PROJECT MANAGEMENT

WITH CPM/PERT

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 Project Management

• Project Definition
• Consists of a series of tasks (or activities) with
following characteristics
• Starting and ending dates
• Well-defined objectives
• Unique endeavor
• Utilizing resources
• Primarily Management Functions
• Planning
• Organizing
• Controlling
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Project Management Functions

 PM functions are to manage

 Cost and time
 Human resources
 Communication
 Contract/procurement
 Risk

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Project Management

• When to use
• Complex projects
• Several parallel tasks
• Predefined deadlines and milestones must be met
• Estimate project completion time
• Difficult to know when project is in trouble
• Limited and conflicting resources

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Examples

• Building a new airport

• Expanding a plant
• Designing a new product
• Construction projects of all types
• Maintenance projects
• R&D projects

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Project Planning Process

 Define project objective(s)

 Identify activities
 Establish precedence relationships
 Make time estimates
 Determine project completion time
 Schedule activities
 Balance resources to meet objective(s)

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Typical Questions for PM’s

 What is the the total time to complete a project?

 What are the scheduled start and finished dates for each
activity?
 Which activities are critical and must be completed on
time to keep the project on schedules?
 How long can noncritical activities be delayed before
they cause a delay in the project completion time?
 Is there any way to reduce the project completion time?
 How much money is needed to expedite the project
completion time?

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Project Management Techniques

• Critical Path Method (CPM)

• Developed in 1950’s
• Planed and control maintenance job of a chemical
plant
• Reduced length of maintenance shutdown by 40%
• Project Evaluation and Review Technique (PERT)
• Developed in 1960’s
• Planed and control the Polaris missile project
• Speeded up project by 2 years

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Critical Path Method (CPM)

• Graphical method of showing relationship of

project activities
• An activity or task --takes resources and time to
complete
• Precedence relations (some must be completed
before others can start) must be constructed
• Critical Path Method is the longest path through
the resulting project network

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Precedence Relations

Activity Immediate Predecessor Duration (days)

A (Start) 8
B A 6
C A 8
D A 10
E B,C,D 4
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 Simple Project Network
“Activity on Node” AON representation

Successor
Precedence relations
represented by “arcs”
B
Predecessor

A
D E

Project Network 11
Simple Project Network
“Activity on Arc” AOA representation

2
B
6
E
A C 3 4
0 1 4
6 8
D
10
4
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Activity Start/Finish Times
(AON)
Activity Name Early
Early Finish
Start Time
Time
ES EF

LS D LF
Late Late
Start Finish
Time
Time
Activity
Duration 13
Finding the Critical Path

A C
C E

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Forward Pass

8 B 14
6

8 C 16
0 A 8 18 E 22
8 4
8
8 D 18
105
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Backward Pass
8 B 14
12 6 18

8 C 16
0 A 8 18 E 22
10 8 18 18 4 22
0 8 8
8 D 18
8 105 18
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 Finding Activity Slack
S =EF-ES = LF-EF

8 B 14 S =18-14=4
14 6 18
S =8-8=0 S =22-22=0
8 C 16
0 A 8 18 E 22
10 8 18
0 8 8 18 4 22
S =18-16=2

8 D 18
Critical Path: Path with 5
zero activity slacks 8 10 18 S =18-18=0 17
Example

Consider the following activities of a project

Activity Predecessors Time (wks)
A. none 4
B. none 12
C. B 6
D. A 16
E. A,C 12
F. B 16
G. E,F 10
H. D,G 0

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Project Network

E Finish
Start
C

B
G

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PERT (Program Evaluation and
Review Technique)

• Similar to Critical Path Method (CPM)

• Uncertainty in activity duration
• Provides estimates of project duration
probabilities
• Best used for highly uncertain projects
• new product development
• first-time projects
• R&D projects

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Dealing with Uncertain Activity Duration

 The PERT three-estimate Approach

 Most likely estimate (m)
 estimate of the most likely value of duration
 Optimistic estimate (b)
 estimate of the duration under the most favorable
conditions
 Pessimistic estimate (a)
 estimate of duration under the unfavorable
conditions

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A Simple Example

Most Optimistic Most Likely Most Pessimistic

Activity (a) (m) (b)

A 2 8 14
B 3 6 9
C 5 7.5 13
D 3 10.5 15
E 2.5 2.5 11.5
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Distribution Assumption
Beta distribution
density

a m b
activity
Expected Time = a + 4m + b
6 duration
Variance = (b - a) 2

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 Expected Duration & Variance

Activity A

a + 4m + b 2+4(8)+14
ET = = = 8.0
6 6
(b - a)2 (14-2)2
Var = = =4
36 36
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Expected Duration & Variance

Expected Critical
Activity Variance
Time Path?
A 8 4 ?
B 6 1
C 8 1.77
D 10 4 ?
E 4 2.33 ?
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Probability of Completion

Probability that a project will be completed by

a specified due date

Due Date - Expected Completion Date

z=
Sum of the Variances on the Critical Path

Expected Completion
Normal
Distribution

z Due Date
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Completion Probability Example

What is the probability of completing the

project within 24 days?

24 - 22
z= = 0.624
4 + 4 + 2.33
From a Z-table for standard Normal distributions:

Probability of completion = 0.7324 = 73.2%

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Considering Time-Cost Trade-offs

• If extra money is spent to expedite the project,

what is the least expensive way of attempting to
meet the target completion time?
• Define Normal and crash points
• Normal point shows the time and cost when an
activity is performed in the normal way
• Crash point shows the time and cost when an activity
is fully crashed

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 Time-Cost Relationship

• Assumed linear relationship

Crash (Crash cost-Normal cost)

Crash cost/wk=
Crash Cost (Normal time - Crash time)

Normal Cost Normal

Crash time Normal time

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Example

Time (wk) Cost($1000)

Activity Normal Crash Crash Normal Max. Red. Cost/wk
A 8 6 10 8 2 2/2=1
B 6 5 7 5 1 2/1=2
C 8 5 10 4 3 6/3=2
D 10 9 8 6 1 2/1=2
E 4 3 7 6 2 1/1=1

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Crashing An Activity

Activity Crash Path Path Path

to Cost ABE ACE ADE
Crash
18 20 22
A 1000 17 19 21
A 1000 16 18 20
D 2000 16 16 19
E 1000 15 15 18
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Other Project Mgmt Techniques

• Resource leveling
• How to schedule resources (equipment, people)
to minimizes
• Multiple resource scheduling
• How to schedule resources when activities can
require more than one resource type
• Cash flow and budgeting
• Combine cash and budget information with
project scheduling to track expenditures,
project cash flows
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Online Vidoes
 [Link] (CRASH)
 [Link] (ESEF)
 [Link] (LSLF)
 [Link] (Critical Path /
Duration)
 [Link] (Float / Slack)
 [Link] (Free Float)
 [Link] (Free Float /
Slack)

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