Project management

Project Scheduling: PERT/CPM

Project Scheduling with Known Activity Times

Project Scheduling with Uncertain Activity Times
Considering Time-Cost Trade-Offs
 Introduction to Project Management
Project Scheduling or project management is used to schedule, manage and control
projects which are comprised of various independent activities or tasks.

Example: Building a New Home

When building a home individual subcontractors are hired to:
― Grade and prepare the land
― Build the foundation
― Frame up the home
― Insulate the home
― Wire (Electricity, Cable, Telephone lines) the home
― Drywall
― Paint (inside)
― Put vinyl siding on home
― Install Carpet
― Landscape
― Lay Concrete
 Introduction to Project Management

Home builders must answer several questions

What is the total time required to complete the project if no delays occur?
When do the individual activities (subcontractors) need to start and finish?
Which subcontractors will delay the earliest completion date if falls behind its
schedule (i. e. the critical activities)?
For other activities, how much delay can be tolerated?

Project Management (PERT/CPM) will help us to address all of the above

issues.
 PERT/CPM

PERT
– Program Evaluation and Review Technique
– Developed by U.S. Navy for Polaris missile project
– Developed to handle uncertain activity times
CPM
– Critical Path Method
– Developed by Du Pont & Remington Rand
– Developed for industrial projects for which activity times generally were known
Today’s project management software packages have combined the best features
of both approaches.
 PERT/CPM

PERT and CPM have been used to plan, schedule, and control a wide variety of
projects:
– R&D of new products and processes
– Construction of buildings and highways
– Maintenance of large and complex equipment
– Design and installation of new systems
 PERT/CPM

PERT/CPM is used to plan the scheduling of individual activities that make up a

project.
Projects may have as many as several thousand activities.
A complicating factor in carrying out the activities is that some activities depend
on the completion of other activities before they can be started.
 PERT/CPM

Project managers rely on PERT/CPM to help them answer questions such as:
– What is the total time to complete the project?
– What are the scheduled start and finish dates for each specific activity?
– Which activities are critical and must be completed exactly as scheduled to
keep the project on schedule?
– How long can noncritical activities be delayed before they cause an increase in
the project completion time?
 Project Network

A project network can be constructed to model the precedence of the activities.

The nodes of the network represent the activities.
The arcs of the network reflect the precedence relationships of the activities.
A critical path for the network is a path consisting of activities with zero slack.
Slack is the amount of time that noncritical activities can be delayed without
increasing the project completion time.
Immediate predecessor(s) is (are) activities that must be completed immediately
before the current activity can begin.
 The Critical Path

A path through a network is one of the routes following the arrows (arcs) from the
start node to the finish node.
The length of a path is the sum of the (estimated) durations of the activities on the
path.
The (estimated) project duration or project completion time equals the length of
the longest path through the project network.
This longest path is called the critical path. (If more than one path tie for the
longest, they all are critical paths.)
 Constructing Project Networks
The Mohawk Discount Store is designing a management training program for
individuals at its corporate headquarters. The company wants to design a
program so that trainees can complete it as quickly as possible. Important
precedence relationships must be maintained between assignments or activities
in the program. For example, a trainee cannot serve as an assistant to the store
manager until the employee has obtained experience in the credit department and
at least one sales department. The following activities are the assignments that
must be completed by each program trainee. Construct the project network for
this problem. (Anderson, et. Al, Chapter 10, problem 1)

Activities A – H represent actual tasks.

Activity A B C D E F G H
Immediate
Predecessor --- --- A A, B A,B C D,F E,G
 Mohawk Project Network

A C F

Start D Finish
G H

B E
 Project Network Discussion

Project networks are not unique. A project network is considered valid provided
all precedence relationships are preserved.
Mohawks project network shows that no activities precede activities A and B. For
this reason an arc goes directly from start to these activity nodes.
The immediate predecessors of each node is (are) displayed on the network by
arcs leading from these immediate predecessors to the node.
Also notice that activity H is the only activity that has an arc that goes directly to
the finish node. ONLY ACTIVITIES THAT ARE NOT IMMEDIATE
PREDECESSORS TO ANY OTHER NETWORK ACTIVITIES MAY HAVE A LINK
DIRECTLY TO THE FINISH NODE.
 Another Project Network Example

Bridge City Developers is coordinating the construction of an office complex. As

part of the planning process, the company generated the following activity list.
Draw a project network that can be used to assist in the scheduling of the project
activities.

