PROJECT MANAGEMENT

This chapter describes techniques that are widely used to plan and schedule projects. A
key tool in such endeavors is a network diagram.
PLANNING AND SCHEDULING WITH GANTT CHART
It is a popular tool for planning and scheduling simple projects. It enables a manager to
initially schedule project activities and, then, to monitor progress over time by comparing
planned progress to actual progress.
In order to prepare the chart, first identify the major activities that would be required.
Next, time estimates for each activity were made, and the sequence of activities was
determined. Once computed, the chart indicated which activities were to occur, their
planned duration, and when they were to occur.
The obvious advantage of Gantt chart is its simplicity, and this accounts for its
popularity. However, it fails to reveal certain relationships among activities that can be
crucial to effective project management.
Consequently, Gantt charts are most useful for simple projects; say where activities are
simultaneous or where a string of sequential activities is involved. On more complex
projects, Gantt charts can be useful for initial project planning, which then gives way to
the use of network diagrams.
PERT AND CPM
PERT (Program Evaluation and Review Technique) and CPM (Critical Path Method) are
two of the most widely used techniques for planning and coordinating large scale
projects. By using PERT or CPM, managers are able to obtain:
- A graphical display of project activities.
- An estimate of how long the project will take.
- An indication of which activities are the most critical to timely completion of the
project.
- An indication of how long any activity can be delayed without lengthening the
project.
THE NETWORK DIAGRAM
One of the main features PERT and related techniques is their use of a network or
precedence diagram to depict major project activities and their sequential
relationships. The diagram is composed of a number of arrows and nodes.
There are two slightly conventions for constructing these network diagrams:
- Under one convention, the arrows are used to designate activities.
- Under the other convention, the nodes are used to designate activities.
These conventions are referred to as Activity-On-Arrow (A-O-A) and Activity-On-
Node (A-O-N).

DETERMINISTIC TIME ESTIMATES

If times estimated for each activity can be made with a high degree of confidence that
actual times will not differ significantly, we say the estimates are deterministic. On
the other hand, if estimated times are subject to variation, we say the estimates are
probabilistic.
Next, let’s describe the analysis of networks with deterministic time estimates.
EXAMPLE

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 Given the information provided in the accompanying network diagram, determine
each of the following:
a) the length of each path
b) the critical path
c) the expected length of the project
d) the amount of slack time for each path

SOLUTION
a)
path Length ( weeks) Slack
1-2-4-5-6 8+6+3+1=18 20-18=2
1-2-5-6 8+11+1=20 20-20=0
1-3-5-6 4+9+1=14 20-14=6

b) The longest path (20weeks) is 1-2-5-6, it is the critical path.

c) The expected length of the project is equal to the length of the critical path (20 weeks).
d) Slack for each path is given in the table above.
A COMPUTING ALGORITHM
An algorithm is used to develop four pieces of information about network activities:
ES, the earliest time the activity can start, assuming all preceding activities start as early
as possible.
EF, the earliest time the activity can finish.
LS, the latest time the activity can start and not delay the project.
LF, the latest time the activity can finish and not delay the project.
Once these values have been determined, they can be used to find:
1. Expected duration of the project.
2. Slack time activities.
3. Which activities are on critical path?

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COMPUTING ES AND EF TIMES
Rules to compute ES and EF:
1. The earliest finish time for any activity is equal to its earliest start time plus its
expected duration, t:
EF = ES + t
2. For nodes with one entering arrows: ES for activities at such nodes is equal to EF
of entering arrow.
- For nodes with multiple entering arrows: ES for activities leaving such nodes
equals the largest EF of entering arrows.
Exercise
Compute the ES and EF time for each activity.
Solution
Assume an ES of zero for activities without predecessors. Thus activities 1-2 and 1-3 are
assigned ES times equal to zero. The earliest finishing times for this activities:
- EF (1-2) = 0+8=8 and EF (1-3) = 0+4=4
-The EF of activity1-2 becomes the ES for the two activities that follow it: 2-4 and 2-5.
- ES (2-4) =8; ES (2-5) = 8 and ES (3-5) = 4
The ES and EF times are summarized as follows:
activity duration ES EF
1-2 8 0 8
1-3 4 0 4
2-4 6 8 14
2-5 11 8 19
3-5 9 4 13
4-5 3 14 17
5-6 1 19 20
Note that the last EF is the project duration.
COMPUTING LS AND LF TIMES
Rules to compute LS and LF times:
1. the latest starting time for each activity is equal to its latest finish time minus its
expected duration:
LS = LF – t
2. -For nodes with one leaving arrow: LF for arrows entering that node equals the
LS of the leaving arrow.
- For nodes with multiple leaving arrows: LF for arrows entering that node equals
the smallest LS of leaving arrows.
Exercise
Compute the LF and LS times for each activity.
Solution
Set LF of the last activity equal to the EF of that activity.
Thus LF (5-6) = EF (5-6) = 20
Hence, LS (5-6) = LF (5-6) – 1
= 20-1 = 19
In order for activity 5-6 to be able to start no latter than week 19, all immediate
predecessors must finish no latter than that time.
Thus: LF (4-5) = LF (2-5) = LF (3-5) = 19

