Project Planning and Control

(a) Project Management

- Critical Path Method (CPM)
- Project Crashing
- Project Evaluation and Review Technique (PERT)
Chapter 17: Project Management; Operations Management by William J. Stevenson

Chapter 9: Project Management; Operations Management by Russell and Taylor

Chapter 3: Project Management; Operations Management by Jay Heizer

Chapter 16: Project Planning and Control; Operations Management by Nigel Slack
Project
- Unique
- One-time operations designed to accomplish a specific set of objectives in a limited time frame.
- A project is a set of activities with a defined start point and a defined end state.
- Unlike many other aspects of business, which tend to operate more routinely, projects often
have complexity, uncertainties and risks that tend to make managing them more challenging.

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Project
- Examples
● organizing emergency aid to earthquake victims
● producing a television programme
● constructing the Channel Tunnel
● designing an aircraft
● running a one-week course in project management
● relocating a factory, merging companies, etc
● refurbishing an hotel, etc

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Typology of projects
- Projects with high uncertainty
are likely to be especially
difficult to define and set
realistic objectives.
- When uncertainty is high, the
whole project planning process
needs to be sufficiently flexible
to cope with the consequences
of change

What do projects have in common?

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Project Hoover Dam Bridge

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Project Management Body of Knowledge (PMBOK)

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Key Metrics in the Project Management
1. Time
2. Cost
3. Quality / Resource

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Phases of a project
1. Initiation
- Deciding which project to implement
- Selecting the project manager
- Selecting the project team
2. Planning
- Planning and designing the project
3. Implementation
- Managing and controlling the project resources
4. Closing
- Deciding if and when the project should be terminated

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Project Life Cycle: 4 Phases

Chapter 4: Project Management (CPM) [email protected]

 Initiation phase
● Project sponsor is identified
● Scope and deliverables are defined
○ Relationship to organizational goals is key
● Budget is approved
● Broad statements are made about risks, approach, timelines
● Stakeholders are identified
● Project Manager is assigned
● At end of phase, approved project charter is the approval to proceed to the planning
phase

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Planning phase
● Deliverables are clearly defined
● Based on the deliverables, a work breakdown structure or WBS defines the “work
packages”
● The work packages are used to develop a schedule
● Plans are made for management of stakeholders, communication, quality, costs, risks,
procurement, resources including human resources.

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Implementation (Execution) Phase
● Project team is hired and developed
● Procurements take place
● Project work is underway
● Project must be monitored and changes managed
● Communication to stakeholders is an important ongoing activity

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Closing phase
● Reporting
● Closing out procurements—final payments
● Identify lessons learned
● Celebrate

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Main Tools Project Management
1. Work Breakdown Structure: To develop list of activities and sub activities
2. Gantt Chart: Visual aid used to plan and monitor individual activities, and develop
activity schedules
3. Network Diagram (PERT/CPM): A big picture visual aid that is used to estimate project
duration, identify activities that are critical for timely project completion, identify
areas where slack time exists.
4. Risk Management: Analysis of potential risks and problems/failures, assessment of
their likelihood consequences and contingency plans

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Main Tools Project Management
(a) Work Breakdown Structure (WBS) / Cost Breakdown Structure (CBS) /
Organisation Breakdown Structure (OBS)

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Main Tools Project Management
(a) Work Breakdown Structure (WBS) / Cost Breakdown Structure (CBS) /
Organisation Breakdown Structure (OBS)

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Main Tools Project Management
(b) Gantt / Bar/ Milestone Chart

Planned
Actual
Milestone

24 Weeks

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 Network Diagram (CPM/PERT)
(a) Critical Path Method (CPM) or Analysis (CPA)
(b) Project Evaluation and Review Technique (PERT)
Main Tools Project Management
(c) Network Diagram : CPM and PERT
Network (precedence) diagram – diagram of project activities that shows sequential relationships by
the use of arrows and nodes.

The two network analysis methods we will examine are the

● Critical Path Method (CPM) or Analysis (CPA) and
● Programme Evaluation and Review Technique (PERT).
• Program evaluation and review technique (PERT) and the critical path method (CPM) were both
developed in the 1950s to help managers schedule, monitor, and control large and complex projects.
• CPM arrived first, as a tool developed to assist in the building and maintenance of chemical plants at
DuPont.
• Independently, PERT was developed in 1958 for the U.S. Navy.

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The Framework of PERT and CPM
PERT and CPM both follow six basic steps:
Step 1 - Define the project and prepare the work breakdown structure.
Step 2 - Develop the relationships among the activities. Decide which activities must precede
and which must follow others.
Step 3 - Draw the network connecting all the activities.
Step 4 - Assign time and/or cost estimates to each activity.
Step 5* - Compute the longest time path through the network. This is called the critical path.
Step 6 - Use the network to help plan, schedule, monitor, and control the project.

Step 5*, finding the critical path, is a major part of controlling a project, represent tasks that
will delay the entire project if they are not completed on time.

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The Importance of PERT and CPM
PERT and CPM help answer questions such as the following about projects with several activities:
1. When will the entire project be completed?