Activity A B C D E F G H I J

Immediate
Predecessor --- --- --- A,B A, B D E C C F,G,H,I
 Bridge City Developers Project Network

Here is one way of depicting a Bridge City Developers Project Network

A D F

J Finish
Start B E G

C
I
Overall Procedure for solving a Project Network

1. Determine the sequence of activities.

2. Construct the network or precedence diagram.
3. Starting from the left, compute the Early Start (ES) and Early Finish (EF)
time for each activity.
4. Starting from the right, compute the Late Finish (LF) and Late Start (LS) time
for each activity.
5. Find the slack for each activity.
6. Identify the Critical Path.

In the following slides will elaborate on steps 3-6.

 Project Management Notation

t Duration of an activity
ES The earliest time an activity can start
EF The earliest time an activity can finish (EF = ES + t)
LS The latest time an activity can start and not delay the project
LF The latest time an activity can finish and not delay the project
Slack The extra time that could be made available to an activity without
delaying the project (Slack = LS – ES)
Critical Path The sequence(s) of activities with no slack
 Example: Frank’s Fine Floats

Frank’s Fine Floats is in the business of building elaborate parade floats.

Frank and his crew have a new float to build and want to use PERT/CPM to help
them manage the project .
The table on the next slide shows the activities that comprise the project.
Each activity’s estimated completion time (in days) and immediate predecessors
are listed as well.
Frank wants to know the total time to complete the project, which activities
are critical, and the earliest and latest start and finish dates for each activity.
 Example: Frank’s Fine Floats
Immediate Completion
Activity Description Predecessors Time (days)
A Initial Paperwork --- 3
B Build Body A 3
C Build Frame A 2
D Finish Body B 3
E Finish Frame C 7
F Final Paperwork B,C 3
G Mount Body to Frame D,E 6
H Install Skirt on Frame C 2
 Example: Frank’s Fine Floats

Project Network

B D

G
F
A Finish
Start
H
E

C
 Earliest Start and Finish Times
Step 3: Make a forward pass through the network as follows: For each
activity i beginning at the Start node, compute:

– Earliest Start Time = the maximum of the earliest finish times of all
activities immediately preceding activity i. (This is 0 for an activity with no
predecessors.)
– Earliest Finish Time = (Earliest Start Time) + (Time to complete activity i ).
The project completion time is the maximum of the Earliest Finish Times at the
Finish node.
 Example: Frank’s Fine Floats

Earliest Start and Finish Times

B 4 D 7
3 6
3 9 G 13
F 7
A 1 6 18
Start Finish
3 9
3 3 H 6
E 6
2 7
C 4 7 12

2 5
 Latest Start and Finish Times
Step 4: Make a backwards pass through the network as follows:

Latest Finish Time Rule: LF = Smallest LS of the immediate successors.

The immediate successors for a node are all nodes that immediately follow
the current node.
Procedure for obtaining latest times for all activities:
1. For each of the activities that link directly to the finish node, set LF equal
to project completion time.
2. For each activity whose LF value has just been obtained, calculate
LS = LF –  (the time to complete the current activity)
3. For each new activity whose immediate successors now have LS values,
obtain its LF by applying the latest finish time rule. Apply step 2 to
calculate its LS.
4. Repeat step 3 until LF and LS have been obtained for all activities.
 Example: Frank’s Fine Floats

