ch08 Numericals

Project Management: A Managerial Approach, 9th edition Instructor’s Resource Guide
Chapter 8
Scheduling
CHAPTER OVERVIEW
Overview – This chapter continues the discussion of project implementation by covering

various scheduling techniques.
8.1 Background – Per the text, “A schedule is the conversion of a project action plan into
an operating timetable.” A schedule is important because each project is unique in its
own way. The basic process is to identify all tasks and sequential relationships
between them, that is, which tasks must precede or succeed others. There are a
number of benefits to the creation and use of these networks. Some of them are as
follows:
 It is a consistent framework for planning, scheduling, and controlling the
project.
 It can be used to determine a start and end date for every project task.
 It identifies so-called critical activities that, if delayed will delay the project
completion.
8.2 Network Techniques: PERT and CPM – PERT and CPM are the most commonly
used approaches to project scheduling. Both were introduced in the 1950s. PERT
has been primarily associated with R&D projects, while CPM with construction
projects. Today PERT is not used much since project management software
generates CPM style networks. The primary difference between them is that PERT
uses probabilistic techniques to determine task durations, while CPM relies on a
single duration estimate for each task. Both techniques identify the critical path
(tasks that cannot be delayed without delaying the project) and associated float or
slack in the schedule. In 2005 the Project Management Institute (PMI) deemed it
necessary to change the names of these techniques. According to PMI, PERT is
called ADM/PERT (Arrow Diagram Method) and CPM is PDM/CPM (Precedence
Diagramming Method).
 Terminology – Following are the key terms associated with the development
and use of networks:
o Activity – A specific task or set of tasks that have a start and end, and
consume resources.
o Event – The result of completing one or more activities. Events don’t
use resources.
o Network – The arrangement of all activities and events in their logical
sequence represented by arcs and nodes.
o Path – The series of connected activities between any two events in a
network.
Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 1

o Critical activities - events or paths which, if delayed, will delay the

completion of the project.
o To construct a network the predecessors and successors of each
activity must be identified. Activities that start the network will have no
predecessor. Activities that end the network will have no successor.
Regardless of the technique used, it is a good practice to link the
activities with no other predecessor to a START milestone. Those
without any successor should be linked to an END milestone.
PDM/CPM networks identify the activities as nodes in the network,
called the Activity on Node (AON) network. The arrows in between the
nodes depict the predecessor/successor relationships among the
activities. The ADM/PERT method, on the other hand, uses Activity on
Arrow (AOA) networks. Here the nodes represent events and the
arrows represent the actual activities.
 Constructing the Network, AON Version – The text illustrates the
development of a simple AON network. All the major project management
software packages will generate this type of network.
o Constructing the Network, AOA Version – The AOA network has
some development rules that make it somewhat more difficult to
construct than the AON network. The primary rule is that any given
activity must have its source in one and only one node. As a result,
some network relationships can only be depicted with the use of a
“dummy” activity. This is an activity that has no duration and
consumes no resources. Its sole purpose is to indicate a precedence
relationship. The text uses various figures to illustrate the use of
dummy activities.
o Gantt (Bars) Charts and Microsoft® Project (MSP) – The most familiar
tool for depicting project schedules is the Gantt chart, invented by
Henry L. Gantt in 1917. The activities are depicted as horizontal bars
with their length proportional to their duration. This method results in
an easy to read graphical depiction of the project schedule. Gantt
charts can be difficult to maintain if there are large changes in the
project schedule. Tools like Microsoft® Project (MSP) will
automatically draw the Gantt chart as a byproduct of the network
entered by the user. The disadvantage of the Gantt chart is that it
typically does not depict the network relationships.
o An Important Aside on Estimating Activity Times – It is important that
the duration of each of the tasks in a project is honestly estimated.
The deadlines should be set as close to the actual deadline needed to
ensure proper buy-in from everyone throughout the project. As is the
norm with many project managers, the deadlines are set earlier than
what is required and the workers overestimate the deadlines to
ensure task completions and delivery, both of which lead to serious
errors in the long run of a major project.

o Solving the Network – The text illustrates the development and solving an
AON network based on the project detailed in Table 8-1.
o Calculating Activity Times – The sample project in the text has three
duration estimates for each activity: optimistic (a), most likely (m) and
pessimistic (b). Optimistic and pessimistic are defined as the durations
that represent 99 percent certainty. In other words the actual duration of
an activity will be less than the optimistic or greater than the pessimistic
only one percent of the time. Then, the expected time (TE) is found with
the formula:
 TE = (a + 4m + b)/6
 where:
 a = optimistic time estimate
 b = pessimistic time estimate
 m = most likely time estimate, the mode
 This formula is based on the beta statistical distribution. In spite of
a flurry of discussion in the 1980s the assumptions used to derive
this formula have stood the test of time. Along with TE, the
variance of the durations can be calculated as:
2 2

σ =( ( b−a ) /6 )
 and the standard deviation as:
2
 σ= √ σ
o Critical Path and Time – Using the example network, the text describes
the concept of the critical path. For simple projects, the critical path can
be found by determining the longest path through the network.
o Slack (aka, Float) – In the previous section, the earliest possible dates for
each activity were determined. By starting the analysis at the end of the
network and working through it backwards, the latest possible dates for
each activity can be determined. The difference between the early dates
and the late dates is float or slack. Activities on the critical path have zero
float.
o Precedence Diagramming – The Precedence Diagram Method allows for
additional relationships to be established between activities. They are:
 Finish to Start – The successor activity cannot begin until the
predecessor finishes. This is the most common relationship
depicted in networks.
 Start to Start – The successor activity cannot begin until the
predecessor begins.
 Finish to Finish – The successor activity cannot finish until the
predecessor activity finishes.
 Start to Finish – The successor activity cannot finish until the
predecessor activity starts. This relationship is rarely used.

 In addition to these relationships, PDM allows for leads and lags

which is the introduction of a specific time period between the
linked activities. For example, in a Start to Start relationship with
five days of lag, the successor activity cannot begin until five days
after the predecessor starts. The critical path and slack calculation
resulting from these relationships can be complicated and counter
intuitive.
o Once again, Microsoft® Project – The text illustrates the use of MSP for
calculating the most likely project duration using the PERT method.
o Exhibits Available from Software, a Bit More MSP – The text illustrates
the types of outputs available from MSP.
o Uncertainty of Project Completion Time – The chance of completing a
project within a given time period can be calculated. The project activities
are assumed to be statistically independent and the variance of a set of
activities is equal to the sum of the variances of the individual activities
comprising the set. Then the chance of meeting a particular project
duration can be calculated as:
2
 Z =( D− μ ) / √σ μ
 where:
 D = the desired project completion time
 µ = the critical time of the project, the sum of the TEs for activities
on the critical path
2
 σ μ= the variance of the critical path, the sum of the variances

of activities on the critical path
 Z = the number of standard deviation of a normal distribution (the
standard normal deviate)
 The weakest element of this technique is that it is difficult to
account for the possibility that other paths through the network
may become critical due to variation in their duration. Simulation
techniques using tools like Crystal Ball® or Risk +® can be used to
better model this situation.
 Toward Realistic Time Estimates – The traditional PERT method uses
optimistic and pessimistic duration estimates at the 99% confidence level.
The calculations can be adjusted for lower confidence levels that
estimators may be more comfortable in predicting such as 90 or 95%.
8.3 Risk Analysis Using Simulation With Crystal Ball® – Tools like Crystal Ball® can be
used to model the project and determine the likelihood of completion within a certain
time. Since Crystal Ball® works with Microsoft® Excel, the project network must be
modeled in the spreadsheet. This involves creating cells that calculate the early and
late dates for each activity. Then a distribution (commonly triangular) with the