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 The respective LS times for each activity are:
LS (4-5) = 19-3=16
LS (2-5) = 19 -11=8
LS (3-5) = 19 -9 = 10
The LS and LF times for each activity are summarized as follows:
activity duration LF LS
5-6 1 20 19
4-5 3 19 16
2-5 11 19 8
3-5 9 19 10
2-4 6 16 10
1-2 8 8 0
1-3 4 10 6

COMPUTING ACTIVITY SLACK TIMES

The slack time for any activity can be computed in either of two ways:
Activity Slack = LS – ES or LF – EF
Exercise
Compute the slack time for each activity.

activity LS ES Slack
1-2 0 0 0
1-3 6 0 6
2-4 10 8 2
2-5 8 8 0
3-5 10 4 6
4-5 16 14 2
5-6 19 19 0
The critical path using this computing algorithm is denoted by activities with zero slack
time. Thus activities 1-2, 2-5, and 5-6 are all critical activities.
TIME – COST TRADE- OFFS: CRASHING
Estimates of activity times for projects are usually made for some given level of
resources. In many situations it is possible to reduce the length of a project by injecting
additional resources.
Managers often have certain options at their disposal that allow them to shorten, or crash,
certain activities. Among the most obvious options are using additional personnel or
more efficient equipment and relaxing work specifications.
The manager needs the following information:
1. regular time and crash time estimates for each activity
2. regular cost and crash cost estimates for each activity
3. a list of activities that are on the critical path
Activities on the critical path are potential candidates for crashing because shortening
non critical activities would not equal have an impact on total project duration. From
an economic point of view, activities should be crashed according to crashing costs:

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crash those activities with the lowest costs first. Moreover, crashing should continue
as long as the cost to crash is less than the benefits received from crashing.

THE GENERAL PROCEDURE FOR CRASHING IS:

1. Obtain estimates of regular and crash times and costs for each activity.
2. Determine the lengths of all paths and path slack times
3. Determine which activities are on the critical path
4. Crash critical activities, in order of increasing cost, as long as crashing costs do
not exceed benefits. (Note that two or more paths may become critical as the
original critical path becomes shorter, so that subsequent improvement will
require simultaneous shortening of two or more paths.
EXAMPLE
Using the information below, develop an optimum time-cost solution. Assume that
indirect project costs are $100/day.
Activi predecess Norma Crash Cost/day
ty or l time time to crash
A - 6 6 -
B A 10 8 $500
C - 5 4 300
D C 4 1 700
E D 9 7 600
F B,E 2 1 800

Solution
a) Determine which activities are on the critical path, its length, and the
length of the path:
Path length
a-b-f 18
c-d-e-f 20(critical path)
b) Rank the critical activities in order of increasing crash cost and determine
the number of days each can be crashed.
Activity cost/day to crash available days
C $300 1
E 600 2
D 700 3
F 800 1
c) Begin shortening the project, one day at a time, and check after each
reduction to see which path is critical.
d) 1. Shorten activity C one day at a cost of $300. the length of the critical
path now becomes 19 days.
2. Shorten activity E one day at a cost of $600. the length of path C-D-E-F
now becomes 18 days, which is the same as path A-B-F.
3. Since the paths are now both critical, further improvements will require
shortening one activity on each.
The remaining points for crashing and their costs are:
Path activity crash cost/day

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 A-B-F A no reduction possible
B $500
F 800
C-D-E-F C no further reduction possible
D $700
E 600
F 800
Since F is on both paths shorten it by one day at a cost of $800. the project
duration is now 17days.
4. At this point no additional improvement is feasible. The cost to crash B is $500 and
that of E is $600 for a total of $1100 and that would exceed the project costs of $1000
per day.
5. the crashing sequence is summarized below:
Path length after crashing n days
n= 0 1 2 3
A-B-F 18 18 18 17
C-D-E-F 20 19 18 17
Activity crashed C E F
Cost $300 $600 $800