Latest Start and Finish Times

B 4 7 D 7 10

3 6 9 3 9 12 G 13 18
F 7 16
A 1 1 6 13 18
Start Finish
3 9 18
3 3 3 H 6 17
E 6 6

C 4 4 2 7 18
7 12 12

2 5 5
 Determining the Critical Path

Step 5: Calculate the slack time for each activity by:

Float = (Latest Start) - (Earliest Start), or

= (Latest Finish) - (Earliest Finish).
 Example: Frank’s Fine Floats
Activity Slack Time

Activity ES EF LS LF Float
A 0 3 0 3 0 (critical)
B 3 6 6 9 3
C 3 5 3 5 0 (critical)
D 6 9 9 12 3
E 5 12 5 12 0 (critical)
F 6 9 15 18 9
G 12 18 12 18 0 (critical)
H 5 7 16 18 11
 Example: Frank’s Fine Floats

Determining the Critical Path

– A critical path is a path of activities, from the Start node to the Finish node,
with 0 float times.

– Critical Path: A–C–E–G

– The project completion time equals the sum of the duration times of all
activities along the critical path.

– Project Completion Time: 18 days

 Frank’s Fine Floats: Network Results

The table on slide 23 reveals that the following schedule should be followed in
order for the project to completed in 18 days.
– Activity A: Must begin on day 1 and be finished by day 3.
– Activity B: May begin between day 4-6, and must be completed by end of day
9.
– Activity C: Must begin on day 4 and be finished by end of day 5.
And so on……………
The project must finish by end of day 18.
PERT/CPM WITH UNCERTAIN ACTIVITY TIMES

Experience and historical data can be used for projects that have be completed in
the past (such as home and apartment construction) to provide accurate activity
time estimates.
In many cases, however, projects are new or unique and activity times are
uncertain. In these cases estimating activity times could be difficult.
When there is uncertainty associated with activity times, they are often best
described by a range of possible values instead of one specific time estimate.
Uncertain activity times are treated as random variables with associated
probability distributions. These distribution allows us to form probability
statements about the likelihood of meeting a specific completion date.
Three time estimates are collected for each activity to incorporate the uncertainty.
 Uncertain Activity Times
In the three-time estimate approach, the time to complete an activity is assumed
to follow a Beta distribution.
An activity’s mean completion time is:
t = (a + 4m + b)
6
– a = the optimistic completion time estimate
– b = the pessimistic completion time estimate
– m = the most likely completion time estimate
 Uncertain Activity Times

An activity’s completion time variance is:

2
 (b  a ) 
 
 6 

a = the optimistic completion time estimate

b = the pessimistic completion time estimate
m = the most likely completion time estimate
 Uncertain Activity Times

In the three-time estimate approach, the critical path is determined as if the mean
times for the activities were fixed times.
The overall project completion time is assumed to have a normal distribution with
mean equal to the sum of the means along the critical path and variance equal to
the sum of the variances along the critical path.
 Example: ABC Associates
Consider the following project:

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
K G,I 3 5 7
 Example: ABC Associates

What is the earliest completion date?

What is the critical path?
If management has set a completion deadline for 24 hours, what is the probability
that they will meet this deadline?
 ABC Associates Project Network

D J

H
A E

I
C F
Start Finish

K
B G
 Example: ABC Associates
Activity Expected Times and Variances

t = (a + 4m + b)/6 2 = ((b-a)/6)2
Activity Expected Time Variance
A 6 4/9
B 4 4/9
C 3 0
D 5 1/9
E 1 1/36
F 4 1/9
G 2 4/9
H 6 1/9
I 5 1
J 3 1/9
K 5 4/9
 Example: ABC Associates

D J
5 3
H
A E 6
6 1
I
C F 5
Start Finish
3 4
K
B G 5
4 2

Complete a forward and backward pass to fill in the above network.

