PROJECT MANAGEMENT - CPM/PERT

Keshao Kinake PG-932

WHAT EXACTLY IS A PROJECT?

PM 1 Im in charge of the construction of a retail development in the centre of a large town. There are 26 retail units and a super market in the complex. My main responsibilities are to co-ordinate the work of the various contractors to ensure that the project is completed to specification, within budget and on time. PM 2 I am directing a team of research scientists. We are running trials on a new analgesic drug on behalf of a pharmaceutical company. It is my responsibility to design the experiments and make sure that proper scientific and legal procedures are followed, so that our results can be subjected to independent statistical analysis. PM 3- The international aid agency which employs me is sending me to New Delhi to organize the introduction of multimedia resources at a teachers training college. My role is quite complex. I have to make sure that appropriate resources are purchased- and in some cases developed within the college. I also have to encourage the acceptance of these 2 resources by lecturers and students within the college.
darla/smbs/vit

PM 1 Im in charge of the construction of a retail development in the centre of a large town. There are 26 retail units and a super market in the complex. My main responsibilities are to co-ordinate the work of the various contractors to ensure that the project is completed to specification, within budget and on time. PM 2 I am directing a team of research scientists. We are running trials on a new analgesic drug on behalf of a pharmaceutical company. It is my responsibility to design the experiments and make sure that proper scientific and legal procedures are followed, so that our results can be subjected to independent statistical analysis. PM 3- The international aid agency which employs me is sending me to New Delhi to organize the introduction of multimedia resources at a teachers training college. My role is quite complex. I have to make sure that appropriate resources are purchased- and in some cases developed within the college. I also have to encourage the acceptance of these resources by lecturers and students within the college. 3
darla/smbs/vit

PROJECT
A project is a series of activities directed to accomplishment of a desired objective.

Plan your work first..then work your plan

WHAT IS PROJECT MANAGEMENT

The

application of a collection of tools and techniques to direct the use of diverse resources towards the accomplishment of a unique, complex, one time task within time, cost and quality constraints origins lie in World War II, when the military authorities used the techniques of operational research to plan the optimum use of resources

Its

One

of these techniques was the use of networks to represent a system of related activities
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PROJECT MANAGEMENT PROCESS

Overall planning and co-ordination of project Steps in Project Management

Project Definition and Scope Technical Design Financing Contracting Implementation Performance Monitoring

WORK BREAKDOWN STRUCTURE

A

method of breaking down a project into individual elements ( components, subcomponents, activities and tasks) in a hierarchical structure which can be scheduled and financed It defines tasks that can be completed independently of other tasks, facilitating resource allocation, assignment of responsibilities and measurement and control of the project It is foundation of project planning It is developed before identification of dependencies and estimation of activity durations It can be used to identity the tasks in the CPM and PERT
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Work Breakdown Structure for Computer Order Processing System Project

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PROJECT SCHEDULING AND CONTROL TECHNIQUES

Gantt Chart Critical Path Method (CPM) Program Evaluation and Review Technique (PERT)

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Gantt Chart
Graph or bar chart with a bar for each project activity that shows passage of time

Provides visual display of project schedule

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HISTORY OF CPM/PERT
Critical

Path Method (CPM)

El Du Pont de Nemours & Co. (1957) for construction of new chemical plant and maintenance shut-down Deterministic task times Repetitive nature of jobs

Project

Evaluation and Review Technique (PERT)

U S Navy (1958) for the POLARIS missile program Multiple task time estimates (probabilistic nature) Activity-on-arrow network construction Non-repetitive jobs (R & D work)
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VIDEO

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PROJECT NETWORK

Network analysis is the general name given to certain specific techniques which can be used for the planning, management and control of projects Use of nodes and arrows Arrows An arrow leads from tail to head directionally Indicate ACTIVITY, a time consuming effort that is required to perform a part of the work Nodes A node is represented by a circle - Indicate EVENT, a point in time where one or more activities start and/or finish Dummy Activity Indicates only precedence relationships Does not require any time of effort

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CONT

Activity-on-node (AON)
nodes represent activities, and arrows show precedence relationships

Activity-on-arrow (AOA)
arrows represent activities and nodes are events for points in time
PRECEEDING ACTIVITY SUCCESSOR

EVENT

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AOA PROJECT NETWORK FOR HOUSE

Lay foundation

3
2 0

Dummy Build house 3 Finish work 1

3
Design house and obtain financing

1
Order and receive materials

4
Select paint

6
1
Select carpet

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AON Project Network for House

Lay foundations Build house

2 2 Start 1 3 3 1
Order and receive materials

4 3

Finish work

7 1 5 1
Select paint

Design house and obtain financing

6 1
Select carpet

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SITUATIONS IN NETWORK DIAGRAM

A

B
A must finish before either B or C can start C

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

C
D

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

B
Dummy

A must finish before B can start both A and C must finish before D can start 17

CONCURRENT ACTIVITIES
3
Lay foundation
Dummy 2 0

Lay foundation

3 2

1
Order material

Order material

(a) Incorrect precedence relationship

(b) Correct precedence relationship

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NETWORK EXAMPLE
Illustration of network analysis of a minor redesign of a product and its associated packaging. The key question is: How long will it take to complete this project ?

