Quantitative Analysis for Management Decision

Lecture 12
Project management and network model
Course leader : Shewayirga Assalf (Ass.Pro.)
PROJECT MANAGEMENT
What is project
 A project is a temporary effort to create a unique
product or service.
 Projects usually include constraints and risks
regarding cost, schedule or performance outcome.
 Project management is the application of knowledge, skills,
tools, and techniques to project activities in order to meet or
exceed stakeholder needs and expectations from a project.
 Meeting or exceeding stakeholder needs and expectations
invariably involves balancing competing demands among:
 Scope, time, cost, and quality
 Stakeholders with differing needs and expectations
 BRIEF HISTORY OF CPM/PERT
CPM/PERT or Network Analysis as the technique is sometimes
called, developed along two parallel streams, one industrial and
the other military.
 CPM was the discovery of M.R. Walker and J.E. Kelly 1957.

 The first test was made in 1958, when CPM was applied to
the construction of a new chemical plant.
 PERT was devised in 1958 for the POLARIS missile
program by the Program Evaluation Branch of the Special
Projects office of the U.S. Navy.
 Both use same calculations, almost similar

 Main difference is probabilistic and deterministic in

time estimation
 BY USING PERT/CPM, MANAGERS ARE ABLE TO
OBTAIN:

1. A graphical display of project activities

2. An estimate of how long the project will take.

3. An indication of which activities are the most

critical to timely completion of the project.

4. An indication of how long any activity can be

delayed with out lengthening the project.
 BASIC DIFFERENCES BETWEEN PERT & CPM

 PERT: It assumes a probability distribution for

the duration of each activity
It is used for one-time projects involving
activities of non-repetitive nature.

 CPM: was developed in connection with a

construction and maintenance project in which
duration of each activity was known with
certainty.

It is used for completion of projects involving

activities of repetitive nature.
PERT / CPM NETWORK MODELS
 PERT (Program Evaluation and Review Technique)
and CMP (Critical Path Method) are two of the most
widely used techniques for planning, scheduling and
controlling large-scale projects.
 By using PERT / CMP, 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 project.
An indication of how long any activity can be delayed
without lengthening the project completion.
 One of the main features of PERT/CPM is the use of a
network or precedence diagram to depict major project
activities and their sequential relationships.
 Some of the terms commonly used in networks are defined
below.
A. Activity

 Activity is a physically identifiable part of a project which

consumes time and resources.
 In the network, activity is represented by an arrow, the tail of
which represents the start and the head, the finish of the
activity.
 i)Predecessor activity- activity must be completed
immediately prior to the start of another activity.
 ii)Successor activity- activity that cannot be started until
one or more activities are completed but immediately succeed
them.
 iii)Concurrent activity- activities which can be accomplished
simultaneously.
 CONT’D
a) Event
 The beginning and end points of an activity are called events or
nodes.
 Event is a point in the time and does not consume any resource. It
is generally represented by a numbered circle.
 The head event has always a number higher than the fail
even/node
 Activity
1 2

A, Path is unbroken chain of activity arrows connecting the initial

event to some other event.
 It is a sequence of activities that leads from the starting node to
the finishing node.
B, Network is the graphical representation of logically and
sequentially connected arrows and nodes representing activities and
events of a project.
THE PROJECT NETWORK

Network analysis is the general name given to certain

specific techniques which can be used for the planning,
management and control of projects.
Network:- Shows the sequential relationships among
activities using nodes and arrows.
 Use of nodes and arrows

Arrows an arrow leads from tail to head

directionally. Indicate Activity.
 Activity:- A task or a certain amount of work required in
the project which requires time to complete
 Nodes A node is represented by a circle
Indicate EVENT, a point in time where one or more
activities start and/or finish.
 SITUATIONS IN NETWORK DIAGRAM
B
A
A must finish before either B or C can start

