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INTRODUCTION TO CPM / PERT TECHNIQUE

CPM (Critical Path Method) was the discovery of M.R.Walker of E.I.Du Pont de
Nemours & Co. and J.E.Kelly of Remington Rand, circa 1957. The computation was
designed for the UNIVAC-I computer. The first test was made in 1958, when CPM was
applied to the construction of a new chemical plant. In March 1959, the method was
applied to maintenance shut-down at the Du Pont works in Louisville, Kentucky.
Unproductive time was reduced from 125 to 93 hours.

PERT (Project Evaluation and Review Technique) was devised in 1958 for the
POLARIS missile program by the Program Evaluation Branch of the Special Projects
office of the U.S.Navy, helped by the Lockheed Missile Systems division and the
Consultant firm of Booz-Allen & Hamilton. The calculations were so arranged so that
they could be carried out on the IBM Naval Ordinance Research Computer (NORC) at
Dahlgren, Virginia.

The methods are essentially network-oriented techniques using the same principle.
PERT and CPM are basically time-oriented methods in the sense that they both lead to
determination of a time schedule for the project. The significant difference between two
approaches is that the time estimates for the different activities in CPM were assumed to
be deterministic while in PERT these are described probabilistically. These techniques
are referred as project scheduling techniques.

In CPM activities are shown as a network of precedence relationships using activity-on-

node network construction

– Single estimate of activity time

– Deterministic activity times

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USED IN: Production management - for the jobs of repetitive in nature where the
activity time estimates can be predicted with considerable certainty due to the
existence of past experience.

In PERT activities are shown as a network of precedence relationships using activity-

on- arrow network construction

– Multiple time estimates

– Probabilistic activity times

USED IN: Project management - for non-repetitive jobs (research and development
work), where the time and cost estimates tend to be quite uncertain. This technique uses
probabilistic time estimates.

Benefits of PERT/CPM

 Useful at many stages of project management

 Mathematically simple

 Give critical path and slack time

 Provide project documentation

 Useful in monitoring costs

Limitations of PERT/CPM

 Clearly defined, independent and stable activities

 Specified precedence relationships

 Over emphasis on critical paths

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Applications of CPM / PERT

These methods have been applied to a wide variety of problems in industries and
have found acceptance even in government organizations. These include

 Construction of a dam or a canal system in a region

 Construction of a building or highway
 Maintenance or overhaul of airplanes or oil refinery
 Space flight
 Cost control of a project using PERT / COST
 Designing a prototype of a machine
 Development of supersonic planes

Basic Steps in PERT / CPM

Project scheduling by PERT / CPM consists of four main steps

1. Planning
 The planning phase is started by splitting the total project in to small projects.
These smaller projects in turn are divided into activities and are analyzed by
the department or section.
 The relationship of each activity with respect to other activities are defined
and established and the corresponding responsibilities and the authority are
also stated.
 Thus the possibility of overlooking any task necessary for the completion of
the project is reduced substantially.

2. Scheduling
 The ultimate objective of the scheduling phase is to prepare a time chart
showing the start and finish times for each activity as well as its relationship
to other activities of the project.
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 Moreover the schedule must pinpoint the critical path activities which require
special attention if the project is to be completed in time.
 For non-critical activities, the schedule must show the amount of slack or
float times which can be used advantageously when such activities are
delayed or when limited resources are to be utilized effectively.

3. Allocation of resources
 Allocation of resources is performed to achieve the desired objective. A
resource is a physical variable such as labour, finance, equipment and space
which will impose a limitation on time for the project.
 When resources are limited and conflicting, demands are made for the same
type of resources a systematic method for allocation of resources become
essential.
 Resource allocation usually incurs a compromise and the choice of this
compromise depends on the judgment of managers.

4. Controlling
 The final phase in project management is controlling. Critical path methods
facilitate the application of the principle of management by expectation to
identify areas that are critical to the completion of the project.
 By having progress reports from time to time and updating the network
continuously, a better financial as well as technical control over the project is
exercised.
 Arrow diagrams and time charts are used for making periodic progress
reports. If required, a new course of action is determined for the remaining
portion of the project.

The Framework for PERT and CPM

Essentially, there are six steps which are common to both the techniques. The
procedure is listed below:
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i) Define the Project and all of its significant activities or tasks. The Project (made

up of several tasks) should have only a single start activity and a single
finish activity.

ii) Develop the relationships among the activities. Decide which activities
must precede and which must follow others.
iii) Draw the "Network" connecting all the activities. Each Activity should
have unique event numbers. Dummy arrows are used where required to
avoid giving the same numbering to two activities.
iv) Assign time and/or cost estimates to each activity
v) Compute the longest time path through the network. This is called the
critical path.
vi) Use the Network to help plan, schedule, monitor and control the project.