appropriate parameters can be assigned to each duration. Finally, Crystal Ball® runs
its simulation and the results are displayed.
 Incorporating Costs into the Simulation Analysis – The uncertainty related to
projects is better understood when considering both time and cost issues.
 Traditional Statistics or Simulation? – With the advent of inexpensive and easy to
use tools, simulation is the recommended way to model uncertainty in project
durations. Both methods require the development of three durations for each
activity. The simulation method, however, does a much better job of handling the
possibility that the critical path will shift due to variation in durations of activities.
This issue can be analyzed with traditional statistics, but it takes considerable
manual effort on the part of an analyst.
8.4 Using These Tools – The text gives an example of the use of the tools on a specific
project.
TEACHING TIPS
The authors correctly applaud the advent of many user-friendly and powerful project
management tools available for PCs. They have performed a great service by integrating
the use of tools like Microsoft® Project into the subject matter. My experience in teaching
these tools, however, reminds me of the story about IBM’s new programming language.
The story goes that IBM, in their marketing campaign for their new language, said that
the language was so easy to use that it would virtually eliminate the position of a
programmer. Anybody would be able to use this language to easily create computer
programs. The punch line is that the new language was FORTRAN, a 1960’s era
product long ago supplanted by other “user-friendly” products. Even today, with all the
marvelous tools we have available, the position of a programmer has not disappeared.
The point of all this is that in the classroom students will have a wide range of skills and
abilities that may or may not be applicable to Microsoft® Project and similar tools. My
experience is that it is unreasonable to expect students to pick up MSP and use it
successfully based solely on the printed examples in the text. Unfortunately, even
students who claim to be experienced in the use of the tool often know how to draw a
Gantt chart and little else. This is due to three reasons:
 MSP on the surface may look like a fancy spreadsheet, but “under the
hood” it’s is a very complex tool. Many of its processes are dependent on
complex algorithms, controlled by a seemingly endless series of settings with
mysterious titles.
 The training provided by most organizations ranges between non-existent
and abominable. If there is training, it’s usually administered by someone who
has never managed a project and doesn’t understand much more than the
student he/she is teaching. One of my very computer literate colleagues will
probably become homicidal, if he is forced to go to yet another training session
that concentrates on issues vital to the PM like changing the color of the fonts. In

my twenty years of both managing projects and teaching project management, I

have encountered just one person who is both an accomplished user of MSP on
actual projects and a capable instructor.
 MSP training, if it exists, is usually done out of context. It is taught as a
standalone computer tool, without any of the concepts of project management to
put its use in the proper perspective.
The opportunity then, for any project management instructor, is to provide both the
concept and meaningful tools training in one package. Ideally, lectures on concept
should be alternated with lab sessions using the tool. If this is not possible then, at a
minimum, the instructor must set aside class time to demonstrate the key elements of
MSP needed to complete the homework problems. Then, a week later, be prepared for
the questions and frustrations that will erupt from the class.
A good reference case for this chapter follows:

Ivey cases:
9A97D001 Note on Introduction to Project Management.An introduction to projects
with a simple AON problem.
9A97D002 Gadget Toy Company.A simple AON problem that also introduces Microsoft
Project (MSP).
9A95D015 H.M.S. Pinafore.A moderately longer AOA problem.
9A98D020 Procter & Gamble Canada: Dayquil Sampling Operations. A realistic
problem based on an actual summer intern’s experience involving a quick decision on a
new product line that requires a number of tasks to be executed.
University of Virginia Darden case:UVA-OM-0803 TasteeSnax Cookie Company. A
straightforward, but more involved network problem.
MATERIAL REVIEW QUESTIONS
Question 1:Define activity, event, and path as used in network construction. What
is a dummy activity?
Activity: Activities have a start and end,and consume resources.
Event:An event can be thought of as the result of completing one or more activities or as
an identifiable end state that occurs at a particular time. Events do not consume
resources. Typically, events designate the start or the completion of an activity or a path
Path: A path traces the predecessor-successor relationships that exist among a set of
interconnected activities and events. The boundaries of a path use a starting event and
a completion event to designate the path’s endpoints.
Dummy Activity: Dummy activities are tasks of zero duration that have no resources
assigned to them. They are used to maintain predecessor/successor relationships in
AOA networks.
Question 2:What characteristic of the critical path times makes them critical?

Activities along the critical path cannot be delayed without delaying the completion of the
project.
Question3:What two factors are compared by Gantt charting? How does the Gantt
chart differ in purpose from the WBS?
Gantt Chart:The Gantt chart compares planned and actual progress for the detailed
tasks in a project.
Master Schedule: The Gantt chart format (bars to represent progress over time) may be
used to display data regarding the master project schedule, but the master schedule is
oriented towards overall management of the project and will only focus on the major
project tasks. For example, the Gantt view in MS-Project can be filtered to only show
summary tasks at a particular level of the WBS hierarchy.
Question 4:Contrast total slack and free slack.

Total slack vs. free slack:
Total slack is the difference between the calculated earliest finish time of the very last
activity and the project’s required completion time.
Free slack is the time an activity can be delayed without affecting the start time of any
successor activity.
So, the total slack deals with the relationship between the current activity and the total
project completion time, while free slack relates to the next activity.
Question 5:When is each scheduling technique appropriate to use?

The authors of the text have suggested that PERT and CPM are very similar. Therefore,
the terms PERT and CPM have been used interchangeably in the textbook, when basic
educational concepts of a project schedule is explained. The following guidelines are
suggested with regard to when to use each type of scheduling technique discussed in
this chapter.
1) PDM/CPM should be used when the control of costs associated with expediting
work is an important concern. PDM networks should be used when the project
requires the use of leads and lags between activities. PDM is easier to draw than
ADM, is used in most project software applications, and tends to be preferred
when CPM is used.
2) ADM/PERT should be used when the activity times are estimated using
probability distributions in order to evaluate the range of uncertainty around the
expected project duration. ADM networks should be used, when it is desirable to
show completion events as a part of the scheduling network, though nothing
prevents the use of START and FINISH events in a PDM/CPM network.
3) The Gantt chart is a useful tool for displaying the schedule regardless of what
method is used to derive it. The Gantt chart can be used directly to develop small
project schedules.A less-known approach: GERT should be used when the
project plan is complex enough to require loop backs and/or the use of multiple
probability distributions associated with branching options in the relationships
between activities.

Question 6:What is the difference between activity-on-node and activity-on-arrow

diagrams?
AON (activity on node) places the activities or tasks on a rectangle (node), whereas the
AOA places the activities on arrows connecting nodes. Typically the AON provides more
information (such as time estimates) per activity in the diagram itself because more
information can be placed on the node itself (start time, finish time, etc).
Question 7:How does simulation determine the probabilities of various project

completion times?
Simulation requires the project schedule to be modeled mathematically, which happens
to be a by-product of any of the network scheduling techniques. Once the model is
established, simulation involves inputting appropriately distributed random numbers into
the independent variables and analyzing the resulting distribution of the dependent
variables (those calculated by the model). To make the result meaningful, hundreds if
not thousands of trials are run, to build a statistically significant output distribution. Once
the output distribution is established, probabilities of various outcomes can be
calculated.
Question 8:Briefly summarize how a network is drawn.

Networks are drawn from the left to the right and top to bottom. Arrowheads indicate the
direction of flow in the network. The flow designates the precedence relationships
between activities in the network.
Question 9: Define “late start time,” “early start time,” and “early finish time.”
Late start time: Given the precedence relationships in a network, this is the latest time
that an activity can begin without extending the time required to complete the entire
project.
Early start time: Given the precedence relationships in a network, this is the earliest time
that an activity can begin. In order to begin, all predecessor constraints must have been
satisfied.
Early finish time: Given the precedence relationships in a network and the activities
duration, this is the earliest time that an activity can be completed if all predecessor
constraints are satisfied.
Question 10:How is the critical path determined?

The critical path is determined by performing the “forward pass” and “backward pass”
calculations. Float is calculated by subtracting the early dates from the late dates,
specifically the early start from the late start or the early finish from the late finish. If an
activity has zero float, then it is on the critical path.Any delay in an activity along the
critical path would extend the project’s completion date.
Question 11:What is “slack” and why is it important?

Slack is important for two reasons: 1) Slack tells us that we can be a bit more forgiving
about delays on paths with slack, whereas our primary attention should be focused on
the critical path. 2) If we need additional resources for some reason (such as a delay on
the critical path), the first place to look is at the resources on paths with slack in case
they might be available for use.
CLASS DISCUSSION QUESTIONS
Question 12:How do you think the approach of developing 3-time estimates for a
task’s duration could be used to estimate costs for manufacturing?
With a three-time estimate for a task’s duration, the pessimistic, optimistic, and most
likely time estimates are calculated. This is an expression of the risk associated with the
tasks. This could be useful in estimating costs for manufacturing by helping to determine
a more accurate time estimate for manufacturing, which would then relate to the
manufacturing cost. Similar to time estimates utilizing three estimates, costs can be
estimated using pessimistic, optimistic, and most likely. This would provide the same
benefits as seen with the time estimates.
Question 13:What are some benefits of the network approach to project planning?
What are some drawbacks?
1) Benefits:
a) Illustrates task interdependencies
b) Establishes the sequence of activities (precedence)
c) Highlights critical and near-critical paths and their tasks
d) Highlights activities that contain float
2) Disadvantages:
a) It can possibly emphasize time at the expense of other dimensions of
project success
b) Large networks are difficult to print in a convenient format and they may
require significant wall space to view the entire network
c) As the network technique becomes more complex, its effectiveness as a
control tool is reduced
Question 14:What is your position on the statements in the Using These Tools
section?
This is a good question to kick off a lively class discussion. There are no black and white
answers to this question, but here are a couple thoughts:
 It’s easy to become obsessed by the use of even more sophisticated tools and
lose sight of the big picture. Project management tools are only useful if they help
projects achieve their cost, schedule, and scope goals. Just because a tool is
more sophisticated doesn’t mean that it will yield a better result for the business.
 Organizations have to clearly articulate the goals of a project, put together some
kind of a plan, and then meticulously monitor its execution. Many organizations

gloss over the monitoring part because they believe it smacks of micro-
management. In spite of what Dilbert thinks, managers must have a mechanism
for knowing where their project is every day. This allows corrective action to be
taken before the problem grows beyond recovery. This attention to detail is
boring and repetitive, but it’s far more fundamental to the success of the project
than the sophistication of the simulation tools used to model the plan.
Question 15:Why is AOA or AON of significant value to the project manager?

