QUANTITATIVE ANALYSIS IN MANAGEMENT

DECISIONS
Lecture 8
Project Scheduling PERT and CPM
Course leader : Dr. B Dayal
Mobile No.: 00251941962113
Email ID: [email protected]
 Chapter: 8
Project Scheduling PERT and CPM
 Canonical forms
 Solved example
 Duality: Introduction
 Formulation of dual problems
 Solved examples
 Economic interpretation of duality
 INTRODUCTION
THE GROWING COMPLEXITIES OF TODAY’S PROJECTS
HAVE DEMANDED MORE SYSTEMATIC AND MORE
EFFECTIVE PLANNING TECHNIQUES WITH THE
OBJECTIVE OF OPTIMISING THE EFFICIENCY OF
EXECUTING THE PROJECT.
 EFFICIENCY HERE IMPLIES EFFECTING THE UTMOST
REDUCTION IN THE TIME REQUIRED TO COMPLETE THE
PROJECT WHILE ACCOUNTING FOR THE ECONOMIC
FEASIBILITY OF USING AVAILABLE RESOURCES.
THERE ARE TWO ANALYTICAL TECHNIQUES FOR
PLANNING, SCHEDULING AND CONTROLLING THE
PROJECT:
 PROJECT EVALUATION AND REVIEW TECHNIQUE
(PERT).
 CRITICAL PATH METHOD (CPM).
 INTRODUCTION
DEFINITION OF PERT
PERT IS AN EVENT ORIENTED NETWORK
GIVING EMPHASIS ON IMPORTANT
STAGES OF COMPLETION OF TASK.
DEFINITION OF CPM
CPM IS A DETERMINISTIC NETWORK TO
ESTABLISH A TRADE-OFF FOR OPTIMUM
BALANCING BETWEEN SCHEDULED TIME
AND COST OF THE PROJECT.
PERT CPM
PLANNING SCHEDULING & CONTROLLING
 INTRODUCTION
PERT
 TOTAL PROJECT DURATION IS REGARDED AS A
RANDOM VARIABLE AND THEREFORE ASSOCIATED
PROBABILITIES ARE CALCULATED SO AS TO
CHARACTERISE IT.
 IT HAD TO COPE WITH ASSOCIATED UNCERTAINTIES
 IT IS AN EVENT ORIENTED NETWORK.
 NORMALLY USED FOR PROJECTS INVOLVING NON-
REPITITIVE ACTIVITIES. IN WHICH TIME ESTIMATES ARE
CERTAIN.
 HELPS IN PIPELINING CRITICAL AREAS IN A PROJECT.
CPM
 BASICALLY DETERMINISTIC NETWORK.
 SUITABLE FOR ESTABLISHING A TRADE-OFF FOR
OPTIMUM BALANCING BETWEEN SCHEDULE TIME AND
COST OF THE PROJECT.
 NORMALLY USED FOR PROJECTS INVOLVING
ACTIVITIES OF REPITITIVE NATURE.
 PROJECT SCHEDULING BY
PERT – CPM (CONTD)
PROJECT CONTROL
REFERS TO RE-EVALUATING ACTUAL
PROGRESS AGAINST THE PLAN. IF
SIGNIFICANT DIFFERENCES ARE
OBSERVED THEN RE-SCHEDULING MUST
BE DONE TO UPDATE AND REVISE THE
UNCOMPLETED PART OF THE PROJECT.
 NETWORK COMPONENTS
EVENTS
 AN EVENT REPRESENTS A POINT IN TIME THAT
SIGNIFIES THE COMPLETION OF SOME ACTIVITY AND
THE BEGINNING OF NEW ONE.
 COMMONLY REPRESENTED BY CIRCLES (NODES) IN THE
NETWORK DIAGRAM.
 THEY DO NOT CONSUME TIME AND RESOURCES.
 IDENTIFIED BY NUMBERS.
ACTIVITIES
REPRESENT PROJECT OPERATIONS OR TASKS TO BE
CONDUCTED.
 REPRESENTED BY AN ARROW.
 THEY CONSUME TIME AND RESOURCES.
 IDENTIFIED BY THE NUMBERS OF THEIR STARTING
EVENT AND ENDING EVENT.
 NORMALLY ASSIGNED ALPHABETS.
 NETWORK COMPONENTS

