=9
LS=0 LS=2 LS=3 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E, 5

LS=4
LF=9 Duration = 15 weeks
92
 Consider the following project:

• Immed. Optimistic Most Likely Pessimistic

• Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.)
• A -- 4 6 8
• B -- 1 4.5 5
• C A 3 3 3
• D A 4 5 6
• E A 0.5 1 1.5
• F B,C 3 4 5
• G B,C 1 1.5 5
• H E,F 5 6 7
• I E,F 2 5 8
• J D,H 2.5 2.75 4.5
• K G,I 3 5 7
93
 Problem
The Director of Personnel Management Resources, Inc. is in the process of
designing a program that its customers can use in the job-finding process. Some of
the activities include preparing resumes, writing letters, making appointments to
see prospective employers, researching companies and industries, and so on.
Some of the information on the activities is shown in the ff table:

Activity DAYS Immediate

a m b predecessors
A 8 10 12 -
B 6 7 9 -
C 3 3 4 -
D 10 20 30 A
E 6 7 8 C
F 9 10 11 B, D, E
G 6 7 10 B, D, E
H 14 15 16 F
I 10 11 13 F
J 6 7 8 G, H
K 4 7 8 I, J
L 1 2 4 G, H
Questions:
• Construct a network for this problem.
• Determine the expected time and variance for each activity.
• Determine ES, EF, LS, LF and slack for each activity.
• Determine the critical path and project completion time.
• Determine the probability that the project will be finished
in 70 days or less.
• Determine the probability that the project will be finished
in 80 days or less.
• Determine the probability that the project will be finished
in 90 days or less.

95
 Project Network
• Use of nodes and arrows
Arrows  An arrow leads from tail to head directionally
– Indicate ACTIVITY, a time consuming effort that is required to perform a
part of the work.
Nodes  A node is represented by a circle
- Indicate EVENT, a point in time where one or more activities start and/or
finish.

• 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
– Does not require any time of effort
96