Both methods are of significant value because they force the PM to consider the
relationships among the project activities. Then using these relationships, both methods
produce a schedule for those activities. In addition, both methods can be used for
analysis of variances and problems when the schedule is executed.
Question 16:How is uncertainty in project scheduling dealt with?

There are many ways to deal with uncertainty. The most common in the scheduling
process are:
1) Adding buffer or padding to the duration of each activity
2) Adding buffer to the overall project schedule
3) Developing schedules based on a range of activity durations
4) Calculating probabilities of completion using statistical or simulation
techniques
5) Taking specific actions to reduce the uncertainty in duration for some or
all the activities
Question 17:How would you calculate free slack?

The “free slack” as it is called, is the slack along a path in the project and is the minimum
of all the slacks on that path. Thus, if the path of interest is A-B-C and the slacks on A
and B are 3 each, while the slack on C is 2, the free slack on the path is 2.
Question 18:How are activity times estimated?

Activity times are generally estimated in a manner similar to budgets. For example, they
can be individually estimated by the participants or calculated based on time estimates
from earlier projects.
Question 19:Should the critical path activities be managed differently from

noncritical path activities? Explain.
Yes and no. Critical path activities deserve closer scrutiny.If critical activities run late the
project is sure to be late. In a situation where scant resources have to be allocated to
help late activities recover, the critical path activities would get the resources before the
noncritical path activities.
This, however, does not absolve the PM from monitoring the noncritical path items.
Items off the noncritical path may feed the critical path, so if they are late they could
delay the project indirectly.Also if noncritical path activities get late enough then the
critical path may shift to them, again delaying the entire project.

Question 20:Precedence diagramming extends the standard task relationship in a

network to three additional situations. Can you think of any others?
I’m not aware of any network relationship that can’t be built through some combination of
the PDM relationships with leads and lags. As the text points out, the relationships can
become quite complicated, which leads to anomalies in the critical path.
PROBLEMS
NOTE: Many of the AON graphics in this solutions set depict the start day of the
successor activity to be the same day as the completion of the predecessor. This is
consistent with the presentation in the text. It is not consistent with the result that would
be obtained using Microsoft® Project, where the start day of the successor is always the
next working day after the completion of the predecessor.
Problem 1:Given the following information, draw the AON diagram:

Problem 2:Convert the AON diagram below to an AOA diagram.
F
B
A C H
E
D G
Problem 3:Find three errors in the diagram below.

1) The arrows cannot form a loop such as the one shown between nodes 2,
3, and 5.
2) The dummy arrow between nodes 6 and 7 is not required because 6
precedes 5 and 5 precedes 7.
3) Nodes 8 and 9 do not have successors, so it appears that this network
has two final termination nodes. This is not a conventional diagramming
technique. An arrow from 8 should point to 9.
Problem4:Given the diagram below, find:

(a) The critical path.
(b) How long it will take to complete the project.
(c) Find the ES, LS, EF, and LF for each activity.
(d) Find the slack for each activity.
a) The critical path is B-E-G.

b) 23 work periods.
c) and d)
Task Duration ES EF LS LF Slack
A 10 0 10 5 15 5
B 7 0 7 0 7 0
C 5 10 15 15 20 5
D 7 10 17 11 18 1
E 11 7 18 7 18 0
F 3 15 18 20 23 5
G 5 18 23 18 23 0
Problem 5:Convert the AOA diagram in Problem 4 to an AON diagram. How would
the AON diagram change if there had been a dummy from node 2 to node 3 in
Problem 4?
The diagram would change because now A and B precede E.

Problem 6:Convert each of the following AOA diagrams into AON diagrams.
PDM Diagram 6a
PDM Diagram 6b

Problem 7:Given the following activities and precedences, draw an AOA or AON
diagram:
Figure 7a is the AOA diagram.
Figure 7b is the AON diagram.

A C F
G
Start D H End
B E
Problem 8:Given the following network,
(a) What is the critical path?

(b) How long will it take to complete this project?
(c) Can activity B be delayed without delaying the completion of the project? If
so, how many days?
Please see note about network depiction preceding Problem 1
a) The critical path activities are A, C, E, and G.
b) The project’s duration is 22 days.
c) Yes.Activity B can be delayed by one day without delaying the completion of the
project.

Problem 9:Given the estimated activity times below and the network in Problem 8
above,
what is the probability that the project will be completed within (based on the path
with the longest expected time):
(a) 21 days?
(b) 22 days?
(c) 25 days?
Task a m b Expected Variance Std Dev.
A 6.5 7.5 14.5 8.5 1.78 1.33
B 8.5 10.5 12.5 10.5 0.44 0.67
C 2.5 3.5 4.5 3.5 0.11 0.33
D 6.5 7.5 8.5 7.5 0.11 0.33
E 5.5 5.5 9.5 6.2 0.44 0.67
F 5.5 7.5 9.5 7.5 0.44 0.67
G 4.5 6.5 8.5 6.5 0.44 0.67
H 2.5 3.5 3.5 3.3 0.03 0.17
Sum of
Expected Variance
Desired Project s Critical
Duration Duration Path Z Probability
21 24.7 2.77 –2.2 a) 1.4%
22 24.7 2.77 –1.6 b) 5.5%
25 24.7 2.77 0.2 c) 57.9%

Problem 10:
Find
(a) The AOA network and the path with the longest expected duration.
(b) All event slacks.
(c) Critical path to event D.
(d) The probability of completing the path with the longest expected
duration in 14 days.
(e) The effect if CD slips to 6 days; to 7 days; to 8 days.
a) The critical path is AC CB BE EF.

b) The only event with slack is “D” at 3 days.
c) If “D” were the final event in the network, then the critical path would be AC CB
BD.
d) The following spreadsheet excerpt illustrates the calculation of the probability of
completion in 14 days:
Expecte
Task a m b d Variance Std Dev.
AB 3 6 9 6.0 1.00 1.00
AC 1 4 7 4.0 1.00 1.00
CB 0 3 6 3.0 1.00 1.00

CD 3 3 3 3.0 0.00 0.00

CE 2 2 8 3.0 1.00 1.00
BD 0 0 6 1.0 1.00 1.00
BE 2 5 8 5.0 1.00 1.00
DF 4 4 10 5.0 1.00 1.00
DE 1 1 1 1.0 0.00 0.00
EF 1 4 7 4.0 1.00 1.00
Sum of
Expecte Variance
Desired d Project s Critical
14 16.0 4.00 –1 15.9%
e) If CD slips to six days the critical path is unchanged, but slack on D is reduced. If
CD slips to seven days, then there are two critical paths: AC CB BE EF and AC
CD DF. If CD slips to eight days then the critical path shifts to AC CD DF and the
project duration extends to 17 days.
Problem 11:

(a) Draw the AOA diagram.

(b) Find the critical path.
(c) Find the expected project completion time.

10 28 36
B G 8 I
17 28 41
1
3 10
9
4 2
0 7 18 37 43
A 3 C 2 F 11 H 6 J
0 7 18 37 43
1
4 5
6 3
3
3 13
D 8 E
3 13
Figure 8.11 shows duration on the arrow in matching the “(i,j)” notation used to
define the problem’s source data.
b) The critical path is A, D, C, E, F, G, H, and J.
c) The completion time is 43 days.
Problem 12:The Denver Iron & Steel Company is expanding its operations to
include a new drive-in weigh station. The weigh station will be a heated/air-
conditioned building with a large floor and small office. The large room will have
the scales, a 15-foot counter, and several display cases for its equipment.
Before erection of the building, the project manager evaluated the project using
AON analysis. The activities with their corresponding times were recorded in
Table A.
Using AON analysis, find the path with the longest expected duration, the slack
times, and the expected completion time.