ACTIVITY
1 2
A
STARTING EVENT COMPLETION EVENT

3 4

2
 NETWORK CONSTRUCTION
Rules for constructing network diagram

 Each activity is represented by one and only one arrow in

the network. This means that no single activity can be
represented twice in a network.
 No two activities can be identified by the same head and
tail event. This means that there should not be loops in the
network.
 Time follows from left to right. All the arrows point in one
direction. Arrows pointing in opposite direction must be
avoided.
 Arrows should not cross each other.
 Every node has atleast one activity preceding to it and
atleast one activity following it. Except for the nodes at the
very beginning and at the very end of the network.
 NETWORK CONSTRUCTION
Rules for constructing network diagram

 To ensure the correct precedence relationship in the

network diagram, the following questions must be
answered as every activity is added to the network:
 What activities must be completed immediately before
this activity can start.
 What activity must follow this activity?
 What activity must occur concurrently with this activity?
 NETWORK CONSTRUCTION
Example:
A company is interested in preparing a budget. The details of the activities
and the departments involved are given below in the table.
The project of preparation of a production budget
Job identification alternate Job description department

• A 1 – 2 Forecasting sales sales

• B 2 – 4 Pricing sales Sales
• C 2 – 3 Preparing Engineering production schedule
• D 3 – 4 Costing the Costing production
• E 4 - 5 Preparation of President budget
Prepare the network diagram for the preparation of budget.
 NETWORK CONSTRUCTION
Solution:
The project of budgeting can be displayed in a network as given below:

From the arrow diagram, we infer that activity A is the first job. Job B
and C start only after A is over. A is called the predecessor of B and C
and B and C are called as successors of A.
 NETWORK CONSTRUCTION
Dummy activities:
There is a need for dummy activity when the project contains groups of
two or more jobs which have common concurrent predecessors. The
time and resources consumed by dummy activity is zero.

Consider an example where B and C are parallel concurrent activities

and activity E is dependent on both of them. That is, E can start only
after B and C are completed. Thus, to complete the network, a dummy
activity D is put, which shows that C is also predecessor of E
alongwith B. the dummy activity is represented by dashed arrow.
 SOLVED PROBLEM 1
Construct the arrow diagram comprising activities A, B, C,
……… and L such that the following relation ships are
satisfied:
 A, B and C the first activities of the project, can start
simultaneously.
 A and B precede D
 B precedes E, F and H.
 F and C precede G
 E and H precede I and J
 C, D, F and J precede K.
 K precedes L.
 I, G and L are the terminal activities of the project.
 SOLVED PROBLEM 1
D K
A
D1 J L
E
B D3
I
H
C F D2
G