2. What are the critical activities/tasks in the project will delay the entire project if they are late?

3. Which are the noncritical activities—the ones that can run late without delaying the whole project’s
completion?

4. What is the probability that the project will be completed by a specific date?

5. Any particular date, is the project on schedule, behind schedule, or ahead of schedule?

6. On any given date, is the money spent equal to, less than, or greater than the budgeted amount?

7. Are there enough resources available to finish the project on time?

8. If the project is to be finished in a shorter amount of time, what is the best way to accomplish this goal at the
least cost?
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The Network/Precedence Diagram
1. Activity-on-arrow (AOA) – a network diagram convention in which arrows designate activities.
2. Activity-on-node (AON) – a network diagram convention in which nodes designate activities.
3. Activities – steps in the project that consume resources and/or time.
4. Events – the starting and finishing of activities, designated by nodes in the AOA convention.
5. Path – a sequence of activities that leads from the starting node to the finishing node.
6. Critical path – the longest path; determines expected project duration.
7. Critical activities – activities on the critical path.
8. Slack – Allowable slippage for path; the difference length of path and the length of critical path
9. Deterministic – Time estimates that are fairly certain
10. Probabilistic – Estimates of times that allow for variation

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Network diagram
- A network consists of “activities and events.” connected logically and sequentially and
showing all the interrelationships among them.

1. Activities – steps in the project that consume resources and/or time.

2. Events – the starting and finishing (completion and beginning) of activities, designated by
nodes in the AOA convention.
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Activities and Events
Activity is represented by an arrow →
- It is always possible to break up the entire project into a no. of distinct, well defined
tasks called activities.
- Is a physically identifiable part of a project, which consumes time or resources and has
a definite beginning and an end is called an activity.
- Activity is represented by an arrow in a network

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Activities and Events
Event is represented usually by circles ⃝
- Represents the accomplishment of some task
- The commencement or completion of an activity is called an event. In a network
diagram, beginning and ending of an activity are represented as events.
- An event is that particular instant of time at which some specific part of a plan has
been or is to be achieved.

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Activities and Events
A network is a flow diagram consisting of “activities” and “events”, connected logically
and sequentially.

Activity A
E E
Tail event Head event

E
B
i vity
t
Ac
Activity A
E E
Ac
tiv
ity
C
E
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Events specifying
• A particular event out of various events on the network diagram may be specified as:
• Tail event, Head event and Dual role event
• Tail event:
- A tail event is the one which marks the beginning of an activity.
- If a particular tail event represents the commencement of the project, it is known as the initial event.
activity activity
1 10

• Head event:
- All activities have an ending i.e. again a specific point of time and is marked by an event.
- The event which marks completion of an activity.
activity activity

10 n
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Events specifying
• Dual role events: Most of the events serve dual function; they are head event to some activity and
tail event to other activity. All events except initial and final events are dual role events.
• Merge event: The nodes to which a number of activities converge are called merge event.

• Burst event: The node from which a number of activities emerge are called burst event.

• Event 1 is the initial event

3 E
B • Event 1 is called the tail event of activity A
• Event 2 is called the head event of activity A
A C F H
1 2 4 6 7 • Events 2, 3, 4, 5, 6 are the dual role events
• Event 2 is the burst event
D G • Event 6 is the merge
5
• Event 7 is the complete event

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Network Interrelationship
• Successor event: The event that follows a particular event in the sequence of their completion is
called a successor event to that event .
• Ex: Event 2 is successor event to event 1
• Ex: Events 3, 4 & 5 are the successor events to event 1
• Predecessor event: The event that occurs before a particular event in the sequence of completion is
called predecessor event.
• Ex: Event 2 is the predecessor event to events 3, 4, 5
• Ex: Events 3, 4 & 5 are predecessor events to event 6
2
D
A

B E
1 3 5 6

C F

4
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Network Interrelationship
• Parallel activities: Those activities which can be performed simultaneously and independently to
each other are known as parallel activities.
• Example (A & B; E & C): fix electric fittings, fix sanitary fittings
• Serial activities: Those activities which are to be performed one after the other in succession. These
activities cannot be performed independently to each other.
• Example (B-E) : excavate foundations, concrete foundations

2
D
A

B E
1 3 5 6

C F

4
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Network Path
• A path is a sequence of activities that leads from the starting node to the ending node.
• 1-2-3-6-7, 1-2-4-6-7, 1-2-5-6-7
• Path reveals sequential relationship
• If one activity in a sequence is delayed (i.e., late) or done incorrectly, the start of all following
activities on that path will be delayed.
3 E
B

A C F H
1 2 4 6 7

D G
5

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Critical Path
● Attempts to shorten project completion must focus on the longest sequence of activities.

● The longest path is referred to as the critical path , and its activities are referred to as critical
activities.

) 3 E
(7)
(10
B
A (5) C (4) F (9) H (5)
1 2 4 6 7

D
(3) (6)
G
5

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Critical Path
Path Length Slack

1-2-3-6-7 5+10+7+5 = 27 27-27=0

1-2-4-6-7 5+4+9+5 = 23 27-23=4

1-2-5-6-7 5+3+6+5 = 19 27-19=8

) 3 E
(7)
(10
B
A (5) C (4) F (9) H (5)
1 2 4 6 7

D
(3) (6)
G
5

● The allowable slippage for any path is called slack:

○ Slack = Length of the critical path - Length of a given path.

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Conventions
Activities must be completed in sequence: first a, then
b, and then c

Both a and b must be completed before c can start

Activity a must be completed before b or c can start

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Conventions
Both a and b must be completed before c or d can start

Use a dummy activity to clarify relationships: To separate two activities that have the same
starting and ending nodes.

When activities share some, but not all, preceding activities. Here, activity c is preceded by
activities a and b, while activity d is only preceded by activity b.

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AON and AOA
There are two approaches for drawing a project network: activity on node (AON) and
activity on arrow (AOA) .