Figure 8.12a shows the PDM network for the data from Table A of Problem 8-12
assuming that the data were applied as shown in Figure 8.12b.
1)The critical path is 2,3,4,5,7,8, and 9.
2)The slack for activity 1 is 11.7 days. The slack for activity 6 is 4 days.
2) The following table shows the calculation of the expected completion time:
Expecte
Activity a m b d
1 8 10 13 10.2
2 5 6 8 6.2
3 13 15 21 15.7
4 10 12 14 12.0
5 11 20 30 20.2
6 4 5 8 5.3
7 2 3 4 3.0
8 4 6 10 6.3
9 2 3 4 3.0
Expecte
d Project
Duration
66.4

Problem 13:Miracle Marketing has received a contract from a large pharmaceutical

firm to design a nationwide advertising campaign for their recently approved
cancer drug. The drug is easily taken, compared with current intravenous drugs,
and can be administered from home. Miracle Marketing has assigned to the task a
project manager who, in turn, has delegated minor subprojects to subordinate
managers.
The project was evaluated using AOA analysis. Due to the extensive length of the
project, many activities were combined: The following is the result.
Find the critical path and expected completion time.

Figure 8.13 shows the network for problem 13.
1) The critical path is A, B, E, I, L, M, N, and P.

2) The completion time is 75 months.
Problem 14:The following chart was prepared at the beginning of a HRM (Human
Resource Management) crash hiring project. The project begins with two
activities: Assemble interview team (A) and Budget resources (B).
The duration, in days, follows the letter of each activity. What is the critical path?
Which activities should be monitored most closely?
At the end of the first week, it was noted that activity A was completed in 2.5 days,
but activity B required 4.5 days. What impact does this have on the project? Are
the same activities critical?
Figure 8.14a shows the original network diagram for problem 14.
1) The critical path activities are A, D, G, and J. Activities B and E should be closely
monitored as a near critical path.

Figure 8.14b shows the impact of the project’s performance to date.

The project will be completed in 12.5 days instead of the 13 days originally expected.
The near critical path (B, E, G, and J) is now critical. Activities A, D, F, and H are now
near critical activities.
Problem 15:Given the following financing project being considered by a venture

firm, find the probability of completing the path with the longest expected duration
by 17 weeks. By 24 weeks. By what date is management 90 percent sure that this
path will be completed?

If the venture firm can complete the project for the customer within 18 weeks, it
will receive a bonus of $10,000. But if the project delays beyond 22 weeks, it must
pay a penalty of $5,000 due to lost opportunity. If the firm can choose whether or
not to bid on this project, what should its decision be if the project is only a
breakeven one normally?Figure 8.15a shows the network.
Using critical path analysis results in the following table:
Expecte
Activity a m b d Variance Std Dev.
1–2 5 11 11 10.0 1.00 1.00
1–3 10 10 10 10.0 0.00 0.00
1–4 2 5 8 5.0 1.00 1.00
2–6 1 7 13 7.0 4.00 2.00
3–6 4 4 10 5.0 1.00 1.00
3–7 4 7 10 7.0 1.00 1.00
3–5 2 2 2 2.0 0.00 0.00
4–5 0 6 6 5.0 1.00 1.00
5–7 2 8 14 8.0 4.00 2.00
6–7 1 4 7 4.0 1.00 1.00
Sum of
Expecte Variance
Desired d Project s Critical
17 21.0 6.00 –1.63299 5.2%
18 21.0 6.00 –1.22474 11.1%
22 21.0 6.00 0.408248 65.9%
24 21.0 6.00 1.224745 88.9%
24.13 21.0 6.00 1.277817 89.8%
The probability of completion at 17 weeks is quite poor, only 5.1%.

Management can be sure that the project will complete 90% of the time in slightly over
24 weeks.
This analysis suggests that 11% of the time the project will achieve the bonus and
34.1% (100 – 65.9) of the time the project will incur the penalty. Since the project is
expected to generate no profit or loss independent of the bonuses and penalties the
expected value calculation yields:
11%  $10,000 + 34.1% (–$5,000) = –$ 605
Strictly based on the expected return management should “no bid” the project. Because
the loss is small, however, the firm may wish to apply other criteria to decide whether to
pursue the project.
Problem 16:Given an auditing project with the following activities,
find:
(a) The probability of completing the critical path in 12 weeks (or less),
as the client desires.
(b) The probability of completing the critical path in 13 weeks (or less).
(c) The probability of completing the critical path in 16 weeks (or less),
the client’s drop-dead date.
(d) The number of weeks required to assure a 92.5 percent chance of
completing the critical path, as guaranteed by the auditing firm.
Using critical path analysis with the data provided gives the following table:
Expecte
Activity d Std Dev. Variance
A 2.0 2.00 4.00
B 3.0 1.00 1.00
C 4.0 0.00 0.00
D 2.0 3.00 9.00
E 1.0 1.00 1.00
F 6.0 2.00 4.00
G 4.0 2.00 4.00
H 2.0 0.00 0.00
Desired Expecte Sum of Z Probabilit

Variances
d Project Critical
Duration Duration Path y
12 13.0 9.00 –0.33 37.1%
13 13.0 9.00 0.00 50.0%
16 13.0 9.00 1.00 84.1%
17.3 13.0 9.00 1.44 92.5%
For this problem, the variance has to be calculated from the standard deviation, and the
durations provided are assumed to be expected durations. As can be seen there is
about an 84% chance of completing the project within the drop dead time. If a little more
than a week is added to the duration, the chance of completing the project on time rises
to 92.5%.
Problem 17:The following network is a compressed representation of the

prospectus of a start-up firm that plans to develop a new, bioelectronic computer
chip.
Note that four activities, the biological elements, can start immediately.
Find:
(b) The earliest time to complete the project.
(c) The slack on activities E, F, and H.

Figure 8.17 shows the network for problem 17.

a) There are two critical paths: C, G and C, F, I.
b) The earliest complete time is 16 time units.
c) Slack: E = 6time units, F = 0 time units, and H = 1 time unit.
Problem 18:The events of the project below are designated as 1, 2, and so on.
(a) Draw the network.
(c) Find the slacks on all the activities.
C, F, H is the critical path as indicated in the network. The slack times are as indicated
for all activities.

Problem 19:Given the following network (times are in weeks), -determine:

(a) The ES, LS, EF, and LF for each activity.
(b) The slacks on all activities.
(c) The critical activities and path.

Figure 8.19 shows the network diagram for problem 19.

Problem 20:Given the schedule in Table B for a liability work package done as part
of an accounting audit in a corporation, find:
(b) The slack time on “process confirmations.”
(c) The slack time on “test pension plan.”
(d) The slack time on “verify debt restriction compliance.”


a) The critical path is A, D, E, G, I, J.
b) The slack on process confirmation (F) is 20 days.
c) The slack on test pension plan (C) is 61 days.
d) The slack on verify debt restriction compliance (H) is 20 days.

Problem 21:In the website development project network shown in the following
figure, the number alongside each activity designates the activity duration (TE) in
weeks.
Determine:
(a) The ES and LS for each activity.
(b) The earliest time that the website can be completed.
(c) The slack on all activities.
(d) The critical activities.
(e) The critical path.

2 0 5 5 7 9
0 0 2 D H
A 2 3 5 5 0 13 12 4 16
0 2 2 I
2 6 7
5 8 13
E
0 9 4 8 5 13 13 1 15
16
Start B J End
16
9 4 13 3 4 9 14 2 16
F
13 0 16
7 6 13
0 4 3 L
C 3 6 7 13 3 16
4 3 7 G
Legend for Solution
9 4 13 Early Early
Slack
Start Finish
Activity Critical Path

Late Late
Duration
Start Finish

a) The ES and LS for each activity are shown in Figure 8.21.
b) The website’s early completion time is 16 weeks.
c) The slack on each activity is shown in Figure 8.21
d) The critical activities are A, D, I, L, and J.
e) The critical path is A, D, I, L.
Problem 22:Given the following information regarding a project concerning an

initial public offering (IPO),


(b) What is the critical path?
(c) When will the offering be available (completion of the project)?
(d) What is the effect on the project if activity e (approvals) takes an extra
week? Two extra weeks?Three extra weeks?

a) Please see note about network depiction preceding Problem 1
b) The critical path is B, F, H.
c) Week 9.
d) If activity E requires one extra week, the time will be absorbed in
free float and will not affect any other activity. If activity E requires two extra
weeks, then a second critical path will be created for activities B, E, G. If activity
E requires three weeks, negative float will be created and the project cannot be
completed in nine weeks. The new completion time will rise to 10 weeks.
Problem 23:Construct a network for the aerospace launch project below and find
its critical path.