 Example: ABC Associates

Critical Path (A-C-F-I-K)

D 7 11 J 19 22
5 15 20 3 20 23
H 13 19
A 1 6 E 7 7 6 14 20
6 1 6 1 12 13
I 13 18
Start
C 7 9 F 9 13 5 13 18 Finish
3 6 9 4 9 13
K 18 23
B 0 4 G 9 11 5 18 23
4 5 9 2 16 18
 Example: ABC Associates
Earliest/Latest Times and Slack

Activity ES EF LS LF Float
A 0 6 0 6 0*
B 0 4 5 9 5
C 6 9 6 9 0*
D 6 11 15 20 9
E 6 7 12 13 6
F 9 13 9 13 0*
G 9 11 16 18 7
H 13 19 14 20 1
I 13 18 13 18 0*
J 19 22 20 23 1
K 18 23 18 23 0*
 Example: ABC Associates
Determining the Critical Path

– The critical path is a path of activities, from the Start node to the Finish node,
with 0 slack times.

– Critical Path: A–C– F– I– K

– The project completion time equals the sum of the duration times of all
activities along the critical path.
– Project Completion Time: 23 hours
 Example: ABC Associates

Probability the project will be completed within 24 hrs: P(X < 24)
The mean completion time E(T) = the sum of the duration times of all activities
along the critical path. Thus E(T) = 23.

2 = 2A + 2C + 2F + 2H + 2K
T = Completion time
= 4/9 + 0 + 1/9 + 1 + 4/9 E(T) = Expected completion
Time
= 2

 = 1.414
 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.

darla/smbs/vit 42
 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

darla/smbs/vit 43
Normal Distribution of Project Time

Probability

Z

 = tp x Time

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 PERT Example
Vpath = VA + VC + VF + VI + VK
= 4/9 + 0 + 1/9 + 1 + 4/9
= 2
path = 1.414
z = (24 - 23)/(24-23)/1.414 = .71
From the Standard Normal Distribution table:
P(z < .71) = .5 + .2612 = .7612

darla/smbs/vit 45
 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 activity’s 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.
darla/smbs/vit 46
 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

darla/smbs/vit 47
 Activity crashing

Crash cost
Crashing activity

Slope = crash cost per unit time

Activity cost

Normal Activity
Normal
cost
Normal
time

Crash time Activity time

darla/smbs/vit 48
 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 = Total project cost
optimal project
time Indirect cost
cost

Direct cost

darla/smbs/vit time 49
 Project Crashing example

2 4
12
8
7
1 4
12

3 6
4 5 4
4

darla/smbs/vit 50
 Time Cost data

Activity Normal Normal Crash Crash Allowable slope

time cost Rs time cost Rs crash time
1 12 3000 7 5000 5 400
2 8 2000 5 3500 3 500
3 4 4000 3 7000 1 3000
4 12 50000 9 71000 3 7000
5 4 500 1 1100 3 200
6 4 500 1 1100 3 200
7 4 1500 3 22000 1 7000
75000 110700

darla/smbs/vit 51
 R500 R7000
Project duration = 36
2 4
8 12 R700
7 From…..
1 4
12

R400 3 6
4 5 4
4 R200
R3000
R200

R500 R7000

2 4
8 12 R700
To….. 7
1 4
7
Project
R400 3 6
duration = 31 5 4
4
Additional cost = 4 R200
R3000
R2000 R200
darla/smbs/vit 52
 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

darla/smbs/vit 53
 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 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

darla/smbs/vit 55
 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.)

darla/smbs/vit 56
 Practice Example
A social project manager is faced with a project with the following activities:

Activity Description Duration

Social work team to live in village 5w
Social research team to do survey 12w
Analyse results of survey 5w
Establish mother & child health program 14w
Establish rural credit programme 15w
Carry out immunization of under fives 4w

Draw network diagram and show the critical path. Calculate project
duration.
darla/smbs/vit 57
 Practice problem
Activity Description Duration
1-2 Social work team to live in village 5w
1-3 Social research team to do survey 12w
3-4 Analyse results of survey 5w
2-4 Establish mother & child health program 14w
3-5 Establish rural credit programme 15w
4-5 Carry out immunization of under fives 4w

4
2

1 5

3
darla/smbs/vit 58
 Example: EarthMover, Inc.

