Project Management - CPM/PERT

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 resources by lecturers and students within the college.2

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. Project is not defined by the type of outcome it is 3 up to achieve set

Project
A project is a temporary endeavour involving a connected sequence of activities and a range of resources, which is designed to achieve a specific and unique outcome and which operates within time, cost and quality constraints and which is often used to introduce change.

Characteristic of a project
A unique, one-time operational activity or effort Requires the completion of a large number of interrelated activities Established to achieve specific objective Resources, such as time and/or money, are limited Typically has its own management structure Need leadership

Examples
constructing houses, factories, shopping malls, athletic stadiums or arenas developing military weapons systems, aircrafts, new ships launching satellite systems constructing oil pipelines developing and implementing new computer systems planning concert, football games, or basketball tournaments introducing new products into market
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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. Its origins lie in World War II, when the military authorities used the techniques of operational research to plan the optimum use of resources. One of these techniques was the use of networks to represent a system of related activities

Project Management Process

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 Project Manager most important member of project team 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 Organizational Breakdown Structure a chart that shows which organizational units are responsible for work items Responsibility Assignment Matrix shows who is responsible for work in a project 7

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 cost 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

Project Planning
Resource Availability and/or Limits
Due date, late penalties, early completion incentives Budget

Activity Information
Identify all required activities Estimate the resources required (time) to complete each activity Immediate predecessor(s) to each activity needed to create interrelationships
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Project Scheduling and Control Techniques

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

11

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

Provides visual display of project schedule

12

 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. Activity A task or a certain amount of work required in the project Requires time to complete Represented by an arrow Dummy Activity Indicates only precedence relationships 13 Does not require any time of effort

Project Network

Project Network
Event Signals the beginning or ending of an activity Designates a point in time Represented by a circle (node) Network Shows the sequential relationships among activities using nodes and arrows
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 14

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

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 C must finish before either of B or D can start

B
Dummy

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

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Concurrent Activities
Lay foundation

3
Lay foundation
Dummy 2 0

3 2

1
Order material

Order material

(a) Incorrect precedence relationship

(b) Correct precedence relationship

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Problem
Event A
B C D E F G H J K L

Preceded by initial event

A B B D B E G,E D,F,H C,J K

Problem
Activity
A B C D E F G H

Immediate Precede
A B C,D C,D E F

Problem
Activity
A B C D E F G H

Immediate Precede
A A B,C C D E F,G

Problem
Activity
A B C D E F G

Immediate Precede
B A,C C C D,E,F

Network of Seven Activities

1
B C A

3 dummy

D E F

22

Problem
Activity A B C D E F G H I J K Immediate Precede A B B C D E H,J F,G

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

Immediate Precede
A A I.J.K B,D B,D F A G,H F

EXAMPLES OF THE USE OF DUMMYACTIVITY

Network concurrent activities
a 1 b 2 1 b 3 a 2

Dummy

WRONG!!!

RIGHT

Activity c not required for e

a a b c c 1 e d 1 b d 2 e

WRONG !

WRON G!!!

RIGHT

RIGHT

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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 Earliest finish time (EF) earliest time an activity can finish earliest start time plus activity time EF= ES + t

Backward Pass

Latest Start Time (LS) Latest time an activity can start without delaying critical path time LS= LF - t Latest finish time (LF)

latest time an activity can be completed without delaying critical path time 27 LF = minimum LS of immediate predecessors

Network example
Activity
A B C D E

F G H I J K

Nodes between activities 1-2 1-3 1-4 2-5 3-5 3-6 3-7 4-6 5-7 6-8 7-8

Duration(days)
2 7 8 3 6

10 4 6 2 5 6 28

Network
2
A(2) D(3) E(6) B(7) C(8)

5
I(2)
G(4) F(10) K(6)

7
J(5)

H(6)

29

Forward Pass(Earlier Start & Earlier Finish)

2

2
A(2)

D(3) E(6)

13

5
I(2)

7
B(7) C(8)

15
G(4)

22
K(6)

3
F(10)

7
J(5)

4
8

H(6)

6
17

PROJECT DURATION=22 DAYS

30

Backward Pass(Latest Start & Latest Finish)

11 14

2
0 0
A(2) B(7) C(8)

D(3) E(6)

13

5
I(2)
G(4) F(10)
16 22

7 7

15

22
K(6)

7
J(5)

4
11

H(6)

6
17

17

CRITICAL PATH:1-3-6-8

31

CPM analysis
Draw the CPM network 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 Determine the float for each activity 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

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Calculation of Float
Total Float: Total float of an activity represents the amount of time an activity can be delayed without delaying the project completion time i.e TF=LF-EF=LS-ES=LF-ES- Duration of the activity Interfering Float:The part of the total float which causes the reduction in the float of the successor activities. i.e. IF=LF(preceding) ES(succeeding) Free Float:The part of the total float which can be used without effecting the float of the successor activities. i.e FF=Total Float-Head Slack Independent Float:Float time of an activity which can be used without effecting either the head and the tail event. i.e. In.F=ES(succeeding)-LF(preceding)-Duration of the activity

Determination of Earliest & Latest times,nd Floats

Activity Duration

Earliest
Start(ES)
Finish(EF)

Latest
Start(LS)
Finish(LF)

Float Total Int Free Ind.