Figure 8.23 shows the network diagram solution for problem 23.
The critical path is A, B, F, H, and I as indicated above.

Problem 24:Construct a network for the following training and development

project.

(c) Assume activity a (hire trainers) took 5 weeks. Replan the project.
(d) From where would you suggest transferring resources, and to what
activities, so that the original target training date may be maintained?
Figure 8.24a shows the network diagram for problem 24a.

b)The critical path is B, E, G, H.

Figure 8.24c shows the network diagram solution to problem 24c.

d)Given a float value of 6 weeks, activity F seems to be the best candidate to supply
resources needed to crash the project. Since, the float is almost 50% of the activity’s
duration, using its resources to work other activities is unlikely to convert activity F into a
near-critical activity. Since activity D is both critical and concurrent to activity F, the
resources should be transferred there.
Problem 25:Resolve part (d) of Problem 10 assuming the values of a and b are
given at the 95 percent level. Repeat, assuming the values are given at the 90
percent level.
Following the discussion in the text, the calculations of TE and σ need to be
modified.For a confidence level of 95%, the calculation for variance would be:
' ' 2
2
σ =( ( b −a ) /3. 29 )
Using these values, the following table can be calculated:
95% Confidence Level
AB 3 6 9 6.0 3.33 1.82
AC 1 4 7 4.0 3.33 1.82
CB 0 3 6 3.0 3.33 1.82
CD 3 3 3 3.0 0.00 0.00
CE 2 2 8 3.0 3.33 1.82
BD 0 0 6 1.0 3.33 1.82
BE 2 5 8 5.0 3.33 1.82
DF 4 4 10 5.0 3.33 1.82
DE 1 1 1 1.0 0.00 0.00
EF 1 4 7 4.0 3.33 1.82

Sum of
Expected Variances
Desired Project Critical
14 16.0 13.32 -0.55 29.1%
Note that the expected durations for the critical path remain unchanged, however, the
variances are quite a bit larger indicating that there is a larger chance that any given
duration will fall outside of the optimistic/pessimistic limit. Similarly for the 90%
confidence level, the following equations would be used:
' ' 2
2
σ =( ( b −a ) /2.56 )
and the following table can be calculated:
90% Confidence Level
Task a M b Expected Variance Std Dev.
AB 3 6 9 6.0 5.49 2.34
AC 1 4 7 4.0 5.49 2.34
CB 0 3 6 3.0 5.49 2.34
CD 3 3 3 3.0 0.00 0.00
CE 2 2 8 3.0 5.49 2.34
BD 0 0 6 1.0 5.49 2.34
BE 2 5 8 5.0 5.49 2.34
DF 4 4 10 5.0 5.49 2.34
DE 1 1 1 1.0 0.00 0.00
EF 1 4 7 4.0 5.49 2.34
Sum of
Expected Variances
Desired Project Critical
14 16.0 21.96 -0.43 33.4%

Problem 26:Using the information below, draw an AOA network. Find the path with
the longest expected duration and use it to compute the number of days you
would be 95 percent sure the project would be completed. Calculate the slack,
earliest start, and latest start times for each activity and show in table form. Does
any path come close to causing a problem in determining the probability of
project completion based on just using the path with the longest expected
duration?

Figure 8.26a shows the network, critical path and slack times.
The critical path in the above diagram is 1-4, 4-5, 5-6, 6-7, 7-10, 10-11 with a duration of
59 days.
Tabulating the calculations for expected durations and probability looks like this:
Expecte
Task a m b d Variance Std Dev.
1-2 6 8 10 8 0.44 0.67
1-3 5 6 7 6 0.11 0.33
1-4 6 6 6 6 0.00 0.00
2-6 0 0 0 0 0.00 0.00
2-7 10 11 12 11 0.11 0.33
3-6 12 14 16 14 0.44 0.67
4-5 5 8 11 8 1.00 1.00
4-9 7 9 11 9 0.44 0.67
5-6 8 10 12 10 0.44 0.67
5-9 0 0 0 0 0.00 0.00
6-7 14 15 16 15 0.11 0.33
6-8 10 12 14 12 0.44 0.67
7-10 9 12 15 12 1.00 1.00
8-10 0 4 14 5 5.44 2.33
9-11 5 5 5 5 0.00 0.00
10-11 7 8 9 8 0.11 0.33
Expected Sum of
Desired Project Variances Probabilit
Duration Duration Critical Path Z y
61.69 59.0 2.66 1.65 95.0%
The next longest path is 1-3, 3-6, 6-7, 7-10, 10-11 at 55 days. It will only be a concern if
under some circumstances; its duration exceeds the actual critical path of 59 days.

Using the same technique for calculating the probability of exceeding a particular
duration gives the following table for this path:
Probability for path 1-3-6-7-10-11
Expected Sum of
Desired Path Path
Duration Duration Variances Z Probability
59 55.0 1.77 3.00 99.9%
Clearly the chance of exceeding 59 days is quite small. The same technique can be
applied to the next longest path 1-4, 4-5, 5-6, 6-8, 8-10, 10-11 which while relatively
short has high variance:
Probability for path 1-4-5-6-8-10-11
Expected Sum of
Desired Path Path
Duration Duration Variances Z Probability
59 49.0 7.1 3.8 100.0%
Again it is clear that it is unlikely that this path will cause problems with the overall
project duration.
Problem 27:Given the following activities required for staging a community play
on Independence Day,
(a) Construct an AON diagram.
(b) Determine the earliest expected completion time for the play.
(c) Based on the path with the longest expected duration, what completion
date are you 80% confident of achieving? 40% confident?
(d) Will a 1-day delay in this project be serious?

Figure 8.27a shows the PDM network for problem 27.
The critical path in the above figure is 1, 4, 6, 8, 12, 15 with a duration of 52 days.
b) See Figure 8.27a for the critical path and its early completion time.

c) See the following table for the probabilities:

Expecte Std
Task a m b d Variance Dev.
1 2 4 6 4 0.44 0.67
2 5 5 5 5 0.00 0.00
3 3 5 7 5 0.44 0.67
4 7 10 13 10 1.00 1.00
5 11 12 13 12 0.11 0.33
6 5 6 7 6 0.11 0.33
7 9 10 11 10 0.11 0.33
8 5 7 9 7 0.44 0.67
9 7 9 11 9 0.44 0.67
10 3 3 3 3 0.00 0.00
11 15 17 19 17 0.44 0.67
12 6 8 10 8 0.44 0.67
13 7 8 15 9 1.78 1.33
14 12 14 16 14 0.44 0.67
15 16 17 18 17 0.11 0.33
Expected Sum of
Desired Project Variances Probabilit
Duration Duration Critical Path Z y
53.35 52.0 2.54 0.85 80.1%
51.6 52.0 2.54 -0.26 40.1%
d) Since the play is supporting an Independence Day event, a one day delay would be
severe.
Problem 28:Draw an AON network using the following data and find the
probability of completing the path with the longest expected duration of the in 44
days, the official opening date.

Figure 28a shows the PDM network diagram for problem 28.
The critical path in the figure above is 1, 3, and 6 with a duration of 41 days.

The following table tabulates the variances and probability for this project:
1 6 10 14 10 1.78 1.33
2 0 1 2 1 0.11 0.33
3 16 20 30 21 5.44 2.33
4 3 5 7 5 0.44 0.67
5 2 3 4 3 0.11 0.33
6 7 10 13 10 1.00 1.00
7 1 2 3 2 0.11 0.33
8 0 2 4 2 0.44 0.67
9 2 2 2 2 0.00 0.00
10 2 3 4 3 0.11 0.33
11 0 1 2 1 0.11 0.33
12 1 2 3 2 0.11 0.33
Sum of
Expecte Variances
Desired d Project Critical Probabilit
Duration Duration Path Z y
44 41.0 8.22 1.05 85.3%
Problem 29:Simulate Problem 27 to find the probabilities of project completion.