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

12
B

A
C both A and C must finish before either of B or D can
start
B
D

A
B
A must finish before B can start
Dummy both A and C must finish before D can start darl
a/sm
bs/v
C it
D
 CONT’D
 The network diagram describes sequential relationships among
major activities on a project.
 The length (of time) of any path can be determined by summing
the expected times of the activities on that path.
 The path with the longest time is of particular interest because it
governs project completion time
 Expected project duration = The expected time of
the longest path
 Moreover, if there is any delay along the longest path, there will
be corresponding delay in project completion time.
 Conversely, attempts to shorten project completion must focus on
the longest sequence of activities.
 Because of its influence on project completion time, the longest
path is the Critical Path, and its activities are referred to as Critical
Activities.
 Paths that are shorter than the critical path can experience some
delays and still not affect the overall project completion time as
long as the ultimate path time doesn’t exceed the length of the
critical path.
 The allowable slippage (delay) for any path is called the Path
Slack and it reflects the difference between the length of a
given path and the length of the critical path.
 The critical path, then, has zero slack time

 e)Conventions for drawing networks:

 There are two slightly different conventions for

constructing the network diagrams.
 Under one convention, the arrows are used to designate
activities, whereas 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) respectively.
 CRITICAL PATH METHOD (CPM) ANALYSIS (DETERMINISTIC TIME
ESTIMATE)
 This is a diagrammatic representation which shows the
various activities in a project.
 The aim of the CPA is to identify how those activities link
together and to show the critical path or the sequence of
activities where a delay will result in the overall project being
delayed.
 An activity is said to be critical if a delay in its start will cause
a further delay in the completion of the entire project.
 The sequence of critical activities in a network is called the
critical path.
 It is the longest path in the network from the starting event to
the ending event and defines the minimum time required to
complete the project.
 In the network it is denoted by double line. This path identifies
all the critical activities of the project. Hence, for the activity
(i,j) to lie on the critical path, following condition must be
satisfied.
The procedure of determining the critical path
 Step 1. List all activities and then draw arrow (network) diagram.
 Step2. Indicate the normal time (tij) for each activity ( i,j) above the
arrow which is deterministic.
 Step 3. Calculate the earliest start, the earliest finish, the latest finish
and latest start times for each event.
 Step 4. Indicate the various times computed above on the arrow
diagram.
 Step 5. Determine the total float for each activity by taking the
difference between the earliest start and the latest start time.
 Step 6. Identify the critical activities and connect them by double line
arrows.
 Step 7. Calculate the project duration.
 CONT’D
Example:
 A small maintenance project consists of the following jobs
whose precedence relationship is given below.

Jobs 1-2 1-3 2-3 2-5 3-4 3-6 4-5 4-6 5-6 6-7

Duration ( 15 15 3 5 8 12 1 14 3 14
days)
Required:
A. Draw an arrow diagram representing the project.
B. Find the total float for each activity.
C. Find the critical path and the total project duration
 SOLUTION
A. THE NETWORK DIAGRAM THAT REPRESENTS THE PROJECT IS AS FOLLOWS
CONT’D
 The paths of the network are:
 Path: 1 – 2 –5 -6 -7=>37days
 Path: 1 – 2 – 3– 4 – 5 – 6– 7 =>44days
 Path: 1 – 2 – 3– 4 – 6– 7 =>54days- Critical Path Length
 Path: 1 – 3– 4– 5 – 6 – 7 =>41days
 Path: 1 – 3– 4 – 6 – 7 =>51days
 Path: 1 – 3–6 – 7 =>41days
B. The total float for each activity
 To determine the total float first the earliest start and finish; late
start and finish should be computed.
 This calls for the forward pass and backward pass computation.
CONT’D
 Forward pass calculation
 Finding ES and EF times involves a “forward pass” through the
network.
 The method associated with finding ES and EF is called
forward pass method.
 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.

EF = ES + t
 Esj is given by:
 ESj= Max (ESj, ti-j)
 Where Esi is the earliest time and tij is the normal time for the
activity (i,j).
 ES1=0
 ES2= ES1 + t1-5= 0 + 15=15
 ES3= Max (ES 2 + t2-3, Es1 + 13)
 = Max (15 +3, 0+15) = 18
 ES4= ES3+ t34 = 18+8 = 26
 ES5 = Max (ES2 + 25, ES4 + t4-5)
 = Max (15 +5, 26+1) = 27
 ES6 = Max (ES3+t3-6, ES4+ t4-6, ES5+t5-6)
 = Max (18+12, 26+24, 27+3)
 = 40
 ES7 = ES6 + t6-7 = 40 +14 = 54