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For clarity, this list is kept to a minimum by specifying only immediate relationships, that is relationships involving activities that "occur near to each other in time".

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QUESTIONS TO PREPARE ACTIVITY NETWORK

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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CPM CALCULATION

Path

A connected sequence of activities leading from the starting event to the ending event

Critical Path

The longest path (time); determines the project duration

Critical Activities

All of the activities that make up the critical path

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FORWARD PASS

Earliest

Start Time (ES) earliest time an activity can start ES = maximum EF of immediate predecessors finish time (EF) earliest time an activity can finish earliest start time plus activity time
EF= ES + t

Earliest

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BACKWARD PASS

Latest Start Time (LS)

Latest time an activity can start without delaying critical path time LS= LF t

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Latest finish time (LF)

latest time an activity can be completed without delaying critical path time LS = minimum LS of immediate predecessors

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CPM ANALYSIS

Draw the CPM network Analyze the paths through the network Determine the float for each activity Compute the activitys float float = LS - ES = LF - EF Float is the maximum amount of time that this activity can be delay in its completion before it becomes a critical activity, i.e., delays completion of the project Find the critical path, is that the sequence of activities and events where there is no slack i.e.. Zero slack Longest path through a network Find the project duration is minimum project completion time
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CPM EXAMPLE:

CPM Network f, 15 a, 6 g, 17 i, 6 h, 9

b, 8
d, 13 c, 5 e, 9
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j, 12

CPM EXAMPLE
ES

and EF Times

f, 15 g, 17 i, 6

a, 6 0 6

h, 9

b, 8
0 8 c, 5 0 5 e, 9
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d, 13

j, 12

CPM EXAMPLE
ES

and EF Times
a, 6 0 6

f, 15 6 21 g, 17 6 23 i, 6

h, 9

b, 8
0 8 c, 5 0 5 d, 13 8 21 e, 9 5 14
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j, 12

CPM EXAMPLE
ES

and EF Times
a, 6 0 6

f, 15 6 21 g, 17 6 23 i, 6 23 29

h, 9 21 30

b, 8
0 8 c, 5 0 5 d, 13 8 21 e, 9 5 14 j, 12 21 33 Projects EF = 33
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CPM EXAMPLE
LS

and LF Times
a, 6 0 6

f, 15 6 21 g, 17 6 23 i, 6 23 29 27 33

h, 9 21 30 24 33

b, 8 0 8
c, 5 0 5

d, 13 8 21 e, 9 5 14

j, 12 21 33 21 33
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CPM EXAMPLE
LS

and LF Times

a, 6 0 6 4 10 b, 8 0 8 0 8 c, 5 0 5 7 12

f, 15 6 21 18 24 g, 17 6 23 10 27 d, 13 8 21 8 21 e, 9 5 14 12 21

i, 6 23 29 27 33

h, 9 21 30 24 33

j, 12 21 33 21 33
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CPM EXAMPLE
Float

a, 6 3 0 6 3 9 b, 8 0 0 8 0 8 c, 5 7 0 5 7 12

f, 15 3 6 21 9 24 g, 17 4 6 23 10 27 d, 13 0 8 21 8 21 e, 9 7 5 14 12 21

i, 6 23 29 4 27 33

h, 9 3 21 30 24 33

j, 12 0 21 33 21 33
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CPM EXAMPLE
Critical

Path

f, 15 g, 17 i, 6

a, 6

h, 9

b, 8
d, 13 c, 5 e, 9
33

j, 12

VIDEO

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PERT
PERT is based on the assumption that an activitys duration follows a probability distribution instead of being a single value Three time estimates are required to compute the parameters of an activitys duration distribution: pessimistic time (tp ) - the time the activity would take if things did not go well most likely time (tm ) - the consensus best estimate of the activitys duration optimistic time (to ) - the time the activity would take if things did go well

Mean (expected time):

te =

tp + 4 tm + t o
6
2

Variance: Vt =2 =

tp - to
6

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PERT ANALYSIS
Draw the network. Analyze the paths through the network and find the critical path. The length of the critical path is the mean of the project duration probability distribution which is assumed to be normal The standard deviation of the project duration probability distribution is computed by adding the variances of the critical activities (all of the activities that make up the critical path) and taking the square root of that sum Probability computations can now be made using the normal distribution table.