Use a triangular distribution for defining activity time distributions. After a 1,000-
trial simulation, examine the statistical information generated and compare the
output of the simulation with your -findings in Problem 27. Briefly explain the
significant similarities and differences. (Optional: modify your simulation model
and determine the probability that the path with the longest expected duration
actually is the critical path. What are the managerial implications associated with
your results?)
To simulate the network in Crystal Ball®, a spreadsheet must be prepared that calculates
the duration of each possible path through the network:
The path durations are calculated by summing the expected duration of each
Paths Project
1-5-10-13-15 1-4-9-13-15 1-4-6-8-12-15 2-6-8-12-15 2-3-8-12-15 2-3-7-11 2-3-7-14 Completion
46.0 50.0 52.0 43.0 44.0 37.0 34.0 52.0
participating activity. The Project Completion is calculated as the maximum duration of

any of the possible paths.
Once the spreadsheet is setup, Crystal Ball®can be used for the simulation. Each of the
expected durations is set to a triangular distribution with minimum and maximum equal
to the optimistic and pessimistic durations respectively using the Define Assumption
function. The setup for activity 1 looks like this:

Then a forecast cell is setup for the Project Completion to view how it changes due to
the simulation. The resulting histogram looks like this:
The statistics that correspond to this graph look like this:

By adjusting the sliders on the histogram, the 80% and 40% confidence levels can be
checked. They look like this:

These graphs show that a 54-day duration can be achieved with an 80% confidence
level and a 52-day duration with a 40% confidence level. These are slightly worse than
the results calculated with the variance method. The reason is that the simulation
properly takes into account the possibility that the critical path shifts for some possible
combinations of activity durations.
Problem 30:Simulate Problem 28 to find the probabilities of project completion.

Use a BetaPERT distribution for defining activity time distributions. After a 1,000-
trial simulation, examine the statistical information generated and compare the
output of the simulation with your findings in Problem 28. Briefly explain the
significant similarities and differences. (Optional: modify your simulation model
and determine the probability that the path with the longest expected duration
actually is the critical path. What are the managerial implications associated with
your results?)
The setup for problem 30 is similar to that for problem 29. First the spreadsheet in Excel
is prepared with the calculations for the paths:
Activities
1 2 3 4 5 6 7 8 9 10 11 12
10 1 22 5 3 10 2 2 2 3 1 2
Paths Project
1-2-4-5 1-2-4-7-8-11-12 1-2-4-7-9-10-12 1-3-9-10-12 1-3-6 Completion
19 23 25 39 42 42
Then, similar to problem 29, triangle distributions are established to calculate the
durations for all activities except 9 (no variation in the estimate).
The resulting forecast for the duration of the project and corresponding statistics are:

Note that the probability of completing the project in 44 days has dropped to about 70%.
Problem 31:In the following table are listed tasks, duration in weeks, and
predecessors.
(a) Construct a Gantt chart using MSP.

(b) Assuming the default 5-day workweek, calculate the critical path of the
project.
(c) Calculate the project duration.

Dec '05 Jan '06 Feb '06 Mar '06 Apr '06
ID Task Name Duration Start Finish 4 11 18 25 1 8 15 22 29 5 12 19 26 5 12 19 26 2 9
1 Start 0 days Sun 12/11/05 Sun 12/11/05 12/11
2 a 2 wks Mon 12/12/05 Fri 12/23/05
3 b 2 wks Mon 12/12/05 Fri 12/23/05
4 c 4 wks Mon 12/26/05 Fri 1/20/06
5 d 3 wks Mon 1/23/06 Fri 2/10/06
6 e 1 wk Mon 1/23/06 Fri 1/27/06
7 f 2 wks Mon 2/13/06 Fri 2/24/06
8 g 3 wks Mon 2/27/06 Fri 3/17/06
9 h 1 wk Mon 3/20/06 Fri 3/24/06
10 End 0 days Fri 3/24/06 Fri 3/24/06 3/24
The figure shows the default Gantt chart view of the problem, with a project start day of
Sunday December 11, 2005. Note that MSP moves the beginning of the first task to the
first workday of Monday the 12th. This display shows the default calendar of 5 day 40 hr.
weeks with no holidays. A “Start” and “End” milestone have been inserted to insure that
all activities have at least one predecessor and successor.
The default “Tracking Gantt” view can be used to display the critical path:
Dec '05 Jan '06 Feb '06 Mar '06 Apr '06
ID Task Name Duration Start 4 11 18 25 1 8 15 22 29 5 12 19 26 5 12 19 26 2 9
1 Start 0 days Sun 12/11/05 12/11
2 a 2 wks Mon 12/12/05 0%
3 b 2 wks Mon 12/12/05 0%
4 c 4 wks Mon 12/26/05 0%
5 d 3 wks Mon 1/23/06 0%
6 e 1 wk Mon 1/23/06 0%
7 f 2 wks Mon 2/13/06 0%
8 g 3 wks Mon 2/27/06 0%
9 h 1 wk Mon 3/20/06 0%
10 End 0 days Fri 3/24/06 3/24
The project duration (in workdays) can be displayed in the “Project” >> “Project
Information” >> “Project Statistics” window, which looks like this:
Problem 32:In the following table, project activities in days are listed with three
time estimates for duration in days and predecessors for the activities.

(a) Calculate the expected time of each activity using MSP.

(b) Construct a Gantt chart using MSP.
(c) Use MSP to draw a network diagram.
(d) Assuming a 5-day workweek, calculate the critical path of the project.
(e) Calculate the slack for the activities.
The “Pert Entry Form” in Microsoft ® Project is used to enter the three durations. After
they are in the “Calculate Pert” button is clicked to populate the Duration field with the
expected durations. Note that MSP uses the non-standard terminology “Expected” in lieu
of “Most Likely.”
Using the calculated durations, the Gantt chart looks like this:
Dec '05 Jan '06 Feb '06
ID Task Name Duration Start Finish Predecessors 4 11 18 25 1 8 15 22 29 5 12 19 26
1 Start 0 days Sun 12/11/05 Sun 12/11/05 12/11
2 a 7.5 days Mon 12/12/05 Wed 12/21/05 1
3 b 8 days Mon 12/12/05 Wed 12/21/05 1
4 c 6 days Wed 12/21/05 Thu 12/29/05 2
5 d 14.5 days Thu 12/22/05 Wed 1/11/06 2,3
6 e 7 days Wed 1/11/06 Fri 1/20/06 4,5
7 f 11.5 days Fri 1/20/06 Mon 2/6/06 3,6
8 g 8 days Tue 2/7/06 Thu 2/16/06 7
9 End 0 days Thu 2/16/06 Thu 2/16/06 8 2/16

The figure shows the default Gantt chart view of the problem, with a project start day of
Sunday December 11, 2005. Note that MSP moves the beginning of the first task to the
first workday of Monday the 12th. This display shows the default calendar of 5 day 40 hr.
weeks with no holidays. A “Start” and “End” milestone have been inserted to ensure that
all activities have at least one predecessor and successor.
The tracking Gantt view can be used to display the critical path:
Dec '05 Jan '06 Feb '06
ID Task Name Duration 4 11 18 25 1 8 15 22 29 5 12 19 26
1 Start 0 days 12/11
2 a 7.5 days 0%
3 b 8 days 0%
4 c 6 days 0%
5 d 14.5 days 0%
6 e 7 days 0%
7 f 11.5 days 0%
8 g 8 days 0%
9 End 0 days 2/16
The network diagram can be displayed directly from MSP using the “Network Diagram”
view. A portion of it with the default format settings looks like this:
a
Start
Start: 12/12/05 ID: 2
Milestone Date: Sun 12/11/05 Finish: 12/21/05 Dur: 7.5 days
ID: 1 Res:
b
Start: 12/12/05 ID: 3
Finish: 12/21/05 Dur: 8 days
Res:
The slack values are automatically calculated by MSP. They can be revealed in a
number of different views:
Nov '05 Dec '05 Jan '06 Feb '06 Mar '06 Apr '06
ID Task Name Start Finish Late Start Late Finish Free Slack Total Slack 27 4 11 18 25 1 8 15 22 29 5 12 19 26 5 12 19 26 2 9 16 23
1 Start Sun 12/11/05 Sun 12/11/05 Mon 12/12/05 Mon 12/12/05 0 days 0 days
2 a Mon 12/12/05 Wed 12/21/05 Mon 12/12/05 Wed 12/21/05 0 days 0.5 days
3 b Mon 12/12/05 Wed 12/21/05 Mon 12/12/05 Wed 12/21/05 0 days 0 days
4 c Wed 12/21/05 Thu 12/29/05 Tue 1/3/06 Wed 1/11/06 9 days 9 days 9 days
5 d Thu 12/22/05 Wed 1/11/06 Thu 12/22/05 Wed 1/11/06 0 days 0 days
6 e Wed 1/11/06 Fri 1/20/06 Wed 1/11/06 Fri 1/20/06 0 days 0 days
7 f Fri 1/20/06 Mon 2/6/06 Fri 1/20/06 Mon 2/6/06 0 days 0 days
8 g Tue 2/7/06 Thu 2/16/06 Tue 2/7/06 Thu 2/16/06 0 days 0 days
9 End Thu 2/16/06 Thu 2/16/06 Thu 2/16/06 Thu 2/16/06 0 days 0 days