EarthMover is a manufacturer of road construction

equipment including pavers, rollers, and graders. The
company is faced with a new
project, introducing a new
line of loaders. Management
is concerned that the project might
take longer than 26 weeks to
complete without crashing some
activities.
 Example: EarthMover, Inc.

Immediate Completion
Activity Description Predecessors Time (wks)
A Study Feasibility --- 6
B Purchase Building A 4
C Hire Project Leader A 3
D Select Advertising Staff B 6
E Purchase Materials B 3
F Hire Manufacturing Staff B,C 10
G Manufacture Prototype E,F 2
H Produce First 50 Units G 6
I Advertise Product D,G 8
 Example: EarthMover, Inc.

PERT Network
D
6 I
B 8
Start
A 4 E
Finish
6 3
C G H
3 F 2 6
10
 Example: EarthMover, Inc.

Earliest/Latest Times

Activity ES EF LS LF Float
A 0 6 0 6 0*
B 6 10 6 10 0*
C 6 9 7 10 1
D 10 16 16 22 6
E 10 13 17 20 7
F 10 20 10 20 0*
G 20 22 20 22 0*
H 22 28 24 30 2
I 22 30 22 30 0*
 Example: EarthMover, Inc.

Critical Activities
D 10 16
6 16 22 I 22 30
B 6 10 8 22 30
Start
A 0 6 4 6 10 E 10 13 Finish
6 0 6 3 17 20
C 6 9 G 20 22 H 22 28
3 7 10 F 10 20 2 20 22 6 24 30
10 10 20
 Example: EarthMover, Inc.

Crashing
The completion time for this project using normal
times is 30 weeks. Which activities should be crashed,
and by how many weeks, in order for the project to be
completed in 26 weeks?
 CRASHING OF PROJECT

The time cost relationship can be visualized

graphically in the form of a time versus cost
curve which is for a limited portion at least, Activity cost
sloping downwards. If the activity takes more
time than the cost increases due to inefficient
use of resources. Also, if the activity has to be Activity time
completed in a less time, then more funds have
to be spent, which implies more costs.
Example-

Activity Normal time Crash time Crash cost/day

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

B (10)
A (6) F (2)

C (5) E (9)
D (4)
a-b-f =18 days
Critical path  c-d-e-f = 20 days
 Arrange activities in increasing order of cost
 
c 300
e 600
d 700
f 800
 
Crash c by one day, critical path = 19 days
Cost= 300
Save= 700
 
Crash e by one day, critical path = 18 days
Cost= 900 (300 +600)
Save= 1100
 
Now both paths have become critical with duration of 18 days, to further crash the project we have to crash 1 day each from both the paths in
that case either we can choose 1 day of either activities from both the path or choosing activity common in both path.
 
Crash f by one day, critical path = 17 days
Cost= 1700
Save= 3000
 
Crash b and e by one day each, critical path = 16 days
Cost= 2800
Save= 2900
 
Project cannot be crashed further.
PERT CPM
A probabilistic model with uncertainty in activity A deterministic model with well known activity
duration. The duration of each activity is normally (single) times based upon the past experience, it
computed from multiple time estimates with a view therefore, does not deal with uncertainty in time.
to take into account time uncertainty. These
estimates are ultimately used to arrive at the
probability of achieving any given scheduled date
of project completion.

It is said to be event oriented as the results of It is activity oriented as the results of calculations
analysis are expressed in terms of events or distinct are considered in terms of activities or operations
points in time indicative of progress. of the project.

The use of dummy activities is required for The use of dummy activities is not necessary.
representing the proper sequencing.

It is used for repetitive jobs It is used for non-repetitive jobs.

It is applied mainly for planning and scheduling It is used for construction and business problems.
research programmes.

PERT analysis does not usually consider costs. CPM deals with costs of project schedules and
their minimization. The concept of crashing is
applied mainly to CPM models.