AON (Activity-on-Node): Node represent activities AOA (Activity-on-Arrow): Arrows represent activities
AON AOA “Activities” consume time and resources.
Node Node

1 2 3
1 2 3
Branch Branch

In an AOA network, the nodes represent the starting and

finishing times of an activity and are also called events.
So nodes in AOA consume neither time nor resources

We focus on AOA networks in subsequent discussions in this chapter

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Network Diagram: Exercise 1
Gantt chart for a bank’s plan to establish a new direct marketing department

ACTIVITY ACTIVITY PREDECESSOR WEEKS

(a) Locate (a) Locate - 8

(b) Interview (b) Interview - 4

(c) Hire and Train (c) Hire and Train b 9

(d) Order Furniture (d) Order Furniture a 6

(e) Remodel (e) Remodel a 11

(f) Setup (f) Setup d 3

(g) Move in (g) Move in c,e,f 1

Question:
2 4 6 8 10 12 14 16 18 20 (a) Draw AOA network diagram
Start Weeks after start End (b) The critical path & the length of each path
(c) Expected length of the project
(d) The amount of slack time for each path
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Network Diagram: Exercise 1
d (6) 4
r
2 Orde

f (3
Se
e(

)
11

tup
( 8 ) Re )
a te mo
c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT
i rea
H
3

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Network Diagram: Exercise 1
d (6) 4
r
2 Orde

Se
e(

f(
11

tup
3)
( 8 ) Re )
a te mo
c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT 1-2-4-5-6 = 8+6+3+1 = 18
e a
Hir
3

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Network Diagram: Exercise 1
d (6) 4
r
2 Orde

Se
e(

f(
11

tup
3)
( 8 ) Re )
a te mo
c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT 1-2-5-6 = 8+11+1 = 20
e a
Hir
3

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Network Diagram: Exercise 1
d (6) 4
r
2 Orde

Se
e(

f(
11

tup
3)
( 8 ) Re )
a te mo
c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT 1-3-5-6 = 4+9+1 = 14
e a
Hir
3

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Network Diagram: Exercise 1
d (6) 4
r
2 Orde

Se
e(

f(
11

tup
3)
( 8 ) Re )
a te mo
c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT
i rea
H
3

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Assignment

Draw AON for the same

Chapter 4: Project Management (CPM) [email protected]

Network Diagram: Exercise 2
d (6) 4
r
2 Orde

Se
e(

f(
11

tup
3)
( 8 ) Re )
a te mo
c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT
i rea
H
Can we relax on paths other 3
than critical?
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Network Diagram: Exercise 2
LF
d (6) 4
EF r
2 Orde

Se
e(

f(
LS 11

tup
3)
( 8 ) Re )
a te mo
ES c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT
i rea LS → Latest Start Time
H
3 LF → Latest Finish Time
ES → Earliest Start Time
EF → Earliest Finish Time
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Deterministic Time Estimate
Forward Pass
Earliest Start Time (ES)
● Earliest time an activity can start
● ES = maximum EF of immediate predecessors
Earliest finish time (EF)
● Earliest time an activity can finish
● Earliest start time plus activity time
EF= ES + t (activity time)
For each beginning activity ES=0
For each activity ES + Activity time = EF
For the following activity ES = EF of preceding activity

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Deterministic Time Estimate
Backward Pass
Latest Start Time (LS)
● Latest time an activity can start without
delaying critical path time. For each activity
LS= LF - t (activity time)
● Latest finish time (LF)
latest time an activity can be completed
without delaying critical path time, for the
preceding activity
LF = minimum LS of succeeding activity
Use largest EF as LF for all ending activity

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Scheduling calculations:
1. Forward pass – Start each activity as early as possible.
ES = Max. EF of immediate predecessors
EF = ES + Task time

2. Backward pass – Work backward from the project completion time in step 1, starting each
activity as late as possible.
LS = LF – Task time
LF = Min. LS of immediate successors

3. Compute slack times.

Slack = LS – ES or LF – EF

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Scheduling calculations for the exercise 2
10 16
8 14

d (6
) 4
r
2 Orde 16 19
0 8 14 17

f (3
Set
8 19

)
0 8

up
8 19
) e(
a (8 e 11
)
at Re 19 20
Loc m od 19 20
el
g (1)
1 5 Move in
6 10 10 19
0 4 4 13
b(
Int 4) )
er v c (9 Trai
n
iew d
e an
Hir
LS LF
ES EF
3
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Network Diagram: Exercise 1
Gantt chart for a bank’s plan to establish a new direct marketing department

ACTIVITY
(a) Locate

(b) Interview

(c) Hire and Train

(d) Order Furniture

(e) Remodel

(f) Setup

(g) Move in

2 4 6 8 10 12 14 16 18 20
Start Weeks after start End
Chapter 4: Project Management (CPM) [email protected]
Scheduling calculations for the exercise 2 LS
ES
LF
EF

Activity Predecessor Weeks ES EF = (ES+t) LS = (LF-t) LF Slack = LS-ES or LF-EF

1→2 a Locate new facility - 8 0 0+8=8 8-8=0 8 0
1→3 b Interview prospective Staff - 4 0 0+4=4 10-4 = 6 10 6
3→5 c Hire and train Staff b 9 4 4+9=13 19-9=10 19 6
2→4 d Select and order furniture a 6 8 8+6=14 16-6=10 16 2
2→5 e Remodel and install phones a 11 8 8+11=19 19-11=8 19 0
4→5 f Furniture received and setup d 3 14 14+3=17 19-3=16 19 2
5→6 g Move in and startup c,e,f 1 19 19+1=20 20-1=19 20 0
Network Diagram: Exercise 2
Given table contains information related to the major Immediate Expected time
Activity
activities of a research project. Use the information to do Predecessor (days)
the following: a - 5
c a 8
● Draw a precedence diagram using AOA. d c 2
● Find the critical path. b a 7
● Determine the expected length of the project. e - 3
f e 6
i b, d 10
m f, i 8
g - 1
h g 2
k h 17
end k, m

