Chapter FOUR

PROJECT MANAGEMENT AND

NETWORK MODEL

PROJECT MANAGEMENT
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What is project
A project is a temporary effort to create a unique Dr. Shime
product or service. Projects usually include
constraints and risks regarding cost, schedule or
performance outcome.
Project management is the application of
knowledge, skills, tools, and techniques to project
activities in order to meet or exceed stakeholder
needs and expectations from a project.
Meeting or exceeding stakeholder needs and
expectations invariably involves balancing competing
demands among:
 Scope, time, cost, and quality
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 Stakeholders with differing needs and
expectations

BRIEF HISTORY OF CPM/PERT

CPM/PERT or Network Analysis as the technique
is sometimes called, developed along two
parallel streams, one industrial and the other
military.
 CPM was the discovery of M.R. Walker and J.E.
Kelly 1957. Dr. Shime

 The first test was made in 1958, when CPM was

applied to the construction of a new chemical
plant.
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 PERT was devised in 1958 for the POLARIS missile
program by the Program Evaluation Branch of the
Special Projects office of the U.S. Navy.

 Both use same calculations, almost similar

 Main difference is probabilistic and
deterministic in time estimation

 BY USING PERT/CPM, MANAGERS ARE ABLE TO

OBTAIN:

1. A graphical display of project activities Dr. Shime

2. An estimate of how long the project will take.

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3. An indication of which activities are the most

critical to timely completion of the project.

4. An indication of how long any activity can be

delayed with out lengthening the project.

BASIC DIFFERENCES BETWEEN PERT & CPM

 PERT: It assumes a probability distribution

for the duration of each activity
It is used for one-time projects involving
activities of non-repetitive nature. 6
 Dr. Shime

 CPM: was developed in connection with a

construction and maintenance project in
which duration of each activity was known
with certainty.

It is used for completion of projects

involving activities of repetitive nature.

THE PROJECT NETWORK

Network analysis is the general name given to

certain specific techniques which can be used
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for the planning, management and control of
projects.
Network:- Shows the sequential relationships Dr. Shime
among activities using nodes and arrows.
 Use of nodes and arrows
Arrows an arrow leads from
tail to head directionally. Indicate Activity.
 Activity:- A task or a certain amount of work
required in the project which requires time to
complete
 Nodes A node is represented by a
circle

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 Indicate EVENT, a point in time where one or more
activities start and/or finish.
EXAMPLE 2
A Seminar Development Project: An Illustration
Suppose the state council on mental health and mental
retardation has developed an information system that it expects
will provide the council with state-wide program information and
the many county agencies with local program and client
information.

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The coordinator has identified the activities that must be Dr. Shime
completed prior to the seminars themselves. She has also
identified which activities must be completed prior to any one

he
listImmedi
With ate of diateEstimated
theseActivity eces of basicDescription imme predeces
two pi information, t predecesso sors time
rs (weeks
and the time for each anning for the
estimated activity, the pl project seminars
describedA blePlan seminar content - 2
as in Ta 1 A 1
B - 2
Obtain speakers
C B,C 3
Select seminar sites
D D 3
Prepare and mail
E flyer/invitations D 1
F Accept reservations
Notify press 1
0
activity and has estimated the number of weeks needed to
perform each activity.

is

CONT……
PROJECT NETWORK

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 Dr. Shime

B Critical
A E
2
1
3
path

Star
t D Finish
3
F
C 1
2

CONT….
THE CRITICAL PATH
A series of connected activities are called path.
1
2
 The length of time associated with the path is the
sum of the time estimates associated with each of the
activities on the path.
Dr. Shime
Thepath with the greatest time estimate is called
the critical path.

A-B-D-E = 9 critical path

A-B-D-F = 7
C-D-E =8
C-D-F =6

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EARLY TIME, LATE TIME, AND SLACK

In order to find the critical path of a network,

we first determine the early start time (ES) and
late start time (LS) for each activity.
 ES is the earliest time that an activity can start
after all preceding tasks are completed. Dr. Shime

 L S is the latest that an activity can start without

delaying the entire project.
The difference LS - ES is called slack; it represents
the amount by which an activity can be delayed
without delaying the project .
FORWARD PASS METHOD

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Finding ES and EF times involves “a forward
pass” through the network. The method
associated with finding ES and EF is called
forward pass method.