The Key Concept used by CPM/PERT is that a small set of activities, which make up
the longest path through the activity network control the entire project. If these
"critical" activities could be identified and assigned to responsible persons,
management resources could be optimally used by concentrating on the few
activities which determine the fate of the entire project.

Non-critical activities can be replanned, rescheduled and resources for them can be
reallocated flexibly, without affecting the whole project.

Five useful questions to ask when preparing an activity network are:

 Is this a Start Activity?

 Is this a Finish Activity?
 What Activity Precedes this?
 What Activity Follows this?
 What Activity is Concurrent with this?
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Network Diagram Representation

In a network representation of a project certain definitions are used

1. Activity
Any individual operation, which utilizes resources and has an end and a
beginning is called activity. An arrow is commonly used to represent an activity
with its head indicating the direction of progress in the project. These are classified
into four categories

1. Predecessor activity – Activities that must be completed immediately prior

to the start of another activity are called predecessor activities.

2. Successor activity – Activities that cannot be started until one or more of

other activities are completed but immediately succeed them are called
successor activities.
3. Concurrent activity – Activities which can be accomplished concurrently
are known as concurrent activities. It may be noted that an activity can be a
predecessor or a successor to an event or it may be concurrent with one or
more of other activities.
4. Dummy activity – An activity which does not consume any kind of resource
but merely depicts the technological dependence is called a dummy activity.

The dummy activity is inserted in the network to clarify the activity pattern in the
following two situations

 To make activities with common starting and finishing points distinguishable

 To identify and maintain the proper precedence relationship between
activities that is not connected by events.
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For example, consider a situation where A and B are concurrent activities. C is

dependent on A and D is dependent on A and B both. Such a situation can be
handled by using a dummy activity as shown in the figure.

2. Event
An event represents a point in time signifying the completion of some activities and
the beginning of new ones. This is usually represented by a circle in a network
which is also called a node or connector.

The events are classified in to three categories

1. Merge event – When more than one activity comes and joins an event such
an event is known as merge event.

2. Burst event – When more than one activity leaves an event such an event is
known as burst event.
3. Merge and Burst event – An activity may be merge and burst event at the
same time as with respect to some activities it can be a merge event and with
respect to some other activities it may be a burst event.

3. Sequencing
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The first prerequisite in the development of network is to maintain the precedence

relationships. In order to make a network, the following points should be taken into
considerations

 What job or jobs precede it?

 What job or jobs could run concurrently?
 What job or jobs follow it?
 What controls the start and finish of a job?
Since all further calculations are based on the network, it is necessary that a
network be drawn with full care.

Rules for Drawing Network Diagram

Rule 1
Each activity is represented by one and only one arrow in the network

Rule 2
No two activities can be identified by the same end events
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Rule 3
In order to ensure the correct precedence relationship in the arrow diagram,
following questions must be checked whenever any activity is added to the
network

 What activity must be completed immediately before this activity can start?
 What activities must follow this activity?
 What activities must occur simultaneously with this activity?

In case of large network, it is essential that certain good habits be practiced to draw
an easy to follow network

 Try to avoid arrows which cross each other

 Use straight arrows
 Do not attempt to represent duration of activity by its arrow length
 Use arrows from left to right. Avoid mixing two directions, vertical and
standing arrows may be used if necessary.
 Use dummies freely in rough draft but final network should not have any
redundant dummies.
 The network has only one entry point called start event and one point of
emergence called the end event.

DRAWING NETWRORK DIAGRAMS

Example one
Draw a network diagram for the following project:

Name of activity Description Predecessor

A Prepare house plan -
B Construct the house A
C Fix doors and windows B
D Wiring the house B
E Paint the house C
F Polish doors and windows D
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4
E
6
C

A B 3 F
1 2

D 5

Example two

Draw a network diagram for the following project

Activity Description Predecessor

A Purchase of land -
B Preparation of building plan -
C Removal of black cotton soil A
D Getting approvals A,B
E Construction of building C
F Plant the building D
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Solution

C 4
E
2

A
6
Dummy
1
F

B
D 5
3

Example three
Draw a network for the simple project of erection of steel works for, a shed. The various
elements of project are as under: -

Activity code Description Predecessor

A Erect site workshop -
B Fence site -
C Bend reinforcement A
D Dig foundation B
E Fabricate steel work A
F Install concrete plant B
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G Place reinforcement C, D
H Concrete foundation G, F
I Paint steel work E
J Erect steel work H, l
K Give finishing touch J

Solution
The resulting network is shown in the figure given below.