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Network Diagram: Exercise 2
Immediate Expected time
Activity
Predecessor (days)
8)

d (2
c( a - 5

)
b (7) c a 8
i( d c 2
) 10
a (5 ) b a 7
e (3) f (6) e - 3
m
f e 6
g( (8 i b, d 10
1) )
h (2)
m f, i 8
k (17)
g - 1
h g 2
k h 17
end k, m

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Network Diagram: Exercise 2
Path Length Slack
8)

d (2
c( a-c-d-i-m 5+8+2+10+8 = 33 33-33 = 0

)
b (7)
a-b-i-m 5+7+10+8 = 30 33-30 = 3
i(
10
( 5) )
a e-f-m 3+6+8 = 17 33-17 = 16
e (3) f (6)
m
g-h-k 1+2+17= 20 33-20 = 13
g( (8
1) )
h (2) k (17)

● Critical Path a-c-d-i-m

● Expected duration of project = 33 days
● Critical activities a, c, d, i, m
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Network Diagram: Exercise 3 (home work)
Using the following information:

Duration
Activity Predecessor
(days)
A - 20
B A 13
C A 15
D A 30
E B, C, D 20
F C, D 22
G E, F 19

1. Draw AON & AOA

2. Tabulate all times and floats for each activity
3. Determine the critical path

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Project/Network Crashing
Time-Cost Trade-Off
Cost-Time Trade-Offs: Project Crashing
● Time and cost are two most important components of project economy.
● If time is not important, management can utilize its resources in most efficient way.
● If cost is not important, management can obtain the best resources and schedule the work
around the clock.
● Cost effectiveness calls for a study of the trade-off between time and cost. -- “Least cost”
solution

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Cost-Time Trade-Offs: Project Crashing

Total Cost

ost
t C
ec
Cost

d i r
In

Direct Cost

Time
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What is least cost Schedule?
A least cost schedule is one with an optimum project duration such that to lengthen
or shorten it would increase the total cost

■ DIRECT COST: The costs directly attributable to

project work items. (e.g. Labour, materials….).
These cost are usually nonlinear.

■ OVERHEAD OR INDIRECT COST: The costs which

are over the entire project ( e.g. office, staff,
management, equipment) These cost are usually
linear.

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Cost-Time Trade-Offs: Project Crashing
• While managing a project, it is not uncommon for a project manager to be faced with
either (or both) of the following situations:
• The project is behind schedule
• The scheduled project completion time has been reduced
• In either situation, some or all of the remaining activities need to be speeded up (usually
by adding resources) to finish the project by the desired due date.
• The process by which we shorten the duration of a project in the cheapest manner
possible is called “project crashing”.

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Cost-Time Trade-Offs: Project Crashing
• The amount by which an activity can be shortened (i.e., the difference between its normal
time and crash time) depends on the activity.
• For example, if a casting needs to be heat-treated in the furnace for 48 hours, adding
more resources does not help shorten the time.
• For example, painting an apartment in 3 days instead of 10 days by using three times as
many workers.
• Similarly, the cost of crashing (or shortening) an activity depends on the nature of the
activity.

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Cost-Time Trade-Offs: Project Crashing
• Managers are usually interested in speeding up a project at the least additional cost.
• When choosing which activities to crash, and by how much, we need to ensure the
following:
• The amount by which an activity is crashed is, in fact, permissible
• Taken together, the shortened activity durations will enable us to finish the project by
the due date
• The total cost of crashing is as small as possible

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Cost-Time Trade-Offs: Project Crashing
• Crashing a project involves four steps:
• STEP 1: Compute the crash cost per week (or other time period) for each activity in the network:
Cost slope = (Crash cost - Normal cost) / (Normal time - Crash time)
• STEP 2: Using the current activity times, find the critical path(s) in the project network. Identify the critical
activities.
• STEP 3: If there is only one critical path, then select the activity on this critical path that (a) can still be
crashed and (b) has the smallest crash cost per period. Crash this activity by one period.
• If there is more than one critical path, then select one activity from each critical path such that (a) each
selected activity can still be crashed and (b) the total crash cost per period of all selected activities is the
smallest. Crash each activity by one period.
• The same activity may be common to more than one critical path.
• STEP 4: Update all activity times. If the desired due date has been reached, stop. If not, return to STEP 2.

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Project Crashing: Problem 1
Activity Predecessors Normal Duration Normal Cost Crash Duration Crash Cost
A - 5 100 1 500
B A 7 200 3 1000
C A 9 800 5 1500
D B, C 3 100 1 700

Question:
• Using the information, crash the project systematically and develop the optimal time–cost solution also
show maximum possible crushing duration. Note: Indirect project costs are Rs.250/- per day.