Ground rule
1. The early start time of an activity with no
predecessors is zero.
2. The early finish time (EF) of each activity is
the sum of its early start time plus the Dr. Shime
time required to complete it.( EF= ES + t)

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 3. The early start time of any other activity is
the latest of its immediate predecessors'
early finish times.
SUMMARIZED EARLY START AND EARLY FINISH TABLE

Activity Duration ES EF
A 2 0 2
B 1 2 3
C 2 0 2
D 3 3 6
E 3 6 9
F 1 6 7

1
6
 0 2 2 3

B1 6 9
A
2
E3

3 6

st Finis
D3 6 7 h
art 0 2

F1
C2

BACKWARD PASS METHOD

The next step in finding the critical path is to

determine the late start (LS) and late finish (LF)
for each activity. Dr. Shime

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 The late start time for any activity is the latest
that activity can commence without delaying
the whole project.
 The late finish time of any activity is the latest Dr. Shime

that activity can finish without delaying the

whole project.
In order to determine LS and LF of each activity
pass through the network backwards, from finish to
start as follows.
Ground rule
1. The late finish time of an activity with no
successors equals the project's finish time.
2. The late start time of any activity is its late
finish time minus the time to complete it. 1
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 Dr. Shime

3. The late finish time of any other activity is the

smallest of its successor's late start times. Thus

CONT……
Activity Duration LF LS
F 1 9 8
E 3 9 6
D 3 6 3
C 2 3 1
B 1 3 2
A 2 2 0

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 A2 B1
E3

start 2 3
0 2 D3 6 9
Finish

C2 36 F1

1 3 8 9
PROJECT SCHEDULING WITH UNCERTAIN ACTIVITY TIMES

The preceding analysis on CPM assumed that activity times

were known and not subject to variation. Although that
assumption is appropriate in some situation, there are many
other in which it is not. Dr. Shime

Consequently, those situations require a probabilistic approach.

PERT uses this approach.
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 Dr. Shime
The probabilistic approach involves three time estimates for each
activity instead of one:
1. Optimistic time: - the length of time require under optimum
condition. It is represented by the letter “a”.
2. Pessimistic time: - the amount of time that will be required
under the worst condition. It is represented by the letter “b”.
3. Most likely time: - the most probable amount of time required.
It is represented by letter ”m”.
These time estimate should be made by managers or other who
have knowledge about the project.

CONT….

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 Dr. Shime

The important issue in network analysis is the average of

expected time for each activity, te and the variance of each
activity time, δ2 .
To find the expected activity time (t), the
beta distribution weights the estimates as
follows
2
2
 a+4m+b
t=
6
Dr. Shime

To compute the dispersion or variance of

activity completion time, we use the
formula
2
Variance =ba 
6

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EXAMPLE 2
SUPPOSE A CIVIL ENGINEERING FIRM HAS TO BID FOR THE CONSTRUCTION OF A DAM. THE ACTIVITIES AND
TIME ESTIMATES ARE GIVEN BELOW. DO THE NEXT REQUIREMENTS.
 Activity a m b
1-2 (a) 1 3 4
1-3 (b) 2 4 6
1-4 (c) 2 3 5
2-5 (d) 3 4 5
3-6 (e) 3 5 7
4- 7 (f) 5 7 9
5-8 (g) 2 3 6
6-8 (h) 4 6 8
7-8 (I) 3 4 6
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CONT…..
 The policy of the firm respect to submitting
bids is to bid the minimum amount that will 2
5Dr. Shime
 provide a 95% of probability of at best
breaking even. The fixed costs for the project
600,000 and the variable costs are 8,0000
every month spent working on the project.

CONT……….

REQUIRED:
a) Draw the project network and identify all the paths.
b) Compute the expected time for each activity and Dr. Shime
the expected duration for each path.
c) Determine the expected project length.
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d) Identify the critical path and critical activities.
e) Compute the variance for each activity and the
variance for path .

