PROJECTMANAGEMENT

&

NETWORKANALYSIS
(
CPM &PERT)
 Whati
saPr
oject
?
A pr oj
ecti sani nterrelatedsetofact ivi
ti
est hathas
definit
est art
ingandendi ngpoi ntsandt hatr esultina
uniquepr oductorser vice
Cuts acr oss organizationall i
nes – t heyneed v ari
ed
ski
llsofdi f
ferentprofessi on
Uncer t
ainti
es l i
ke new t echnol ogy & ext ernal
environmentcanchanget hechar acteroft heproject
Personnel ,mat eri
als,f acil
i
ties et c.ar et empor ari
ly
assembl edt oaccompl ishagoalwi thinaspeci f
iedtime
fr
ameandt hendisbanded
Uponf i
nish,apr ojectr eleasesl otofr esourceswhi ch
wereengagedi nexecut ionoft hepr oject
 Exampl
esofPr
oject
Host
ingaCol
l
egeAnnualFunct
ion
Pl
anaSpaceShut
tl
etoMar
s
Const
ructaPl
antt
oManuf
act
ureBal
l
Bear
ingsPl
anf
orWeddi
ng
Desi
gni
ngandI
mpl
ementaComput
erSy
stem
Desi
gni
ngaABSSy
stem
Ex
ecut
ingEnv
ironment
alCl
ean-
upOfa
Cont
ami
nat
edSi
teEr
ectaNewLabi
ntheDept
.of
Mechani
calEngi
neer
ing
Def
ini
ti
onofPr
oject

•Aproj
ectisaoneshot ,t
imelimit
ed,goal
di
rect
ed,majorundert
aki
ng,requi
ringthe
commitmentofvari
edskil
ls&resources.

•I
tal sodescr
ibesprojectasacombi nati
on
of
h umanandnonhumanr esourcespool
ed
togetherinat empor aryor gani
zat
ionto
achievespecif
icpurpose
 Pr
ojectAt
tri
but
es
Aproject:
Hasauni
• quepur pose.
I
•st empor ary.
I
•sdev elopedus i
ngpr ogressiveel
aborat
ion.
Requi
• resr esources, oftenfrom
v ariousar eas.
Shoul
• dhav eapr i
mar ycustomeror
sponsor .
•Thepr ojectspo ns
o rusuall
yprovi
dest he
dir
ect ionandf undingf orthepr
oject.
I
•nvol v
esuncer tai
nt y
.
Pr
ojectandPr
ogr
am Manager
s
Proj
ect managers wor
k wi t
h proj
ect sponsor
s,
proj
ectt
eams,andotherpeopl
einv
olvedi
npr oj
ects
tomeetproj
ectgoal
s.
Program:“Agroupofrelatedpr
oject
smanagedina
coordinat
edwaytoobt ainbenefi
tsandcontr
olnot
avai
lablefr
om managi
ngt hem i
ndivi
dual
l
y.”
Progr
am manager
soverseepr
ogr
amsandof
tenact
asbossesf
orproj
ectmanager
s.
Proj
ectmanagementis“t
heappl
i
cati
onofknowl
edge,
skil
l
s,toolsandtechni
questoproj
ectacti
vi
ti
esto
meetprojectr
equi
rements.
”
 Pr
ojectManagement
ToolsandTechni
ques
Projectmanagementt oolsand t echniquesassi
st
project manager s and t hei
rt eams i n var
ious
aspectsofpr oj
ectmanagement .
Specifi
ct ool
sandt echniquesi
nclude:
Projectcharter
s,scope st atement s,and WBS
(scope).
Ganttcharts,networ k diagrams,cri
ticalpath
anal
yses,
cri
ti
cal
chainscheduli
ng(ti
me)
.
Costestimates and earned v al
ue management
(cost)
.
 NETWORKANALYSI
S
Net
workAnal
ysi
sref
erst
oanumberoft
echniques
f
orthepl
anni
ngandcont
rol
ofcompl
exproj
ects.

