PROJECT MANAGEMENT PERT/CPM

MANAGEMENT SCIENCE By K. Venkaiah Babu MBA., (Ph D)

Science & Humanities Dept.,

Sri Sarathi
Institute of Engineering & Technology

LECTURE OUT LINE

Introduction to Project Management To understand the project Life Cycle

1. Project Planning 3. Project Scheduling 2. W B S 4. Project Control

To apply tools and technique's

Gantt chart /& Mail stone chart CPM PERT & Probabilistic Activity Times

Project Crashing and Time-Cost Trade-off Describe how CPM / PERT have developed and merged together to provide a useful technique for managing projects.

What is Project?

Definition:

Set of inter-related activities

to plan, implement, and control the management of large, one time projects Used in Construction, Shipbuilding, Weapons, Systems Development, etc. Applies to uncertain technology projects Applies to variable cost resource allocation

Unique, one-time operation activity or effort

Application:

Project Characteristics

Set of Activities Single unit Money & Time related

General purpose
High labor skills required

Project Elements

Objective of Project Management Scope (Limitations / Boundary) Contract requirements Schedules Resources (Physical) Personnel (Psychological) Control Risk and problem analysis

Generic Project Life Cycle

EXAMPLES OF PROJECTS

Examples of Projects

Building construction

Examples of Projects

Building construction New product introduction

New! Improved!
9 Nude Sandalfoot Medium to Tall (B)

No nonsense

Examples of Projects

Building construction New product introduction Training seminar

Examples of Projects

Building construction New product introduction Training seminar Research project

Examples of Projects

Building construction New product introduction Training seminar Research project S/W development Planning concert, football games, or basketball tournaments

Project Scope

Scope statement

A document that provides an understanding, justification, and expected result of a project

Statement of work

written description of objectives of a project

breaks down a project into components, subcomponents, and activities

Work breakdown structure

What is Project Management? (PM)

PM is the application of knowledge, skills, tools and techniques to project activities in order to meet project requirements. Project Management

is an art. is a science. has a set of tools and methods.

Effective Project Managers

Qualities of Project Manager:
Project Manager is the most important member of project team

Lead by example Visionaries Technically competent Decisive/pivotal Good communicators

Good motivators Stand up to exert when necessary Support team members Encourage new ideas

Process of Project Management

Project Planning Project Scheduling Project Control

Project Team
made up of individuals from various areas and departments within a company

Matrix Organization

a team structure with members from functional areas, depending on skills required

Mechanism of Planning

Define project objective (SMART) Define work breakdown structure (WBS)

Identify tasks and subtasks -- deliverables Lowest element stand alone work package

Identify tasks relationship Identify possible risks Estimate work packages (people, time, etc.) Create initial schedule Iterate plan (Procedure) Document

Benefits of the Planning

Framework for communication

Clients and coworkers Personnel, equipment and facilities, budget

Allocate resources

Benchmark to measure progress

OBJECTIVES OF PROJECT MANAGEMENT

Objectives of Project Management

To complete project within elapsed time To ensure optimum utilization of available resources without delay To complete a project with a minimum of capital investment.

PROJECT MANAGEMENT PROCESS

Project Management Process

Planning

Objectives Resources Work breakdown sched. Organization

Project Management Process

Planning

Scheduling

Objectives Resources Work breakdown sched. Organization

Project activities Start & end times Network

Project Management Process

Planning

Scheduling

Objectives Resources Work breakdown sched. Organization

Project activities Start & end times Network

Controlling

Monitor, compare, revise, action

PROJECT PLANNING

Project Planning

Establishing objectives Defining project Creating work breakdown structure (WBS) Determining resources Forming organization

Work Breakdown Structure (WBS)

First Step in Project Management Begins with a Work Breakdown

Lists the WHAT of a Project Begins with Finished Project Consists of Tree Chart, with Each Branch Listing the WHATs at that Level

Then List Each Task that Must Be Completed to Accomplish the WHAT

Start at top, progressively break work down into work packages Roll up the packages for bottom up estimating Packages give clear work assignments

Splits work into manageable, logical packages Make sure packages can be tested for completeness

Ex: WBS Buy a House

` BUY A HOUSE LOCATION FINANCING FIND HOUSE - Type of House - Find Real Estate Agent - Look for House - Make Offer, P&S Agreem't

- Criteria

- Determine affordability - Determine mortgage provider - Lockup mortgage commitment

- Visit Locations

10

- Closing

Top Down Decomposition, Elemental Tasks

Project Organization

Project Organization

Often temporary structure Uses specialists from entire company Headed by project manager Coordinates activities Monitors schedule & costs Eng. Eng. Permanent Mkt. Acct. structure called matrix organization
Mgr.