The dummy activities D1 and D2 are used (dotted lines) to establish

correct precedence relationships. D3 is used to identify activities E
and H with unique end events. The events of the project are
numbered such that their ascending order indicates the direction
of the progress in the project.
 CRITICAL PATH CALCULATION
Critical activity
An activity is said to be critical if a delay in the start of the
course makes a delay in the completion time of the entire
project.
Non – critical activity
A non-critical activity is such that the time between its
earliest start and its latest completion time is longer than
its actual duration.
 A non-critical activity is said to have a slack or float time.
Determination of critical path.
A critical path defines a chain of critical activities that
connect the start and end events of the network diagram.
 Critical path identifies all the critical activities of the
project.
 CRITICAL PATH CALCULATION
Includes two phases.
Forward pass.
Where all calculations begin from the start node and move to
the end node.
 We note the number of heads joining the event.
 Take the maximum earliest timings through these heads.
Back ward pass
Begins calculations from the “end” node and moves to the
“start” node.
 The time computed represents the latest ocurrance time of
the corresponding event.
Let ESi = Earliest start time of all the activities
emanating from event i.
DiJ = Duration of the activity (I,J)
THEN, ESj = Max {ESi + DiJ) for all defined (I, j) activities
 CRITICAL PATH CALCULATION
The backward pass starts from the “end” event.
Latest completion time.
Let LCi = Latest completion time for event I,
Then for any node, LCi = MIN (LCJ – DiJ) For all
defined activities.
An activity (I, J) lies on the critical path if it satisfies
the following conditions:
ESi = LCi
ESJ = LCJ
ESJ – ESi = LCJ - LCi = DiJ
 SOLVED PROBLEM 2
Consider a network which stands from node 1
and terminate at node 6. the time required to
perform each activity is indicated on the
arrows. Define the critical path and shortest
time to complete the project.
4
2 5
7
1 5 6
2 3 6
3
3 2
3
 SOLVED PROBLEM 2
Let us start with the forward pass with ES1 = 0
Since there is only one incoming activity (activity 1, 2) to event 2 with
D12 = 3,
ES2 = ES1 + D12 = 0 + 3 = 3
Now, for end 3, there is only one activity (2, 3) to event 3 with D23 = 3
Thus, ES3 = ES2 + D23 = 3 + 3 = 6
4
2 5
0/0 3/3 7
1 5 6
2 3 6
3
3 2
3
6/6
 SOLVED PROBLEM 2
For ES4, there are two activities approaching to event 4, (activity 3, 4 and
activity 2, 4 with D24 = 2 and D34 = 0
Thus, ES4 = Max{ES2 + D24; ES3 + D34}
= Max {(3 + 2); (6 + 0)} = 6
Similarly ES5 = 13 and ES6 = 19
This completes the forward pass.
4
6/6 5
2
0/0 3/3 7
5 6 19/19
1 2 3 6
3 13/13
3 2
3
6/6
 SOLVED PROBLEM 2
In the backward pass we have
LC6 = 19 = ES6
LC5 = LC6 – D56 = 19 – 6 = 13
LC4 = min {(LC5 – D45); (LC6 – D46)} = min{(13 – 7); (19 – 5)} = min {6; 14} = 6
Similarly LC3 = 6; LC2 = 3 and LC1 = 0
Therefore activities (1, 2), (2, 3), (3, 4), (4, 5), (5, 6) are critical and (2, 4), (4, 6) and (3, 6)
are noncritical.
Thus the activities (1, 2), (2, 3), (3, 4), (4, 5), and (5, 6) define the critical path which is the
shortest possible time to complete the project i.e., 19 days.
4
6/6 5
2
0/0 3/3 7
5 6 19/19
1 2 3 6
3 13/13
3 2
3
6/6
 DETERMINATION OF FLOATS
Latest start time.
LSiJ = LCJ – DiJ
Earliest completion time
ECiJ = ESi + DiJ
Total float. TFiJ for activity (I, J) is the difference between the
maximum time available to perform the activity and its
duration.
TFiJ = (LCJ – ESi) – DiJ = LCJ – ESi – DiJ = LCJ – ECiJ = LSiJ - ESi
Free float. The free float is defined by assuming that all the
activities start as early as possible. Free float FFiJ for
activity (I, J) is the excess of available time over its
duration.
FFiJ = ESJ – ESi – DiJ
For critical activity total float is zero. The free float must also
be zero when total float is zero. Converse is not true.
 DETERMINATION OF FLOATS
Let us consider the solved problem 2 before the critical path
calculations. The floats for non critical activities can be
summerised as depicted in the table below:

Activity Duration Earliest latest Total Free

(i, j) Dij Start ESi Completi Start LSij Completi float TFij floats FFij
on ECij on LCj
(1, 2) 3 0 3 0 3 0* 0
(2, 3) 3 3 6 3 6 0* 0
(2, 4) 2 3 5 4 6 1 1
(3, 4) 0 6 6 6 6 0* 0
(3, 5) 3 6 9 10 13 4 4
(3, 6) 2 6 8 17 19 11 11
(4, 5) 7 6 13 6 13 0* 0
(4, 6) 5 6 11 14 19 8 8
(5, 6) 6 13 19 13 19 0* 0
Note: Total float TFij = LSij – Esi Free float FFij = ESj – ESi - Dij
* = critical activity
 SOLVED PROBLEM 3
A project consists of a series of tasks A, B, C, D, E, F, G, H, I
with the following relationships. (W < X,Y means X and Y
cannot start until W is completed, X,Y< W means W cannot
start until both X and Y are completed). With this notation
construct the network diagram having the following
constraints: A<D,E; B,D< F; C<G; B,G< H; F,G<I.
Find also the minimum time of completion of the project, the
critical path, and the total floats of each task, when the
time (in days) of completion of each task is as follows:
Task: A B C D E F G H I
Time: 23 8 20 16 24 18 19 4 10
 SOLVED PROBLEM 3