This view shows the View “Detail Gantt” combined with the “Schedule” Table. Note that
the Gantt chart also displays the slack as a green line.
INCIDENTS FOR DISCUSSION
Yankee Chair Company
Questions: Will Gort’s approach work? How much more of a gamble is Gort taking
than any project manager normally takes? What should Gort watch out for?
This incident is a good opportunity to engage the students in a discussion of what’s
important in the planning and scheduling process. The spirit of the case is to not do
dumb things like apply scheduling techniques that aren’t understood by the users.
Gort’s approach won’t work, because he doesn’t understand the scheduling process that
he intends to apply.The sophistication of the technique is not the issue. If he doesn’t use
PERT he can still come up with a useable schedule with any one of several techniques.
The issue is that as the PM he needs to understand why the schedule comes out the
way it does. He should be able to explain the schedule to others. He needs to be able to
understand the implications of uncertain data, and he needs to be able to understand the
impact of a reschedule. If he is using a scheduling technique that he doesn’t understand,
then he won’t be able to perform any of these important management tasks.
Cincinnati Software
Question: If you were the project manager, which method would you use, and
why?
This incident, like the previous one, is an excellent opportunity to engage the students in
a discussion of what’s really important in the project management process. I have seen
discussions similar to this incident take place many times in business situations. The
flavor of the discussion is, “What’s the latest technology and how much can we apply to
this project?” The real question should be, “Which technology is appropriate for the goal
we are trying to achieve?” In business we fall prey to the fallacy that the sophistication of
the technology will make up for our lack of planning and discipline. As the text has
discussed the keys to a good planning and scheduling process are:
 Solid understanding of senior management’s and the customer’s goals in
pursuing the project
 A complete listing of all the activities and products the project must accomplish
 A schedule that provides a start and complete date for each identified task
 A budget for each task
 A clear understanding of the outcome of each task
 A system for monitoring the progress of each task
 A process for identifying and managing change to the project scope
Note that the schedule is only one element, and as the text has explained, there are
several ways to get there. I will take a project that has every one of these in place, but

creates the schedule on a white board over a project that uses other methods, but has
no clear idea of what the customer’s expectations are.
That being said the options look like this:
 I would reject the Gantt chart as being too simplistic for the large plan and
schedule that will have to be maintained for a project as complicated as an ERP
system.
 I would work with the PERT and CPM camps to reach a compromise and use
the best of both worlds. That would be a CPM based network using PERT for
estimating durations.
CASE: Topline Arena
Question 1:Analyse the five proposals and make recommendations based on

expected costs.
The first thing needed to analyze this situation is a project schedule for the base plan.
The Gantt chart from Microsoft® Project for the plan without any alterations looks like
this:
Figure 1: Base Schedule

The following assumptions were used in preparing this schedule:
1) The start date was chosen as 15 th February 2010 so that the project penalty date
would be Tuesday 15th February 2011. (From here on, the date convention
“dd.mmm.yy” is used, although Microsoft Project uses the convention mm/dd on the
Gantt charts.)
2) A five day, forty-hour work calendar was used with no holidays.
3) The durations were designated in weeks, and predecessors established per the
Appendix.

As can be seen, the project would end on 14 Jan 11 well before the penalty would be
due. This date will be used as the baseline for all subsequent analysis.
The next step is to understand the impact on the schedule of the shutdown announced
by the utility company. For the first scenario eight weeks of non-working time was added
to the calendar between 29 Nov 10 and 21 Jan 11. The new schedule looks like this:
Figure 2: 8-Week Shutdown

Note that the project completion is delayed until 10 Mar 11. This causes the following
additional costs to be incurred:
Overhead costs: 8 weeks at ¥3,000/week = ¥24,000
Penalty costs: 4 weeks at ¥100,000/week = ¥400,000
Total: ¥424,000
Next the 12-week shutdown will be analyzed:
Figure 3: 12 Week Shutdown

Note that now the completion date is delayed until 7 Apr 11. This causes the following
additional costs to be incurred:
Overhead costs: 12 weeks at ¥3,000/week = ¥36,000
Penalty costs: 8 weeks at ¥100,000/week = ¥800,000
Total: ¥836,000
Next, the expected value of each possible outcome is calculated. The four possible
scenarios are:
 What happens if there is an 8 week shutdown?
 What happens if there is a 12 week shutdown?
 What happens if there is no shutdown and the weather in December is cold?
PROPOSAL No No Expected
5 - DO Expected stoppage, stoppage, value with Overall
NOTHING Planned 8 week 12 week value with cold warm no expected
value stoppage stoppage stoppage December December stoppage value
Planned
value ¥2,000,000
Impact of
option -¥424,000 -¥836,000 -¥12,000 ¥0
Revised
value ¥1,576,000 ¥1,164,000 ¥1,988,000 ¥2,000,000
Probability 0.70 0.30 0.33 0.67
Factored
value ¥1,103,200 ¥349,200 ¥656,040 ¥1,340,000
Derived
value ¥1,452,400 ¥1,996,040
Probability 0.50 0.50
Factored
value ¥726,200 ¥998,020
Expected
value ¥1,724,220
 What happens if there is no shutdown and the weather in December is warm?
The various proposals are examined using spreadsheets as follows. The first
spreadsheet looks at the outcome if the project just carries on as planned. This is the
same as the fifth of the proposals suggested to the project team and shows the
consequences of making no special arrangements to mitigate risks but simply reacting to
whatever happens. The convention is that extra costs are preceded by a minus sign;
savings are positive.
Figure 4: Project Expected Value If Nothing is Done

The spreadsheet works like this. The planned value is the return expected if the project
goes entirely to plan and no additional costs are incurred. Then the impact of a
stoppage is considered. For an 8 week stoppage we know the extra cost (¥424,000) so
this would reduce the expected return to ¥1,576,000. If there is a stoppage, the chance
of it lasting 8 weeks is reckoned to be 70%, so the factored value becomes ¥1,103,200.
By the same logic, the factored value if the stoppage occurs and lasts 12 weeks is

¥349,200. The expected value for the stoppage scenario is the sum of those factored
values, ¥1,452,400. Note that we do not need to consider any extra costs due to
working in December (e.g. heaters) because no work will take place if there is a
shutdown.
The same process applies to the examination of what happens if there is no shutdown,
but the weather in December may be cold or warm. If the weather is cold, an additional
cost of ¥12,000 would be incurred for heating equipment during the pouring of the seats.
By the same process as before we arrived at an expected value if there is no stoppage
of ¥1,996,040.
We know that the chance of a shutdown is reckoned at 50%, so the net expected value
for the whole project if no special measures are taken to mitigate risk is ¥1,724,220.
This is in fact the expected value of the fifth proposal, doing nothing.
The next step is to evaluate the expected value of the other four proposals.
Proposal one is to expedite (speed up) the pouring of the concrete for the seats. It
improves the project completion time to 3 Dec 10 if there is no shutdown, 28 Jan 11 if
there is an 8-week shutdown and 25 Feb 11 if there is a 12 week shutdown. This
reduces the additional costs to ¥6,000 for the 8-week (two weeks of overhead and zero
weeks of penalty) and ¥218,000 for the 12-week (six weeks of overhead and two weeks
of penalty). Note that once again a shutdown and cold weather problems in December
are mutually exclusive. Also, because of the earlier completion with no shutdown, no
concrete pouring activity will take place in December and in fact the overhead costs are
reduced because the project completes six weeks before the baseline date. This allows
a cost savings for the no shutdown branches of 6 times ¥3,000 or ¥18,000.
The updated expected value chart looks like this:
PROPOSAL 1
-
ACCELERATE No No Expected
SEAT Expected stoppage, stoppage, value with Overall
GALLERY Planned 8 week 12 week value with cold warm no expected
POURING value stoppage stoppage stoppage December December stoppage value
¥1,870,00
Planned value 0
Impact of
option -¥6,000 -¥218,000 ¥18,000 ¥18,000
¥1,864,00 ¥1,652,00 ¥1,888,00 ¥1,888,00
Revised value 0 0 0 0
Probability 0.70 0.30 0.33 0.67
¥1,304,80 ¥1,264,96
Factored value 0 ¥495,600 ¥623,040 0
¥1,800,40 ¥1,888,00
Derived value 0 0
Factored value ¥900,200 ¥944,000
Expected ¥1,844,20
value 0