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A)

Dr. Shime

SOLUTION 2
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CONT…..
Solution
B)
Times
Path Activity a m b te =a+4m+b Path total
6 Dr. Shime

1-2-5-8 a 1 3 4 2.83
b 2 4 6 4.00 10.00
c 2 3 5 3.17

1-3-6-8 d 3 4 5 4.00
e 3 5 7 5.00 16.00
f 5 7 9 7.00

1-4-7-8 g 2 3 6 3.33
h 4 6 8 6.00 13.5
i 3 4 6 4.17

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CONT…..
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C) The critical path is path 1-3-6-8, since it has the
longest expected

CONT….
Knowledge of the expected path time and their
standard deviation enables a manager to make
probabilistic estimate of the project
complementation time.
Dr. Shime

It is assumed that the path time is of

independent to each other. This requires two
things:
 Activity times are independent of each other,
and each activity is only on one path
 A project is not completed until all of its
activities, not just those on the critical path,
have been completed.

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TIME-COST TRADE-OFFS _CRASHING:

Inmany situations it is possible to reduce

the length of a project by injecting
additional resources. Dr. Shime

Managers often have certain options at

their disposal that allow them to shorten,
or crash, certain activities.

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Among the most obvious options are using
additional personnel or more efficient
equipment and relaxing work specifications.
CONTD…
aproject manager may be able to shorten a
project, there by realizing a savings on
Dr. Shime
indirect project cost by increasing direct
expenses to speed up the project.

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The goal in evaluating time-cost trade-offs is
to identify a plan that will minimize the sum
of the indirect and direct project costs.
In order to make a rational decision about

which activities (If any) to crash and the

extent of crashing desirable, a manager
needs the following information:
Dr. Shime

1. Regular time and crashing time

estimates for each activity
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2. Regular cost and crush cost estimates for
each activity

3. A list of activities that are on the critical

path

Activities on the critical path are potential

candidates for crashing because shortening non
critical activities would not have an impact on total
project duration.

Dr. Shime

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 Cost Shorten
Total cost
Shorten

Cumulative
cost of crashing

Crash
Expected
indirect cost

Shorten
Project
length
Optimum

THE GENERAL PROCEDURE FOR CRASHING IS:

1. Obtain estimates of regular and crash times

and costs for each activity. 3
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 Dr. Shime

2. Determine the length of all paths and path

slack times.

3. Determine which activities are on the

critical path.

4. Crash critical activities, in order of

increasing costs, as long as crashing costs
do not exceed benefits.

Example: Using the information below,

develop an optimum time-cost
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 solution. Assume that indirect project costs
are $1,000 per day. Dr. Shime

Activity Normal Time Crash Time Cost per Day

to crash
a 6 6
__ b 10 8
$500 c 5 4
300 d 4 1
700 e 9 7
600 f 2 1
800

4
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 6
10
a
Start b 2
En
5 f d
9
4 e
c

A. Determine which
d activities are on the critical
path, its

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 Dr. Shime

length, and the length of the other path: Path

Length a-b-f 18 c-d-e-f
20- critical path
B. Rank the critical path activities in order
of lowest crashing cost and determine
the number of days each can be
crashed.
Dr. Shime

Activity Cost/Day to crash available days

c
$ 300 1 e 600

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2 d 700 3 f
800 1

C. Begin shorting activity c one day at the

cost of $ 300. The length of critical path
now be comes 19 days.

D. Activity c cannot be shortened any

more. Dr. Shime

Shorten activity e one day at a cost of

$ 600. The length of path c-d-e-f now

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 becomes 18 days, which is the same as
the length of path a-b-f.

E. Since the paths are now both critical,

further improvement will necessitate
shortening one activity on each.
Path Activity Crash cost par day
a-b-f a no reduction possible
b $500 f 800 c-
d-e-f

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 Dr. Shime

c no further reduction
possible d $ 700
e 600 f
800
f. 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.

Dr. Shime

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