I
A C
H J K
G

D
B F

Project Evaluation and Review Technique (PERT)

The main objective in the analysis through PERT is to find out the completion for a
particular event within specified date. The PERT approach takes into account the
uncertainties. The three time values are associated with each activity

1. Optimistic time – It is the shortest possible time in which the activity can be
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finished. It assumes that everything goes very well. This is denoted by t0.
2. Most likely time – It is the estimate of the normal time the activity would take.
This assumes normal delays. If a graph is plotted in the time of completion and
the frequency of completion in that time period, then most likely time will
represent the highest frequency of occurrence. This is denoted by tm.
3. Pessimistic time – It represents the longest time the activity could take if
everything goes wrong. As in optimistic estimate, this value may be such that
only one in hundred or one in twenty will take time longer than this value. This is
denoted by tp.

In PERT calculation, all values are used to obtain the percent expected value.

1. Expected time – It is the average time an activity will take if it were to be repeated
on large number of times and is based on the assumption that the activity time
follows Beta distribution, this is given by
t 0 +4 t m +t p
te=
6

2. The variance for the activity is given by

2
σ = [ ]
t p −t 0 2
6

Example
A project has the following characteristics;
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ACTIVITY Most optimistic time Most pessimistic Most likely time

time

1–2 1 5 1.5

2–3 1 3 2

2–4 1 5 3

3–5 3 5 4

4–5 2 4 3

4–6 3 7 5

5–7 4 6 5

6–7 6 8 7

2 6 4

7–8

7–9 5 8 6

8 – 10 1 3 2

9 – 10 3 7 5

Required

Construct a PERT network.

Find the critical path

variance for each event

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Solution
Network diagram

4 5 4 2
5 10
3 7 8

5
6.17
2
3 7
9

1 2
2
6
3
4 5

Critical path
1-2-3-5-7-8-10 =19
1-2-3-5-7-9-10 = 24.17
1-2-4-5-7-8-10 = 19
1-2-4-5-7-9-10 = 24.17
1-2-4-6-7-8-10=23
1-2-4-6-7-9-10=28.17 = critical path
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( )
ACTIVITY Most Most Most t 0 +4 t m +t p t p−t 0
2

optimistic pessimistic likely t e= 2

δ =
6 6
time (a) time ( b) time (c)

1–2 1 5 1.5 2 0.44

2–3 1 3 2 2 0.11

2–4 1 5 3 3 0.44

3–5 3 5 4 4 0.11

4–5 2 4 3 3 0.11

4–6 3 7 5 5 0.44

5–7 4 6 5 5 0.11

6–7 6 8 7 7 0.11

7–8 2 6 4 4 0.44

7–9 5 8 6 6.17 0.25

8 – 10 1 3 2 2 0.11

9 – 10 3 7 5 5 0.44

For activity 1-2

1+4 ( 1.5 ) +5
te= =2
6
For activity 2-3
1+4 ( 2 ) +3
te= =2
6

( )
2
2 t p−t 0
δ =
6
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( )
2
2 5−1
Activity 1-2 δ = =0.44
6

( )
2
2 3−1
Activity 2-3 δ = =0.11
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CRASHING OF PROJECTS
Project crashing is the method of shortening project duration by reducing time of time or more
critical activities to less than the normal time. Crashing is achieved by devoting more resources
thereby increasing project cost. The objective is to reduce project duration while minimizing cost
of crashing.
Steps in crashing;
1. Determine the normal critical path and identify critical activities
2. Calculate the cost slope or increment cost per unit for the different activities;
Crash cost−Normal cost
cost slope=
Normal time−Crash time
3. Rank activities in ascending order as per their cost slopes.
4. Next;
i) Crash activities of critical path as per lowest cost slope first
ii) Calculate the new direct cost by adding cost of crashing to the normal time.
5. Since critical path duration is reduced, so other paths also become critical. Project
duration may be reduced by simultaneously crashing activities in the parallel critical
paths.
6. A point is reached when either no crashing is possible or crashing does not result in
reduction of project duration.
NB; If time in critical path say A lowers below another alternative path say B after
crashing, crashing is done in such a way that time in critical path is kept same as B
but should never go below B. Meaning, critical path has to always remain critical
either alone or jointly with other paths and cannot be replaced by another critical
path.
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EXAMPLE ONE
Consider the following project data;
Activity Predecessor Normal time Crash time Normal cost Crash cost
A - 2 1 10,000 15,000
B - 8 5 15,000 21,000
C A 4 3 20,000 24,000
D B 1 1 7,000 7,000
E B 2 1 8,000 15,000
F C,D 5 3 10,000 16,000
G E 6 2 12,000 36,000