The t
wo mostf r
equentl
yusedformsof
net
wor kpl
anningare:
1. P r
ogrammeEv aluati
onandRev
iew
Technique(
PERT)
2. Crit
icalPat
hMet hod(CPM)
 W HAT I
SANETWORK?
A networkisagr aphi
caldiagram
consi
sti
ngofcer tai
nconfi
gurati
onof“ Arr
ows”
()and “ Nodes”( O)forshowi ng t
helogical
sequenceofv ari
oustaskstobeper for
medt o
achi
evetheprojectobj
ecti
ve.
 PERT/CPM Techni
ques

The init
ialstep i
n PERT/ CPM proj
ect
scheduli
ngprocessi sthedeter
minat
ion
ofallspeci
fi
cacti
viti
esthatcompri
sethe
proj
ectandtheirr
elat
ionshi
ps.
 EXAMPLE
Act
ivi
ty Descr
ipt
ion Durat
ion(
in Immediat
weeks) e
pr
edecess
or
A Obtai
nthe 2 -
budget
approval
B Obtai
nt he 5 A
machine
C Hi
retheoperator 1 A
D I
nst
all
the 1 B
machine
E Trai
nthe 6 C
operat
or
F Pr
oducethe 1 D,
E
goods
 TERMSUSEDI
NANETWORK

1.Acti
vit
y:Aneffortt
hatisr
equir
edto
completeapar tofthepr
oject
.Iti
s
repr
esentedby“”.

2. Node:I
tr epr
esent
sthebegi
nni
ngor
completi
on of an activi
ty.Itis
repr
esentedby“”
 RULESOFNETWORKCONSTRUCTI
ON

1.Eachdefi
nedact
ivi
tyi
srepr
esent
edbyone
and
onlyonearr
owinthenet
work.

2.Bef
oreanactivi
tycanbeundert
aken,al
l
act
ivi
ti
espr
ecedi
ngitmustbecomplet
ed.

3.Thearrowsdepicti
ngvari
ousacti
vi
tiesare
i
ndicati
veofl ogi
calprocedur
eonly .The
l
engthandbear i
ngofthearrowsareofno
si
gnifi
cance.
4. The ar
row di
rect
ion i
ndicat
esthe gener
al
pr
ogressi
oni
nti
me.HeadeventsandTai
levent
s.

5. Whenanumberofact ivi
ti
ester
minateatone
ev ent
,itindi
catesthatnoactiv
ityemanati
ng
from thateventmayst ar
tunl
essallacti
vi
ti
es
terminati
ngtherehavebeencomplet
ed.

6. Ev
ent
sar
eident
if
iedbynumber
s.

7. Theact i
vi
ti
esareident
if
iedbyt
henumbersof
their st
art
ing and ending event
s or by
alphabet
s.
8. Anet
workshoul
dhav
eonlyonei
nit
ial
and
t
ermi
nal
node.
A
C Mer
geEv
ent
B

B
A
Bur
stEv
ent
C
10. Par al
lel acti
vit
ies between t wo ev ents,
without inter
vening events,are prohibit
ed.
When t wo ormor e paral
lelact
ivit
ies ina
projecthav ethesameheadandt ai
lev ents,
dummyact i
vi
ti
esar eneededi nconst ruct
ing
thenetwor k.

Dummy act i
vi
ties do notconsume t ime or
resour
ces.An ef f
ici
entnet work cont
ains a
minimum numberofdummyact iv
iti
esrequi
red
toport
raythecorr
ectprecedencerel
ati
onshi
ps.

11.
Loopi
ngi
snotper
mit
tedi
nanet
wor
k.
NETWORKSYMBOLS
SYMBOL MEANI
NG
Act
ivi
ty
Ev
ent
Act
ivi
tyAmustbecomplet
ed
bef
oreAct
ivi
tyBcompl
eted
Acti
vit
iesA&Bcanoccur
concurrentl
y,butbot
hmustbe
completedbef or
eacti
vi
tyC
canbegi n
Activ
iti
esA&Bmustbecompl eted
beforeacti
vi
ti
esC&Dcanbegi n,
butCcanbegi ni
ndependent
lyofD
&vicev er
sa
SAMPL
ENE
TWORK
DUMMYACTI
VI
TY
 CRI
TICALPATHMETHOD

CPM aimsatthedet erminati

onoft
he
ti
me to complete a proj
ectand t
he
i
mportant activ
iti
es on whi ch a
managershal
lfocusattent
ion.
 PROCEDURE
Consi
derall
t hepat
hsinaproj
ect
,begi
nni
ng
wi
tht
hestarteventandst
oppi
ngattheendevent
.

Foreachpat
h,cal
culat
ethet
imeof
execut
ion.