Chapter 4: Project Management (Crashing) [email protected]

Project Crashing: Problem 1
Normal Normal Crash Crash Crash cost per day Max. possible
Activity Predecessors
Duration Cost Duration Cost ΔC/Δt crashing
A - 5 100 1 500 =(500-100)/(5-1) = 100 4
B A 7 200 3 1000 = (1000-200)/(7-3) = 200 4
C A 9 800 5 1500 = (1500-800)/(9-5) = 175 4
D B, C 3 100 1 700 = (700-100)/(3-1) = 300 2

Direct cost = 100 + 200 + 800 +100 = Rs. 1200

Project indirect cost = Rs. 250 per day
(a) Critical path = A-C-D
Network diagram (b) Normal project completion time = 5+9+3 = 17 days
B (c) Normal project completion cost = Direct + Indirect cost
7 = 1200 + (250X17)
= Rs. 5450 /-
A D
5 3

C
9
Chapter 4: Project Management (Crashing) [email protected]
Project Crashing: Problem 1
Normal Normal Crash Crash Crash cost per day Max. possible
Activity Predecessors
Duration Cost Duration Cost ΔC/Δt crashing
A - 5 100 1 500 =(500-100)/(5-1) = 100 4
B A 7 200 3 1000 = (1000-200)/(7-3) = 200 4
C A 9 800 5 1500 = (1500-800)/(9-5) = 175 4
D B, C 3 100 1 700 = (700-100)/(3-1) = 300 2

1500
C

1000
B
500 D
A

2 4 6 8 10 12
Chapter 4: Project Management (Crashing) [email protected]
Project Crashing: Problem 1 LS
ES
LF
EF
7 14
5 12

B
7

A D 14 17
0 5
5 3 14 17
0 5

C
9
5 14
5 14

Crashing activity Project Duration Direct Cost Indirect Cost (250/day) Total Cost
Before crashing 17 1200 17x250 = 4250 1200+4250=5450
1st crashing A by 4 days 13 1200 + (4x100) = 1600 13x250 = 3250 1600+3250=4850
2nd crashing C by 2 days 11 1600 + (2x175) = 1950 11x250 = 2750 1950+2750=4700
3rd crashing D by 2 days 9 1950 + (2x300) = 2550 9x250 = 2250 2550+2250=4800
4th crashing B+C combinely by 2 days 7 2550 + (2x375) = 3300 7x250 = 1750 3300+1750=5050
Chapter 4: Project Management (Crashing) [email protected]
Project Crashing: Problem 1 LS
ES
LF
EF
7 14 3 10 1 8 1 6
5 12 1 8 1 8 1 6

B
75
14 17 10 13 8 11 8 9
0 5 A D
14 17 10 13 8 11 8 9
0 5 51 31
6 7
0 1 Crashing limit attained! 6 7
C
0 1
97 5
Crashing limit attained! 5 14 1 10 1 8 1 8
Crashing limit attained!
5 14 1 10 1 8 1 6

Crashing activity Project Duration Direct Cost Indirect Cost (250/day) Total Cost
Before crashing 17 1200 17x250 = 4250 1200+4250=5450
1st crashing A by 4 days 13 1200 + (4x100) = 1600 13x250 = 3250 1600+3250=4850
2nd crashing C by 2 days 11 1600 + (2x175) = 1950 11x250 = 2750 1950+2750=4700
3rd crashing D by 2 days 9 1950 + (2x300) = 2550 9x250 = 2250 2550+2250=4800
4th crashing B+C combinely by 2 days 7 2550 + (2x375) = 3300 7x250 = 1750 3300+1750=5050
Chapter 4: Project Management (Crashing) [email protected]
Project Crashing: Problem 1

4700

11 days

Crashing activity Project Duration Direct Cost Indirect Cost (250/day) Total Cost
Before crashing 17 1200 17x250 = 4250 1200+4250=5450
1st crashing A by 4 days 13 1200 + (4x100) = 1600 13x250 = 3250 1600+3250=4850
2nd crashing C by 2 days 11 1600 + (2x175) = 1950 11x250 = 2750 1950+2750=4700
3rd crashing D by 2 days 9 1950 + (2x300) = 2550 9x250 = 2250 2550+2250=4800
4th crashing B+C combinely by 2 days 7 2550 + (2x375) = 3300 7x250 = 1750 3300+1750=5050
Chapter 4: Project Management (Crashing) [email protected]
Project Crashing: Problem 2
Normal Crash Crash cost per day Max. possible
Activity Predecessors
Duration Duration ΔC/Δt crashing
a - 6 6 - 0
b a 10 8 500 2
c - 5 4 300 1
d c 4 1 700 3
e d 9 7 600 2
f b,e 2 1 800 1

Using the information, develop the optimal time–cost solution. Project costs are $1,000 per day

Chapter 4: Project Management (Crashing) [email protected]

Project Crashing: Problem 2
Normal Crash Crash cost per day Max. possible
Activity Predecessors
Duration Duration ΔC/Δt crashing
a - 6 6 - 0
b a 10 8 500 2
c - 5 4 300 1
d c 4 1 700 3
e d 9 7 600 2
f b,e 2 1 800 1
Indirect project costs are $1,000 per day.
Paths
1. a-b-f → 6+10+2 = 18
2. c-d-e-f → 5+4+9+2 = 20*
*Critical path = c-d-e-f

Normal project completion time = 20 days

Chapter 4: Project Management (Crashing) [email protected]
Project Crashing: Problem 2
Normal Normal Crash Crash Crash cost per day Max. possible
Activity Predecessors
Duration Cost Duration Cost ΔC/Δt crashing
a - 6 6 - 0
b a 10 8 500 2
c - 5 4 300 1
d c 4 1 700 3
e d 9 7 600 2
f b,e 2 1 800 1
Indirect project costs are $1,000 per day.
Paths
1. a-b-f → 6+10+2 = 18
2. c-d-e-f → 5+4+9+2 = 20*
*Critical path = c-d-e-f