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PROBABILITY COMPUTATION
Determine probability that project is completed within specified time x- Z=

where = tp = project mean time

= project standard mean time x = (proposed ) specified time

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PERT EXAMPLE
Immed. Optimistic Most Likely Pessimistic Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.) A -4 6 8 B -1 4.5 5 C A 3 3 3 D A 4 5 6 E A 0.5 1 1.5 F B,C 3 4 5 G B,C 1 1.5 5 H E,F 5 6 7 I E,F 2 5 8 J D,H 2.5 2.75 4.5 38 K G,I 3 5 7

PERT EXAMPLE PERT Network

D

C B F G
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PERT EXAMPLE

Activity
A B C D E F G H I J K

Expected Time
6 4 3 5 1 4 2 6 5 3 5

Variance
4/9 4/9 0 1/9 1/36 1/9 4/9 1/9 1 1/9 4/9
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PERT EXAMPLE
Activity
A B C D E F G H I J K

ES
0 0 6 6 6 9 9

EF
6 4 11 7 13 11 13 13 19 23

LS
0 5 9 15 12 9 16 19 18 22 18

LF
6 9 6 20 13 13 18 14 13 20 23

Slack
0 *critical 5 9 0* 9 6 0* 7 20 1 18 0* 23 1 0*
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PROJECT COST

COST CONSIDERATION IN PROJECT

Project managers may have the option or requirement to crash the project, or accelerate the completion of the project. This is accomplished by reducing the length of the critical path(s). The length of the critical path is reduced by reducing the duration of the activities on the critical path. If each activity requires the expenditure of an amount of money to reduce its duration by one unit of time, then the project manager selects the least cost critical activity, reduces it by one time unit, and traces that change through the remainder of the network. As a result of a reduction in an activitys time, a new critical path may be created. When there is more than one critical path, each of the critical paths must be reduced. If the length of the project needs to be reduced further, the process is repeated.
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PROJECT CRASHING
Crashing reducing project time by expending additional resources Crash time an amount of time an activity is reduced Crash cost cost of reducing activity time Goal reduce project duration at minimum cost

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ACTIVITY CRASHING

Crash cost

Crashing activity Slope = crash cost per unit time Normal Activity

Normal cost

Normal time
Crash time Activity time 45

TIME-COST RELATIONSHIP
Crashing costs increase as project duration decreases Indirect costs increase as project duration increases Reduce project length as long as crashing costs are less than indirect costs

Time-Cost Tradeoff
Min total cost = optimal project time Total project cost Indirect cost

Direct cost
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time

PROJECT CRASHING EXAMPLE

2 8 1
12

4
12

7 4 3 4

5 4

6 4

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TIME COST DATA

Activity Normal time 1 12 2 8 3 4 4 12 5 4 6 4 7 4

Normal cost Rs 3000 2000 4000 50000 500 500 1500 75000

Crash time 7 5 3 9 1 1 3

Crash cost Rs 5000 3500 7000 71000 1100 1100 22000 110700

Allowable crash time 5 3 1 3 3 3 1

slope
400 500 3000 7000 200 200 7000
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R500
2 8 1
12

R7000 4
12

Project duration = 36
R700 7 4 6 4 R200

From..

R400

3 4 R3000

5 4 R200

R500 2 8 1
7

R7000 4
12

R700 7 4

To.. Project

R400

duration = 31
Additional cost = R2000

3 4 R3000

5 4 R200

6 4 R200
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BENEFITS OF CPM/PERT
Useful at many stages of project management Mathematically simple Give critical path and slack time Provide project documentation Useful in monitoring costs

CPM/PERT can answer the following important questions:

How long will the entire project take to be completed? What are the risks involved? Which are the critical activities or tasks in the project which could delay the entire project if they were not completed on time? Is the project on schedule, behind schedule or ahead of schedule? If the project has to be finished earlier than planned, what is the best 50 way to do this at the least cost?

LIMITATIONS TO CPM/PERT

Clearly defined, independent and stable activities Specified precedence relationships Over emphasis on critical paths Deterministic CPM model Activity time estimates are subjective and depend on judgment PERT assumes a beta distribution for these time estimates, but the actual distribution may be different PERT consistently underestimates the expected project completion time due to alternate paths becoming critical

To overcome the limitation, Monte Carlo simulations can be performed on the network to eliminate the optimistic bias
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COMPUTER SOFTWARE FOR PROJECT MANAGEMENT

Microsoft

Project (Microsoft Corp.) MacProject (Claris Corp.) PowerProject (ASTA Development Inc.) Primavera Project Planner (Primavera) Project Scheduler (Scitor Corp.) Project Workbench (ABT Corp.)

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LEARNING FROM MR. TANMAY (L & T)

Critical Chain Path Method Handles 30 projects at a time Use of software know as Concerto Important:

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Delivery Date Customer Oriented Critical Path

CCPM lacks crashing

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