Required
a) Draw a network diagram
b) Crash the project and ascertain the new project cost

Solution

C
4 F
2

A 4
5 6
2 D
1 G
1 B
6
8 E
3 5
2

Possible paths are;

A – C – F = 11
B – D – F = 14
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B – E – G = 16= critical path

Activity Predecessor Normal Crash Normal Crash Cost Position

time time cost cost slope
A - 2 1 10,000 15,000 5,000
B - 8 5 15,000 21,000 2,000 1st
C A 4 3 20,000 24,000 4,000
D B 1 1 7,000 7,000 -

E B 2 1 8,000 15,000 7,000 3rd

F C,D 5 3 10,000 16,000 3,000
G E 6 2 12,000 36,000 6,000 2nd

Finally;
TIME Paths
B–E–G B–D–F A–C–F Cost added

Normal time 16 14 11 -
Crash B by 3 13 11 11 6,000
days

Crash G by 2 11 11 11 12,000
days
Crash F and G 9 9 9 12,000 + 6,000 =
by 2 days each 18,000
Total additional cost 36,000
Add normal project cost 82,000
Total 118,000
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new project cost

EXAMPLE TWO

Consider the following project data;

Activity Normal time Crash time Normal cost Crash cost

1–2 10 8 60 120
2–3 9 6 75 150
2–4 7 4 90 150
3–4 6 5 100 140
3–5 9 7 50 80
3–6 10 8 40 70
4–5 6 4 50 70
5–6 7 5 70 110

Required
c) Draw a network diagram
d) Crash the project and ascertain the new project cost

Solution

10
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9 6
6
10
1 2

7 6
4 5

Possible paths are;

1236 = 29
123456 = 38 = critical path
12456 = 30
12356 = 35

Activity Normal time Crash Normal cost Crash cost Cost Position
time slope
1–2* 10 8 60 120 30 4th
2–3* 9 6 75 150 25 3rd
2–4 7 4 90 150 20
3–4* 6 5 100 140 40 5th
3–5 9 7 50 80 15
3–6 10 8 40 70 15
4–5* 6 4 50 70 10 1st
5–6* 7 5 70 110 20 2nd

Finally;
Paths
123456 1236 12456 12356 Cost added
Normal time 38 29 30 35 -
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Crash 4 - 5 by 36 29 28 35 20
2 days
Crash 5 – 6 34 29 26 33 40
by 2 days
Crash 2 – 3 31 26 26 30 75
by 3 days each
Crash 1 – 2 by 29 24 24 28 60
2 days
Crash 3 – 4 by 28 24 24 28 40
1 day
Total additional cost 235
Add normal project cost 535
Total new project cost 770

EXAMPE THREE
Time and cost estimates for a six activity project are given below;

Activity Preceding Normal time Crash time Normal cost Crash cost
activity
A - 6 4 10,000 14,000
B - 4 3 5,000 8,000
C A 3 2 4,000 5,000
D B 8 3 1,000 6,000
E B 14 6 9,000 13,000
F C,D 8 4 7,000 8,000

Required
a) Draw a network diagram
b) Crash the project and ascertain the new project cost

Solution
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a)

A6 C3
4

1
D8
B4 F8

3
5
E 14

b) Possible paths are;

ACF = 17
BDF = 20 = critical path
BE = 18

Activity Normal time Crash Normal Crash cost Cost Position

time cost slope
A 6 4 10,000 14,000 2,000
B* 4 3 5,000 8,000 3,000 3rd
C 3 2 4,000 5,000 1,000
D* 8 3 1,000 6,000 1,000 2nd
E 14 6 9,000 13,000 500
F* 8 4 7,000 8,000 250 1st

Finally;

Paths
B–D–F A–C–F B–E Cost added
CRITICAL
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Normal time 20 17 18 -
Crash F by 2 18 15 18 500
days
Crash F by 2 16 13 16 1500
days and E by 2
days
Crash D and E 13 13 13 3,000 + 1,500
by 3 days each
Crash B by one 12 12 12 3,000 + 1000
day and C by
one day
Crash D by 2 10 10 10 2,000 + 4,000 +
days, A by 2 1000
days and E by 2
days
Total additional cost 17,500
Add normal project cost 36,000
Total new project cost 53,500