Thepathwit
ht hel
argesttimeiscalledthe
cri
ti
calpat
handtheact
ivi
ti
esalongthispathare
cal
ledcri
ti
cal
act
ivi
ti
esorbott
leneckacti
vi
ties.
 PE
RT
(
Proj
ectorPr
ogr
amEv a
luat
ion
andRevi
ewTech
niques
)
PROJECTEVALUATI
ONREVI
EW TECHNI
QUE
I
nt hecrit
icalpathmet hod,thet i
meest i
matesareassumedt o
be known wi t
h cert
ainty.I
ncer tain pr
oject
slikeresearch and
development , new product introducti
ons, i
ti s di
ffi
cultt o
esti
mat ethetimeofvar i
ousactivi
ties.
HencePERTisusedinsuchproject
swithaprobabi
li
sti
cmethodusi
ngt
hree
ti
meestimatesforanact
ivi
ty,
rathert
hanasingleesti
mat
e,as
Fi
gure
shownin Opt
imisti
ctime t
O:

Iti
st heshortestti
met akent
ocompl etet
he
acti
vi
ty.Itmeanst hat i
fever
ythi
nggoeswell
thent her
eismor echanceofcompletingt
he
acti
vi
tywithi
nthist
ime.

Mostl
ikel
ytmet
i m:
Iti
sthenor malti
met aken t ocomplet
e an
act
ivi
ty,i
ftheact
ivi
tywerefrequent
lyr
epeat
ed
underthesamecondit
ions.

Pessi
mist
ict
imet
p:
Iti
st helongestti
met hatanactiv
itywouldtake
tocompl ete.I
tistheworsttimeest i
matet hat
anact i
vit
ywoul dtakeifunexpected probl
ems
arefaced.
Taki
ngal
lthesetimeest i
matesi
ntoconsi
der
ati
on,t
heexpect
ed
ti
meofanactivi
tyisar
rivedat
.
Theaverageormean( t
a)
val
ueoft heacti
vit
y
durat
ionisgivenby,
Thevari
anceoftheactivit
y
time i
s cal
culated using
thefor
mula,
Pr
obabi
li
tyf
orPr
ojectDur
ati
on
The probabil
it
yofcompl et
ing the
proj
ectwi t
hint hescheduled ti
me
(Ts)or contracted t
ime may be
obtai
ned by usi ng the standard
normaldevi ate where Te ist he
expected t i
me of proj
ect
completion.
Probabi
lit
yofcomplet
ingthe
proj
ectwithi
ntheschedul
ed
ti
mei s,
 Exampl
eProbl
em ofPERT
AnR&Dproj
ecthasalistoft
askstobeper f
ormedwhoset
ime
est
imat
esar
egiveni
ntheTable8.
11,asfol
lows.

a.Drawt heprojectnetwork.
b.Findthecrit
icalpath.
c. Fi
ndt he pr
obabil
it
ythatthe pr oj
ecti
s
compl et
edi n19day s.I
ftheprobabil
it
yisl
essthan20%,
findthe
probabil
ityofcompl eti
ngiti
n24day s.
Timeexpect edforeachact i
vit
yis
calculatedusingtheformula(5):
Si
mi l
arly
, t he expected time
i
scal cul
atedforal
ltheacti
vit
ies.

The vari
ance ofact ivi
tyti
me is
cal
culatedusingthef or
mula(6)
.
Si
milar
ly, variances of al
lt he
act
ivit
iesarecalculat
ed.
A)Const
ructanet
wor
kdi
agr
am:

cal
culatethet
imeear
li
est(
TE)andt
imeLat
est(
TL)f
oral
lthe
act
ivi
ties.
Fr
om thenetworkdiagr
am Fi
gur
e8.24,t
hecrit
ical
pathis
i
dent
ifi
edas1-4,
4-6,
6-7,
wit
haproj
ectdurat
ionof22days.
C)Thepr
obabil
it
yofcomplet
ingt
hepr
ojectwi
thi
n
19daysi
sgivenby,
P(Z<Z0)

Tof
indZ0,

Thus,
thepr
obabi
li
tyofcompl
eti
ngt
heR&Dpr
ojecti
n19day
sis
9.
01%.
Sincetheprobabi
li
tyofcompl eti
ngtheproj
ectin19
daysisl ess t
han 20% Asin quest
ion,wefind t
he
probabi
li
tyofcompl et
ingi
tin24days.
 COSTANALYSI
S
Thetwoimpor
tantcomponent
sofanyacti
vi
tyar
ethecostandt
ime.Costi
s
di
rect
lypr
opor
tionalt
oti
meandvi
ceversa.
Forexample,i
nconst ruct
ingashoppi ngcomplex,the expect ed time of
completi
oncanbecal cul
atedusingt hetimeestimatesofv ar
iousact i
vi
ti
es.
Butift
heconstruct ionhast obefini
shedearl
ier
,itrequi
resadditionalcostt
o
completethepr oject.Weneedt oar r
iveatatime/ cost t
rade-offbetween
tot
alcostofpr ojectandt otalt
imer equir
edtocompl etei
t.
Normalti
me:
Normalti
mei stheti
mer equir
edtocompl
ete
theact
ivi
tyatnormalcondit
ionsandcost
.
Crashti
me:
Crash ti
me is the short
est possi
ble
acti
vi
tyt i
me;cr
ashing morethan t he
normaltimewi
ll
incr
easethedi
rectcost.
CostSl
ope
Costsl
opeist
heincreaseincostperunit
ofti
mesavedbycrashing.Ali
nearcost
cur
veisshowninFigure8.27.
 Exampl
e
Anact i
vit
ytakes4daystocompl et
eatanormalcostofRs.500.
00.Ifi
tis
possibl
et ocomplet
et heact
ivi
tyin2dayswithanaddit
ionalcostofRs.
700.00,whatist
heincr
ementalcostoft
heact
ivi
ty?