ES1 = 0, ES2 = 20, ES3 = 23, ES4 = 39, ES5 = 39, ES6 = 57, ES7 = 67
The activity table is as given below:
Activity (I, j) Duration Dij Earliest latest Total float TFij Free floats FFij
Start ESi Completion Start LSij Completion
ECij LCj
(1, 2) 20 0 20 18 38 18 0
(1, 3) 23 0 23 0 23 0* 0
(1, 4) 8 0 8 31 39 31 31
(2, 5) 19 20 39 38 57 18 0
(3, 4) 16 23 39 23 39 0* 0
(3, 7) 24 23 47 43 67 20 20
(4, 5) 0 39 39 57 57 10 0
(4, 6) 18 39 57 39 57 0* 0
(5, 6) 0 39 39 57 57 18 18
(5, 7) 4 39 43 63 67 24 24
 SOLVED PROBLEM 3
Solution:
The critical path 1 – 3 – 4 – 6 – 7
The duration to complete the project = 67 days
 PROJECT MANAGEMENT - PERT
Probability and cost consideration in project
scheduling.
Let A = The optimistic time, which will be required if the
execution of the project goes extremely well.
B = The passimistic time, which will be required if everything
goes bad.
M = The most likely time, if execution is normal.
Then, expected duration of each activity D = (A+B +4M)/6
Variance V = {(B – A)/6}2
 SOLVED PROBLEM 4
A project is represented by the network shown below and
has the following data:
TASK A B C D E F G H I
OPTIMISTIC TIME 5 18 26 16 15 6 7 7 3
PESSIMISTIC TIME 10 22 40 20 25 12 12 9 5
MOST LIKELY TIME 8 20 33 18 20 9 10 8 4

3 6 7
F I
B H
A E
1 2 D 5
G

C
4
 EXAMPLE 4 (CONTD)
Determine the following:
Expected task time and their variance.
Earliest and latest expected times to reach each
event.
The critical path.
The probability of an event occurring at the
proposed completion data if the original contract
time of completing the project is 41.5 weeks.
The duration of the project that will have 95%
chances of being completed.
 EXAMPLE 4 (CONTD)
Determine the following:
Expected task time and their variance.
Earliest and latest expected times to reach each
event.
The critical path.
The probability of an event occurring at the
proposed completion data if the original contract
time of completing the project is 41.5 weeks.
The duration of the project that will have 95%
chances of being completed.
 EXAMPLE 4 (CONTD)
Solution:
Using the formula we can calculate expected activity times and variances
in the following table:
Duration D = (A +B + 4M) / 6
Variance V = [(B – A) / 6]2
Durations and variances for each activity
Activity a b m D V
1 – 2 (A) 5 10 8 7.833 0.694
1 – 3 (B) 18 22 20 20.00 0.444
1 – 4 (C) 26 40 33 33.00 5.444
2 – 5 (D) 16 20 18 18.00 0.444
2 – 6 (E) 15 25 20 20.00 2.777
3 – 6 (F) 6 12 9 9.00 1.000
4 – 7 (G) 7 12 10 9.555 0.694
5 – 7 (H) 7 9 8 8.00 0.111
6 – 7 (I) 3 5 4 4.00 0.111
Forward pass:
E1 = 0; E2 = 7.833; E3 = 20; E4 = 33; E5 = 25.833; E6 = 29; E7 = 42.555
 EXAMPLE 4 (CONTD)

Backward pass:
L7 = 42.555; L6 = 38.555; L5 = 34.555; L4 = 33; L3 = 29.555; L2 =
16.555; L1 = 0
• The critical path is shown with thick line in the figure. The critical
path is 1 – 4 – 7 and the completion time is 42.555 weeks.
• The last event will occur only after 42.555 weeks. For this we
require only the duration of critical activities.
Expected length of critical path = 33 + 9.555 = 42.555 weeks
Variance of critical path length = 6.138
 EXAMPLE 4 (CONTD)

Z = (Scheduled time – Estimated time) / standard deviation

= (ST – ET) / V1/2
= (41.5 – 42.555) / 6.1381/2
= - 0.426
P(-0.426) = 0.3354
Thus, the probability that the project can be completed in less than or
equal to 41.5 weeks is 33.46%. In other words, probability that the
project will get delayed beyond 41.5 weeks is 66.54%.
• Given that P (Z) = 0.95 thus Z = 1.645
Then 1.645 = (ST – 42.555) / 6.1381/2
ST = 46.631 weeks.
Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879
0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389
1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319
1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767
2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936
2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986
3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990