1-2 1-3 1-4 2-5

2 7 8 3

3-5
3-6 3-7 4-6 5-7 6-8 7-8

6
10 4 6 2 5 6

Determination of Earliest & Latest times,nd Floats

Activity Duration

Earliest
Start(ES)
Finish(EF)

Latest
Start(LS)
Finish(LF)

Float Total 9 0 3 9 Int 9 0 3 1 Free 0 0 0 8 Ind. 0 0 0 0

1-2 1-3 1-4 2-5

2 7 8 3

0 0 0 2

2 7 8 5

9 0 3 11

11 7 11 14

3-5
3-6 3-7 4-6 5-7 6-8 7-8

6
10 4 6 2 5 6

7
7 7 8 13 17 15

13
17 11 14 15 22 21

8
7 12 11 14 17 16

14
17 16 17 16 22 22

1
0 5 3 1 0 1

1
0 1 0 1 0 0

0
0 4 3 0 0 1

0
0 4 0 0 0 0

Example
Activity
A B C D

Immediate predecessors A A

Completion Time (week) 5

6 4 3

E
F G H I 36

A
E D,F B,C G,H

1
4 14 12 2

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 + to
6
2

Variance: Vt =2 =

tp - t o
6

37

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

39

Normal Distribution of Project Time

Probability

= tp

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 K G,I 3 5 7

PERT Example PERT Network

D

C B F G I K

42

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
43

PERT Example
Activity ES
A B C D E F G H I J K 0 0 6 6 6 9 9 13 13 19 18

EF
6 4 9 11 7 13 11 19 18 22 23

LS
0 5 6 15 12 9 16 14 13 20 18

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

Slack
0 *critical 5 0* 9 6 0* 7 1 0* 1 0*

44

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

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Precedences And Project Activity Times

Immediate Activity Predecessor Optimistic Most Likely Pessimistic Time Time Time EXP TE Var S.Dev V

2 0 2

a b c

10 20 4

22 20 10

22 20 16

20 20 10

4 0 4

d
e f g

a
b,c b,c b,c

2
8 8 4

14
8 14 4

32
20 20 4

15
10 14 4

25
4 4 0

5
2 2 0

h
I j

c
g,h d,e

2
6 2

12
16 8

16
38 14

11
18 8

5.4 2.32
28.4 5.33 4 2

46

The complete network

2
a (20,4)

d (15,25)

6
j (8,4)

e (10,4)

b (20,0)

3
g (4,0) h (11,5.4)

f (14,4)

c (10,4)

i (18,28.4)

47

Figure 8-13 The complete Network

EF=20 35 d (15,25) e (10,4) f (14,4)

a (20,4)
b (20,0)

2
20

j (8,4) 43

1
c (10,4)

3
g (4,0)

7
i (18,28.4)

CRIT. TIME = 43

4
10

h (11,5.4)

5
24

48

Critical Path Analysis (PERT)

Activity
a b c d e f g h i j

LS
0 1 4 20 25 29 21 14 25 35

ES
0 0 0 20 20 20 20 10 24 35

Slacks
0 1 4 0 5 9 1 4 1 0

Critical ?
Yes

Yes

Yes

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Assume, PM promised to complete the project in the fifty days. What are the chances of meeting that deadline? Calculate Z, where

Z = (D-S) / V
Example, D = 50; S(Scheduled date) = 20+15+8 =43; V = (4+25+4) =33 Z = (50 43) / 5.745 = 1.22 standard deviations. The probability value of Z = 1.22, is 0.888 50
1.22

What deadline are you 95% sure of meeting Z value associated with 0.95 is 1.645

D = S + 5.745 (1.645) = 43 + 9.45 = 52.45 days

Thus, there is a 95 percent chance of finishing the project by 52.45 days. 51

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 way to do this at the least cost? 52

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

53

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.)

54

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

55

Practice Example
A social project manager is faced with a project with the following activities: Activity Description
Social work team to live in village

Duration
5w

Social research team to do survey

Analyse results of survey Establish mother & child health program

12w
5w 14w

Establish rural credit programme

Carry out immunization of under fives

15w
4w

Draw network diagram and show the critical path. Calculate project duration. 56

Practice problem
Activity 1-2 1-3 3-4 2-4 3-5 4-5 Description Social work team to live in village Social research team to do survey Analyse results of survey Establish mother & child health program Establish rural credit programme Carry out immunization of under fives
4 5 3

Duration 5w 12w 5w 14w 15w 4w

2 1

57