Normal project completion time = 20 days

Chapter 4: Project Management (Crashing) [email protected]
 LS LF

Project Crashing: Problem 2 ES EF

Cost per day to Available days (Normal

Activity
crash ($) time – Crash time)
c 300 1
2 8 8 18
e 600 2 0 6 6 16
d 700 3 18 20
18 20
f 800 1
• Shorten activity c one day at a cost of $300. The
length of the critical path now becomes 19 days.
0 5 9 18
0 5 9 18
Length after crashing n days 5 9
Path
n=0 n=1 5 9

a-b-f 18 18
c-d-e-f 20 19
Activity crashed c
Cost $300
Chapter 4: Project Management (Crashing) [email protected]
Project Crashing: Problem 2
Activity Cost per day to crash ($) Available days
e 600 2
d 700 3 2 8 8 18

f 800 1 0 6 6 16
18 20
• Shorten activity e one day at a cost of $600.
18 20

Path Length after crashing n days

n=0 n=1 n=2
0 5 9 18
a-b-f 18 18 18 0 5 9 18
c-d-e-f 20 19 18 5 9
5 9
Activity crashed c e
Cost $300 $600

Chapter 4: Project Management (Crashing) [email protected]

Project Crashing: Problem 2
Path Length after crashing n days Path Activity Crash cost Available
n=0 n=1 n=2 (per day) days

a-b-f 18 18 18 a-b-f a - -
b $500 2
c-d-e-f 20 19 18 f $800 1
Activity crashed c e c-d-e-f c - -
Cost $300 $600 d $700 3
e $600 1
f $800 1

Chapter 4: Project Management (Crashing) [email protected]

Project Crashing: Problem 2

2 8 8 18
Path Length after crashing n days 0 6 6 16
n=0 n=1 n=2 n=3 18 20
18 20
a-b-f 18 18 18 17
c-d-e-f 20 19 18 17
Activity crashed c e f
0 5 9 18
Cost $300 $600 $800
0 5 9 18
5 9
5 9

Chapter 4: Project Management (Crashing) [email protected]

Project Crashing: Problem 2
Path Activity Crash cost Available Path Length after crashing n days
(per day) days n=0 n=1 n=2 n=3
a-b-f a - - a-b-f 18 18 18 17
b $500 2
f $800 1 c-d-e-f 20 19 18 17
c-d-e-f c - - Activity crashed c e f
d $700 3 Cost $300 $600 $800
e $600 1
f $800 1

• At this point, no additional improvement is feasible.

• The cost to crash b is $500 and the cost to crash e is $600, for a total of $1,100, and that
would exceed the indirect project costs of $1,000 per day.

Chapter 4: Project Management (Crashing) [email protected]

Program Evaluation and Review Technique (PERT)

Uncertainty in Project Planning

 PERT
• Scheduling with uncertainty using Program Evaluation and Review Technique (PERT).
• Developed in 1950s by the US Navy to support the Polaris Missile Program.
• What is the project duration that would be attained with a 90% probability?

Chapter 4: Project Management (PERT) [email protected]

Uncertainty in Duration
• There is a significant amount of uncertainty associated with the activities durations due
to several factors:
• The time required to gain regulatory approval for projects may vary tremendously.
• External events such as adverse weather, trench collapses, or labor strikes make
duration estimates particularly uncertain.

Chapter 4: Project Management (PERT) [email protected]

Uncertainty in Duration
• The use of most likely durations may not account for uncertainty factors, so a
contingency allowance can be incorporated in the estimate of activity durations.
• For example, an activity with an expected duration of two days might be scheduled for
a period of 2.2 days, including a ten percent contingency.
• The use of this rule-of-thumb or heuristic contingency factor can result in more
accurate schedules.
• However, Incorporating uncertainty more formally are useful as a means of obtaining
greater accuracy or in understanding the effects of activity delays.

Chapter 4: Project Management (PERT) [email protected]

 PERT
• The most common formal approach to incorporate uncertainty in the scheduling
process is PERT:
• Apply the critical path scheduling process
• Then analyze the results from a probabilistic perspective.
• In PERT each activity is assigned three durations: optimistic, most likely and pessimistic.

Chapter 4: Project Management (PERT) [email protected]

 PERT
• The optimistic duration (to) is the shortest time to perform the activity under the most
favorable conditions.
• The pessimistic duration (tP) is the longest time to perform the activity under the most
unfavorable conditions.
• The most likely duration (tm) is time that has occurred most frequently in similar
circumstances.

Chapter 4: Project Management (PERT) [email protected]

PERT Assumptions
• PERT focuses on a single critical path.
• The activity duration follows a special beta distribution.
• Activity durations are assumed to be independent variables to facilitate the calculation
of the critical path variance.
• The duration of the critical path is assumed to follow a standard normal probability
distribution.

Chapter 4: Project Management (PERT) [email protected]

Probabilistic Time Estimates
The probabilistic approach involves three time estimates for each activity:
• Optimistic time (to): The length of time required under optimum conditions (or) time an activity
will take if everything goes as planned
• Pessimistic time (tp): The length of time required under the worst conditions (or) time an
activity will take assuming very unfavourable conditions
• Most likely time (tm): The most probable amount of time required (or) most realistic estimate of
the time required to complete an activity

Chapter 4: Project Management (PERT) [email protected]

Probabilistic Time Estimates
• The expected duration of a path (i.e., the path mean) is equal to the sum of the expected times
of the activities on that path.
• Path mean = Ʃ of expected times of activities on the path
• The standard deviation of each activity’s time is estimated as one-sixth of the difference
between the pessimistic and optimistic time estimates.
• Variance = σ2 = [(tp – to)/6]2 = (tp – to)2 /36
• The size of the variance reflects the degree of uncertainty associated with an activity’s time. i.e.
the larger the variance, the greater the uncertainty
• The standard deviation of the expected time for each path is sum of the variances of the
activities on a path and then taking the square root of that number.
• σpath = √ Σ(variances of activities on path)