I
ncr
ement
alCostorCostSl
ope

I
tmeans,i
fonedayi
sreducedwehavet
ospendRs.100/
-ext
raperday
.

Pr
ojectCr
ashi
ng
Pr
ocedur
eforcr
ashi
ng
St
ep1:Dr
awt
henet
wor
kdi
agr
am andmar
ktheNor
malt
imeandCr
asht
ime.
St
ep2:Cal
cul
ateTEandTLf
oral
ltheact
ivi
ti
es.

St
ep3:Fi
ndt
hecr
it
icalpat
handot
herpat
hs.

St
ep4:Fi
ndt
hesl
opef
oral
lact
ivi
ti
esandr
ankt
hem i
nascendi
ngor
der
.
St
ep5:Est
abl
ishat
abul
arcol
umnwi
thr
equi
redf
iel
d.

St
ep6:Sel ectthelowestr ankedact iv
ity;
checkwhet heritisacr i
ti
calacti
vi
ty.I
f
so,crasht heact i
v i
ty,elsegot othenexthighestr ankedact i
vit
y.
Not e:Thecr iti
calpat hmustr emai ncri
ti
calwhi lecrashi
ng.
St
ep7:Cal culatethet otalcostofpr ojectforeachcrashing
St
ep8:RepeatSt ep6unt ilalltheact i
vit
iesinthecrit
icalpathar eful
ly
crashed.
Example
Thefol
lowingTabl e8. 13gi vest heactivi
ti
esofaconst ructi
onpr oject
andotherdat a.

I
ftheindi
rectcosti
sRs.20perday,cr
ashtheacti
vi
ti
estofindthe
mini
mum dur at
ionoft
heprojectandtheproj
ectcostassoci
ated.
 Sol
uti
on
From t
hedataprovi
dedint
het
abl
e,dr
awt
henet
wor
kdi
agr
am (
Figur
e8.
28)
andfi
ndthecri
ti
calpat
h.

From thediagram,weobser v
e
thatthe cri
ti
calpathis 1-2-
5
withpr
ojectdurati
onof14days

Thecostsl
opef
oral
lact
ivi
ti
esandt
hei
rranki
scal
cul
atedasshowni
nTabl
e8.
14
Theavai
labl
epathsofthenet
workar
elist
eddowninTabl
e8.
15
i
ndicat
ingthesequenceofcr
ashi
ng(seeFigur
e8.
29).

The sequence ofcr ashing

and thet otalcost
involved
i
sgiveninTabl e8.16I nit
ial
di
rectcost
=sum ofal l
normalcostsgi v
en
=Rs.490.00
 Acti
vi
ty Pr
oject Cr
it
icalPat
h Di
rectCosti
n(Rs.
) I
ndi
rectCost Total
Cr
ashed Durati
on i
n(Rs.) Costi
n
(
Rs.)

- 14 1-
2-5 490 14x20= 770
280

1–2(
2) 10 1–2–5 490+(2x15)+(2x 10x20= 970
2–5(
2) 1–3–4–5 100)+(1x10)+(
2x 200
2–4(
1) 1–2–4–5 20)=770
3–4(
2)

Iti
snotpossibletocrashmor ethan 10days,asallthe
act
ivi
ti
esinthecri
ti
calpathareful
l
ycrashed. Hence the
minimum proj
ectdurat
ionis10dayswiththetot
alcostof
Rs.970.
00.
Assi
gnment
a.Drawthepr oj
ectnetworkdiagram.
b.Calcul
atethelengthandvari
anceofthecri
ti
calpat
h.
c.Whatist heprobabil
it
ythatthejobsont
hecr i
ti
cal
pathcanbe
completedin41days?
THANKYOU