PROJECT SCHEDULING

Project Scheduling

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

Project Scheduling Techniques

Gantt chart Critical Path Method (CPM) Program Evaluation & Review Technique (PERT)

Project Scheduling Techniques

More popular Techniques of Network are: CPM Critical Path Method PERT Programme Evaluation and Review Method LCS Least Cost Method RAMS Resource Allocation and Multi-project Scheduling MAP Manpower Allocation Procedure RPSM Resource Planning and Scheduling Method GERT Graphical Evaluation and Review Technique

PROJECT CONTROL

Project Control
Periodical check list concerned with: Time management Cost management Quality management Performance management

Earned Value Analysis

a standard procedure for numerically measuring a projects progress, forecasting its completion date and cost and measuring schedule and budget variation

Communication Enterprise project management

GANTT CHART

Gantt Chart
Gantt Chart was developed by

Henry Laurence Gantt (1861-1919) was a mechanical engineer and management consultant who is most famous for developing the Gantt chart in the 1910s. These Gantt charts were employed on major infrastructure projects including the Hoover Dam and Interstate highway system. He refined production control and cost control techniques.

Example of Gantt Chart

0
Activity Design house and obtain financing

Month 4

10

Lay foundation
Order and receive materials Build house Select paint Select carpet Finish work

3 Month

Gantt Chart Activities in Buy a House

` BUY A HOUSE LOCATION FINANCING FIND HOUSE - Type of House - Find Real Estate Agent - Look for House - Make Offer, P&S Agreem't

- Criteria

- Determine affordability - Determine mortgage provider - Lockup mortgage commitment

- Visit Locations

TASK 1-criteria 2-visit loc. 3-affordability 4-mortgage co 5-mortg lock 6-type of hse 7-real est agent 8-look for hse 9-offer, P&S 10-closing

PREDECESSOR 3 1 3 4 1 2, 6 7 5, 8 9

10

- Closing

Gantt Chart Buy a House

TASK 1-criteria 2-visit loc. 3-affordability 4-mortgage co 5-mortg lock 6-type of hse 7-real est agent 8-look for hse 9-offer, P&S 10-closing PREDECESSOR 3 1 3 4 1 2, 6 7 5, 8 9

Simple Gantt Chart View

Limitations of Gantt Chart

CPM & PERT

CPM & PERT

Network techniques Developed in 1950s

CPM by DuPont for chemical plants In 1957 suitable for Civil & Mechanical Projects PERT by U.S. Navy for Polaris missile in 1958 consulting with M/s Booz, Allen & Hamilton

Consider precedence relationships & interdependencies Each uses a different estimate of activity times

CPM & PERT Steps

Identify activities Determine sequence Create network Determine activity times Find critical path

Earliest & Latest start times Earliest & Latest finish times Slack or Float

Questions Answered by PERT & CPM

Completion date? On schedule? Within budget? Probability of completing by ...? (Duration) Critical activities? Enough resources available? How can the project be finished early at the least cost?

Constructing Networks

Graphical Representation of Events and Activities

Flow Charting - Uses Nodes and Arrows Arrows

An arrow leads from tail to head directionally A node is represented by a circle or any mathematical symbol
Node Arrow

Nodes

Activity On Node (AON)

Task is Represented by Node as the Completion of an Activity Arrows Represent the Sequential Linkages Between Activities For Example, Node 1 is Begin, Node 2 is Complete Task 1, Node 3 is Complete Task 2
1 2 3

Activity On Arrow (AOA)

Task is Represented by an Arrow Bounded on Either End by a Node (Event) Each Event is Identified by a Number The Activity is Designated by the Leading Event Number and the Following Event Number - i.e. Activity 1 - 2
1 2

Designating Task Relationships

Sequential vs. Concurrent Activities

1 2 3

Sequential Task Relationship

2 1 3 4

Concurrent Task Relationships

Designating DUMMY Activities

Represented by Dashed Arrows Show Sequential Relationships Among Tasks, but Take No time or Resources
2

Dummy Activity 2-3 indicates that both Activities 1-2 and 2-3 must be Completed before beginning Activity 3-4

4 3

Network Terms
Project: Obtain a college degree - B. Tech.
Register

1
Event (Node)

Attend class, study etc.

4 Years Activity (Arrow)

Receive degree

2
Event (Node)

Activity Relationships

Activity Relationships

Activity Relationships

2
A

1
B A & B can occur concurrently

Activity Relationships
A must be done before C & D can begin A

2
C

1
B

Activity Relationships

2
A

D
C

1
B

4
E B & C must be done before E can begin

Activity Relationships
A must be done before C & D can begin A

2
C

1
B A & B can occur concurrently

4
E B & C must be done before E can begin

Dummy Activities

Activities are defined often by beginning & ending events

Example: Activity 2-3

Every activity must have unique pair of beginning & ending events

It is an imaginary activity Consume no Time or Resources

Dummy activities maintain precedence or logical sequence of activities.