Chapter 4: Project Management (PERT) [email protected]

Probabilistic Time Estimates

• Beta distribution, note that it has definite end points

• Mean and variance of the distribution can be readily obtained from the three time estimates
• The expected time of an activity (te) is a weighted average of the three time estimates.
• te = (to + 4 tm + tp )/6

Chapter 4: Project Management (PERT) [email protected]

PERT: Exercise 1
d (6) 4
r
2 Orde

Se
e(

f(
11

tup
3)
( 8 ) Re )
a te mo
c a de
Lo l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 ra
iew n dT
i rea
H
Probability to complete the 3
work in 20 weeks?
Chapter 4: Project Management (PERT) [email protected]
PERT: Exercise 1
Gantt chart for a bank’s plan to establish a new direct marketing department

ACTIVITY ACTIVITY PREDECESSOR WEEKS

(a) Locate (a) Locate - 8

(b) Interview (b) Interview - 4

(c) Hire and Train (c) Hire and Train b 9

(d) Order Furniture (d) Order Furniture a 6

(e) Remodel (e) Remodel a 11

(f) Setup (f) Setup d 3

(g) Move in (g) Move in c,e,f 1

Question:
2 4 6 8 10 12 14 16 18 20 (a) Draw AOA network diagram
Start Weeks after start End (b) The critical path & the length of each path
(c) Expected length of the project
(d) The amount of slack time for each path
Chapter 4: Project Management (PERT) [email protected]
PERT: Exercise 1
ACTIVITY PREDECESSOR t0 tm te tp

(a) Locate - 5 7 8 15

(b) Interview - 1 3 4 11

(c) Hire and Train b 6 8 9 16

(d) Order Furniture a 3 5 6 13

(e) Remodel a 7 9 11 23

(f) Setup d 2 2 3 8

(g) Move in c,e,f 1 1 1 1

te → Expected time; to → Optimistic time: tm → Most likely time; tp → Pessimistic

time 4: Project Management (PERT)
Chapter [email protected]
 d (6) 4
r
2 Orde

Se
e(

f(
11

tup
3)
( 8 ) Re )
a te mo
a de
Loc l
g (1)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 Tra
iew d
e an
Hir ACTIVITY PREDECESSOR t0 tm te tp
3
(a) Locate - 5 7 8 15

(e) Remodel a 7 9 11 23

(g) Move in c,e,f 0.5 1

0.75 [email protected]
2.5
Chapter 4: Project Management (PERT)
 d (6) 4
r
2 Orde
) e(

Se
15

f(
7 - 7-9

tup
3)
- Re
a ( 5
te mo -23)
a de
Loc l g (0.5-0.75-2.5)
1 5 6
Move in
b(
4) ) in
Int
erv c (9 Tra
iew d
e an
Hir ACTIVITY PREDECESSOR t0 tm te tp
3
(a) Locate - 5 7 8 15

(e) Remodel a 7 9 11 23

(g) Move in c,e,f 0.5 1

0.75 [email protected]
2.5
Chapter 4: Project Management (PERT)
Estimating the Probability of Completion Dates

The standard deviation of each activity’s time is estimated as one-sixth of the difference between the pessimistic
and optimistic time estimates. (Analogously, nearly all of the area under a normal distribution lies within three
standard deviations of the mean, which is a range of six standard deviations.) We find the variance by squaring the
standard deviation → 6𝜎 = UL-LL, thus,

Chapter 4: Project Management (PERT) [email protected]

Estimating the Probability of Completion Dates
Activity Optimistic (to) Most Likely (tm) Expected time (te) Pessimistic (tp) Variance (σ2)
(a) Locate 5 7 8 15 2.78
(e) Remodel 7 9 11 23 7.11
(g) Mobe in 0.5 0.75 1 2.5 0.11

Sum over critical path = 10.00

Chapter 4: Project Management (PERT) [email protected]

Estimating the Probability of Completion Dates
• When you know:
– The standard deviation
– Expected completion time / population mean
• You can calculate the probability of completing the project in “the specified completion
date” with the following formula:
z = (x-𝜇)/𝜎
○ x→ score
○ 𝜇→population mean
○ 𝜎→ std. deviation
Question 1: What is the probability of completing project (along critical path) within 20 weeks?

Question 2: By how many weeks are we 95% sure of completing project (along critical path)?
Chapter 4: Project Management (PERT) [email protected]
Estimating the Probability of Completion Dates
Question 1: What is the probability of completing project (along critical path) within 20 weeks?
z = (x-𝜇)/𝜎 z = (20-20)/3.16
○ x→ score z=0
○ 𝜇→population mean
○ 𝜎→ std. deviation

Use standard normal Table to answer probabilistic questions, such as

Probability = 0.5000 + 0 = 0.5

= 50 %

Chapter 4: Project Management (PERT) [email protected]

Chapter 4: Project Management (PERT) [email protected]
Chapter 4: Project Management (PERT) [email protected]
Estimating the Probability of Completion Dates
Question 2: By how many weeks are we 95% sure of completing project (along critical path)?

z = (x-𝜇)/𝜎 1.65 = (x-20)/3.16

○ x→ score x = 25.2 weeks
○ 𝜇→population mean
○ 𝜎→ std. deviation

Chapter 4: Project Management (PERT) [email protected]

Estimating the Probability of Completion Dates
• Using probabilistic time estimates offers the advantage of predicting the probability of
project completion dates
• We have already calculated the expected time for each activity by making three time
estimates
• Now we need to calculate the variance for each activity
• The variance of the beta probability distribution is:

– where Tp=pessimistic activity time estimate

To=optimistic activity time estimate
Chapter 4: Project Management (PERT) [email protected]
Example-1 Problem Using Probabilistic Time Estimates

Chapter 4: Project Management (PERT) [email protected]

Network Diagram with Expected Activity Times

• ABDEGIJK is the expected critical path & the project has an expected duration of
44.83 weeks

Chapter 4: Project Management (PERT) [email protected]

Estimating the Probability of Completion Dates
• Using probabilistic time estimates offers the advantage of predicting the probability of
project completion dates
• We have already calculated the expected time for each activity by making three time
estimates
• Now we need to calculate the variance for each activity
• The variance of the beta probability distribution is:

– where Tp=pessimistic activity time estimate

To=optimistic activity time estimate
Chapter 4: Project Management (PERT) [email protected]
Project Activity Variances
Activity Optimistic Most Likely Pessimistic Expected time Variance (σ2)
A 2 4 6 4 0.44
B 3 7 10 6.83 1.36
C 2 3 5 3.17 0.25
D 4 7 9 6.83 0.69
E 12 16 20 16 1.78
F 2 5 8 5 1.00
G 2 2 2 2 0.00
H 2 3 4 3 0.11
I 2 3 5 3.17 0.25
J 2 4 6 4 0.44
K 2 2 2 2 0.00
4.96

Sum over critical path = 4.96

Chapter 4: Project Management (PERT) [email protected]
Apply z formula to critical path
Question 1: What is the probability of completing project (along critical path) within 48 weeks?

Use Standard Normal Table to answer probabilistic questions, such as

Probability = 0.5000 + 0.4222 =0.9222 or 92.22%

Project not finished by the

given date, tail area = 0.0778

0.50 0.4222

Chapter 4: Project Management (PERT)

0 Z92 = 1.42 z [email protected]
Apply z formula to critical path
Question 2: By how many weeks are we 95% sure of completing project (along critical path)?

DT = 48.5 weeks

Project not finished by the

given date, Tail Area = 0.05

0.50 0.45

Chapter 4: Project Management (PERT)

0 Z95 = 1.65 z [email protected]
Probabilistic Time Estimates
• The expected duration of a path (i.e., the path mean) is equal to the sum of the expected times of the
activities on that path.

• Path mean = Ʃ of expected times of activities on the path

• The standard deviation of each activity’s time is estimated as one-sixth of the difference between the
pessimistic and optimistic time estimates.

• Variance = σ2 = [(tp – to)/6]2 = (tp – to)2 /36

• The size of the variance reflects the degree of uncertainty associated with an activity’s time. i.e. the larger
the variance, the greater the uncertainty
• The standard deviation of the expected time for each path is sum of the variances of the activities on
a path and then taking the square root of that number.

•Chapter
σpath = √ Σ(variances
4: Project Management (PERT)of activities on path) [email protected]
Example-2 Problem Using Probabilistic Time Estimates

The network diagram for a project is given below,

with three time estimates for each activity. Activity
times are in weeks. Do the following:
a. Compute the expected time for each activity
and the expected duration for each path.
b. Identify the critical path.
c. Compute the variance of each activity and
the variance and standard deviation of each
path.

Chapter 4: Project Management (PERT) [email protected]

Probabilistic Time Estimates
a. Compute the expected time for each activity and the expected duration for each path.

b. The path that has the longest expected duration is the critical path. Because path d-e-f has the largest
path total, it is the critical path.
Chapter 4: Project Management (PERT) [email protected]
Probabilistic Time Estimates
c. Compute the variance of each activity, the variance and standard deviation of each path.

Variance Std. dev

Chapter 4: Project Management (PERT) [email protected]

Probabilistic Time Estimates
d. What is the probability that the project can be completed within 17 weeks of its start?
e. What is the probability that the project will be completed within 15 weeks of its start?
f. What is the probability that the project will not be completed within 15 weeks of its start?

Chapter 4: Project Management (PERT) [email protected]

Probabilistic Time Estimates
(d)

P(Finish by week 17) =

(Path a-b-c finish)*(Path d-e-f finish)* (Path g-h-i finish)
= 1*0.8413*1 = 0.8413 = 84.13%
Chapter 4: Project Management (PERT) [email protected]
Probabilistic Time Estimates
(e)

P(Finish by week 15)= 1*0.1587*0.9192 = 0.1459 = 14.59%

(f) Probability that the project will not be completed within 15 weeks of its start = 1-0.1459 =
0.8541 = 85.41%
Chapter 4: Project Management (PERT) [email protected]
PERT/ Problems
• PERT suffers from three major problems:
– The procedure focuses upon a single critical path, when many paths might
become critical due to random fluctuations.
– It is incorrect to assume that most construction activity durations are
independent random variables.
– PERT method requires three duration estimates for each activity rather than a
single estimate.

Chapter 4: Project Management (PERT) [email protected]

Main Tools Project Management
(c) Network Diagram : PERT (Program Evaluation and Review Technique) and CPM (Critical Path Method)
PERT:
- Event oriented
- Probabilistic model
- Primarily concerned with project time
- It enables the project manager to schedule and coordinate the various activities so that the project can be
completed on schedule time. It uses the crashing.

CPM:
- Activity oriented
- Deterministic model
- The longest path through the network is called the “critical path” and it’s length determines the minimum
duration in which the said project can be completed.
- All the activities on critical path is considered as “critical activities”
Chapter 4: Project Management (PERT) [email protected]