Figure 5: Project Expected Value with Expedited Gallery Pour
Note that the total maximum value of the project has been reduced to ¥1,870,000
because proposal one requires an additional ¥130,000 of expense for all four possible
scenarios. The expected value of the project, however, rises to ¥1,844,200 with this
proposal.
For proposal two, examination of Figures 2 and 3 shows that building the main floor
foundation is not on the critical path. Hence money spent to accelerate completion
would be wasted. Specifically, it lowers the expected value of proposal one by ¥65,000
to $1,761,200.
Similarly proposal three also reduces the duration of a task off the critical path. As in
proposal two, this expense simply lowers the expected value of proposal one by ¥60,000
to ¥1,766,200.
Proposal four is harder to evaluate. If there was an 8-week or 12-week shutdown the
same two activities would benefit from expediting; Pour Seats and Paint Seats. For the
8-week shutdown a smaller amount of expediting will be used to reduce the extra cost
incurred. Specifically, Pour Seats could be reduced to 2 weeks from 4 weeks for a cost
of ¥40,000 and Paint Seats could be reduced to 1 week from 3 weeks also for a cost of
¥40,000. The Gantt chart for the 8-week shutdown looks like this:
Figure 6: 8-Week Shutdown with Proposal Four Mitigations

For the 12-week shutdown, the maximum possible expediting would be used, specifically
Pour Seats would be reduced to 1.3 weeks for a cost of ¥54,000 (2.7 times ¥20,000) and
Paint Seats would be reduced to 1 week for a cost of ¥40,000.


Figure 7: 12-Week Shutdown with Proposal 4 Mitigations

The delay for the 8-week shutdown plus the expediting costs would cause costs of:
4 weeks at ¥3,000/week (overhead) + no penalty + ¥80,000 expediting costs = ¥92,000
For the 12-week shutdown the delay plus expediting would be:
7.3 weeks at ¥3,000/week (overhead) + 3.3 weeks at ¥100,000 /week (penalty) +
¥94,000 expediting costs = ¥445,900
If there is no shutdown, but a cold winter, then four weeks of heating costs will be
incurred as in the base scenario. Placing these values in the appropriate place on the
expected value chart gives the following:
PROPOSAL No No Expected
4 - WAIT Expected stoppage, stoppage, value with Overall
UNTIL 1 Planned 8 week 12 week value with cold warm no expected
DECEMBER value stoppage stoppage stoppage December December stoppage value
Planned
value ¥2,000,000
Impact of
option -¥92,000 -¥445,900 -¥12,000 ¥0
Revised
value ¥1,908,000 ¥1,554,100 ¥1,988,000 ¥2,000,000
Probability 0.70 0.30 0.33 0.67
Factored cost ¥1,335,600 ¥466,230 ¥656,040 ¥1,340,000
Derived value ¥1,801,830 ¥1,996,040
Factored
value ¥900,915 ¥998,020
Expected
value ¥1,898,935
Figure 8: Project Expected Value for Proposal 4
This analysis shows that proposal four has the best expected value and, on cost benefit
grounds, should be selected.
Question 2:What other basis might be used to make a decision besides expected
costs? What might the decision be in that case?
Other solution techniques drawn from decision analysis can be used, such as the
minimax decision rule. To employ this technique a table will be built of the possible
payouts for proposals 1, 4 and 5 (the others can be safely eliminated as no better than
one of these three):
No No
stoppag stoppag
8 week 12 week e, cold e, warm
stoppag stoppag Decemb Decemb
Outcome e e er er

Proposal ¥1,864,0 ¥1,652,0 ¥1,888,0 ¥1,888,0

1 00 00 00 00
Proposal ¥1,908,0 ¥1,554,1 ¥1,988,0 ¥2,000,0
4 00 00 00 00
Proposal ¥1,576,0 ¥1,164,0 ¥1,988,0 ¥2,000,0
5 00 00 00 00
Using minimax the best worst case is in proposal 1 (¥1,652,000), so it would be

selected. That is, the worst scenario is the 12 week stoppage. If that were to happen
proposal one would be the best way to deal with it, because it has the least impact on
the planned value.
Another technique is the minimax regrets. Using this rule we compare each proposal to
the best one in that column (state of nature) to determine how much would be lost if that
proposal were selected instead of the best one. For example, in the “8-Week Shutdown”
column the best outcome is ¥1,908,000 so the regret for choosing proposal 1 is
¥1,864,00 minus ¥1,908,000 = -¥44,000. In other words it we choose proposal one and
an 8-week shutdown occurred we would regret our choice because we would have been
¥44,000 better off if we had chosen proposal 4. The complete regrets table looks like
this:
No No
stoppage stoppage
8 week 12 week , cold , warm
stoppag stoppag Decemb Decemb
Outcome e e er er
- - -
Proposal 1 ¥44,000 ¥0 ¥100,000 ¥112,000
-
Proposal 4 ¥0 ¥97,900 ¥0 ¥0
- -
¥332,00 ¥488,00
Proposal 5 0 0 ¥0 ¥0
Using the minimax regrets criteria we compare the maximum regrets of each proposal
and choose the smallest one. In this case, proposal 4 has the smallest maximum regret
at - ¥97,900 so on this basis it would also be chosen.
Question 3:What other factors might enter into the decision such as behavioral,
organizational and political?
There are a number of non-financial factors that could be considered in making the
decision including:
 The political and marketing implications of not completing the job on time.
 The organization’s ability to quickly change and then execute an updated project
plan in response to events.
 The company’s overall ability to execute any project, let alone one with problems

 The benefits of keeping the team working on the project, rather than interrupting
their work on the arena.
 Demonstrating a competent and professional approach to a serious problem.
 Lotus Construction would want to behave in an assertive way towards the utility
company, to ensure it realized the effects of the shutdown and the need to
complete its work quickly and with the least disruption.
 Lotus could consider changing the specification of the arena to speed up
construction, but there is not really time to do this.
 Lotus might consider whether there are grounds for a legal action against the
utility company to recover some of its unexpected costs.

Question 4:What decision would you make if you were the project director?
The president would decide to go with proposal four, based on its highest expected
value.

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Project Management: A Managerial Approach, 9th edition Instructor’s Resource Guide

Overview – This chapter continues the discussion of project implementation by covering

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 1

o Critical activities - events or paths which, if delayed, will delay the

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 2

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 3

 In addition to these relationships, PDM allows for leads and lags

 σ μ= the variance of the critical path, the sum of the variances

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 4

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 5

my twenty years of both managing projects and teaching project management, I

A good reference case for this chapter follows:

MATERIAL REVIEW QUESTIONS

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 6

Question 4:Contrast total slack and free slack.

Question 5:When is each scheduling technique appropriate to use?

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 7

Question 6:What is the difference between activity-on-node and activity-on-arrow

Question 7:How does simulation determine the probabilities of various project

Question 8:Briefly summarize how a network is drawn.

Question 10:How is the critical path determined?

Question 11:What is “slack” and why is it important?

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 8

CLASS DISCUSSION QUESTIONS

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 9

Question 15:Why is AOA or AON of significant value to the project manager?

Question 16:How is uncertainty in project scheduling dealt with?

Question 17:How would you calculate free slack?

Question 18:How are activity times estimated?

Question 19:Should the critical path activities be managed differently from

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 10

Question 20:Precedence diagramming extends the standard task relationship in a

Problem 1:Given the following information, draw the AON diagram:

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 11

Problem 2:Convert the AON diagram below to an AOA diagram.

Problem 3:Find three errors in the diagram below.

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 12

Problem4:Given the diagram below, find:

a) The critical path is B-E-G.

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 13

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 14

Figure 7a is the AOA diagram.

Figure 7b is the AON diagram.

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 15

Problem 8:Given the following network,

(a) What is the critical path?

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 16

21 24.7 2.77 –2.2 a) 1.4%

22 24.7 2.77 –1.6 b) 5.5%

25 24.7 2.77 0.2 c) 57.9%

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 17

a) The critical path is AC CB BE EF.

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 18

CD 3 3 3 3.0 0.00 0.00

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 19

(a) Draw the AOA diagram.

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 20

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 21

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 22

Problem 13:Miracle Marketing has received a contract from a large pharmaceutical

Find the critical path and expected completion time.

1) The critical path is A, B, E, I, L, M, N, and P.

Copyright ©2015 John Wiley & Sons, Inc. Chapter 8 - 23