Dummy Activities Example

Dummy Activities Example

Incorrect
2-3 1-2 3-4

2
2-3

Dummy Activities Example

Incorrect
1-2

2-3
3-4

2
2-3

4
Different activities; same designation

Dummy Activities Example

Incorrect
1-2 2-3 3-4

1
Correct
1-2

2
2-3 2-4

4
4-5

2
2-3

3-4: Dummy activity

Some more Example of Dummy Activities

Ex I
A Printing invitation Cards B Collection of Address C Dispatching of Cards
A

2
2-3: Dummy activity

1
B

Some more Example of Dummy Activities

Ex II
If A & E are concurrent B is after A & E and F is after E A
B

Labeling the Events by Dr. Fulkersons Rules:

Numbering the events by DR. Fulkersons rules: There is a single initial event in the net work diagram. This initial event will have arrows coming out of it and none entering it. Number this initial event as 1. Neglect all the arrows emerging out of the initial event numbered 1. Doing so, it will apparently provide one or more new initial events. Number these apparently produced new initial events as 2, 3, 4 etc. Again neglect all emerging arrows from these numbered events. This will create few more initial evens. Follow rule 3. Continue this operation until the last event, which has no emerging arrows, is numbered.

Numbering the Events

D B A

o
A C

q
G

s
I

Network Example
Youre a project manager for Bechtel. Construct the network.
Activity A B C D E F G H Predecessors -A A B B C D E, F

Network Example - AON

D B

Network Example - AOA

Activity A B C D E F G H Predecessors -A A B B C D E, F

Rough arrow diagram

3 D E 5 F 4 6 G 8 7 9

B 1

2 C

Network Example - AOA

3
D E 5

B 1 A 2

6 H

C
4

Final Arrow Diagram

C P M Technique - foretaste

Activity oriented technique Single Time estimation Designed for repetitive projects Not Statistically analyzed Demarcates critical activities Dummy activities are not necessary Employs words like arrow diagram, nodes and floats etc Suitable for industrial settings, plant maintenance, civil construction projects etc.

Critical Path Analysis Example

Event ID Pred. None Description Prepare Site Pour fdn. & frame Buy shrubs etc. Roof Do interior work Landscape Move In Time (Wks)

A B C D E F G

A B B D C F, E

1 6 3 2 3 4 1

Critical Path Analysis Example

Event ID Acty.. 1-2 Description Prepare Site Pour fdn. & frame Buy shrubs etc. Roof Do interior work Landscape Move In Time (Wks)

A B C D E F G

2-3 3-4 3-5 5-6 4-6 6-7

1 6 3 2 3 4 1

Event ID

Critical Path Analysis Example

Acty.. 1-2

A B C D E F G

B.6 G.1 A.1 2-3 6 7 3 1 2 E.3 3-4 D.2 5 3-5 5-6 4-6 Different paths from network: 6-7 1-2-3-4-6-7 - 15 (Critical Path)

C.3

F.4

1-2-3-5-6-7 -

13

Earliest Start Time & Finish Steps

Begin at starting event & work forward EST = 0 for starting activities

EST is earliest start

EFT = EST + Activity time

EFT is earliest finish

EST = Maximum EFT of all predecessors for non-starting activities

Latest Start Time & Finish Steps

Begin at ending event & work backward LFT = Maximum EFT for ending activities

LFT is latest finish; EFT is earliest finish

LST = LFT - Activity time

LST is latest start

LFT = Minimum LST of all successors for non-ending activities.

Compute Earliest, Latest & Slack durations.

Activity A 1-2 B 2-3 C 3-4 D 3-5 E 5-6 F 4-6 G 6-7
Earliest Act. EF Dura. ES 0 1 1 1 7 6 3 7 10 2 7 9 3 9 11 4 14 10 1 14 15 Latest

LS 0 1 7 9 11 10 12

LF 1 7 10 11 14 14 15

Slack 0 0 0 2 3 0 0

PERT & Time Estimates

PERT Technique - foretaste

Event oriented technique Three time estimation Use of dummy activities are required representing the proper sequence A probabilistic model with uncertainty in activity duration Analyzed statistically Employs words Network diagram, events and Slack etc

Activity Time Estimates

CPM - One Time Estimate per Activity PERT - Three Time Estimates per Activity

to = Optimistic Time Estimate tm = Most Likely Time Estimate tp = Pessimistic Time Estimate

Can Calculate Activity Mean Time Estimate and Variance

PERT Time Estimates

Activity Mean Time Estimate = te Activity Variance Estimate = Sigmae te = (to + 4tm + tp)/6
Sigmae = (tp - to )/6
Can Use Central Limit Theorem to Estimate Project Time

Computing the Float value

Ft E1 1 L1 Fid

Ff E2
t 2 L2

Example Network Flow Diagram

D
2 5

A
1

C
4

G
H

I
7

B
3

E F

Example Activity Characteristics

Activity

a
10 9 1 1 1 5 8 1 6 6

m
12 11 3 8 7 10 13 7 10 10

b
14 13 11 9 13 15 18 19 20 14

te
12 11 4 7 7 10 13 8 11 10

Sigmae
2/3 2/3 5/3 4/3 6/3 5/3 5/3 9/3 7/3 4/3

A B C D E F G H I J

1-2 1-3 2-4 2-5 3-4 3-6 4-5 4-6 5-6 6-7

Example Network Flow Diagram

te =12
1 2

te =7 te =4 te =7

te =13
4

te =11
te =8
6 7

te =11

te =10

te =10

Earliest Start Time & Finish Steps

Begin at starting event & work forward EST = 0 for starting activities

EST is earliest start EFT is earliest finish

EFT = EST + Activity time

EST = Maximum EFT of all predecessors for non-starting activities

Example Network Flow Diagram

ES=12

te =12
ES=0
1

te =7
ES=18
4

ES=31
5

te =4
ES=11

te =13 te =8

te =11
ES=42
6

ES=52
7

te =11

te =7 te =10

te =10

Latest Start Time & Finish Steps

Begin at ending event & work backward LFT = Maximum EFT for ending activities

LFT is latest finish; EFT is earliest finish LST is latest start

LST = LFT - Activity time

LFT = Minimum LST of all successors for non-ending activities.

Example Activity Characteristics

to

tm
12 11 3 8 7 10 13 7 10 10

tp
14 13 11 9 13 15 18 19 20 14

te Sigmae EST
12 11 4 7 7 10 13 8 11 10 2/3 2/3 5/3 4/3 6/3 5/3 5/3 9/3 7/3 4/3 0 0 12 12 11 11 18 18 31 42

LST
2 0 14 24 11 32 18 34 31 42

EFT
12 11 16 19 18 21 31 26 42 52

LFT
14 11 18 31 18 42 31 42 42 52

1-2 1-3 2-4 2-5 3-4 3-6 4-5 4-6 5-6 6-7

10 9 1 1 1 5 8 1 6 6

Example Network Flow Diagram With Critical Path

ES|LS|EF|LF t2-5=7 12|24|19|31 2 5 t5-6=11 t4-5=13 t2-4=4 31|31|42|42 18|18|31|31 t =8 4-6 12|14|16|18 18|34 |26|42 4 t3-4=7 11|11|18|18
6 3

t1-2=12 0|2|12|14
1

t1-3=11 0|0|11|11

t3-6=10 11|32|21|42

t6-7=10 42|42|52|52

Computing the Float value

Ft E1 1 L1 Fid Ff E2 t 2 L2

Distinction between CPM & PERT

CPM

PERT

Activity oriented technique. It has one time estimate. Designed for repetitive projects. Not statistically analyzed. It demarcates critical activities. It employs words like arrow diagram, node, floats etc. Dummy activities are not necessary. Suitable for industrial settings, plant maintenance, civil construction projects. A deterministic model with well known activities times based on past experience. Cost is not directly proportional to time and const is the controlling factor.

Event oriented technique. It has three time estimation. Suitable for non-repetitive projects. Analyzed statistically. It does not demarcated critical and non-critical activities. It employs words like network diagram, events Slack etc. Use of dummy activities are required representing the proper sequence. Suitable for defense projects and R & D etc. Where activities cannot be predicted. A probabilistic model with uncertainty in activities duration Cost varies directly with time and time is the controlling factor.

Benefits & Limitations of PERT/CPM

Benefits
of PERT/CPM

Useful at many stages of project management Mathematically simple Use graphical displays Give critical path & slack time Provide project documentation Useful in monitoring costs and time

Limitations of PERT/CPM

Clearly defined, independent, & stable activities Specified precedence relationships Activity times (PERT) follow beta distribution Subjective time estimates Over emphasis on critical path

Conclusion

Explained what a project is Summarized the CPM / PERT project activities and their time estimates Drew project networks Compared PERT & CPM Determined slack & critical path Computed project probabilities

Project Management
PERT/CPM
THE END