CPM & PERT

Introduction

“Project management is the application of processes, methods,

skills, knowledge and experience to achieve specific
project objectives according to the project acceptance criteria
within agreed parameters. Project management has final
deliverables that are constrained to a finite timescale and budget. ”
Importance of Project Management

• Strategic Alignment
• Leadership
• Clear Focus and Objectives
• Realistic Project Planning
• Quality control
• Risk Management
Management of Project

• Planning
• Scheduling
• Controlling
Project Planning

the following steps are followed.

• The Objectives of the projects in definite words

• Goals and stages intermediate to attain the final target
• Forecast and means of achieving goals i.e., activities.
• Organization resources-financial, managerial and operational-to carry out activities
and to determine what is feasible and what is not.
• Alternatives-individual courses of action that will allow accomplishing goals.
• For consistency with company’s policies
• An alternative which is not only consistent with its goals and concept but also one
that can be accomplished with the evaluated resources.
• Decision on a Plan
 Scheduling

• Scheduling is the allocation of resources

• Resources in conceptual sense are time & energy but in practical sense
are the time, manpower, equipment applied to material.
• Scheduling is the process of formalizing the planned functions, assigning
the starting and completion dates to each activity which proceeds in a
logical sequence and in an orderly and systematic manner.
Gantt Chart

• Low cost means

• Planned Activities
• Documented order of performance
• Recording of activity time
Project Controlling

• Carried during the execution phase

• For variance analysis
• Standards and targets are established
• Performance is measured against the yardstick
Project Management techniques

• PERT: Program Evaluation and Review Technique (PERT) is that

technique of project management which is used to manage uncertain
(i.e., time is not known) activities of any project.

• CPM: CPM is that technique of project management which is used to

manage only certain (i.e., time is known) activities of any project.
Framework

1. Define the project and prepare the work breakdown structure.

2. Develop the relationships among the activities. Decide which activities must precede
and which must follow others.

3. Draw the network connecting all the activities.

4. Assign time and/or cost estimates to each activity.

5. Compute the longest time path through the network. This is called the critical path .

6. Use the network to help plan, schedule, monitor, and control the project
Network Diagram Approaches

• Activity on Node: Activities are shown on the nodes.

• Activity on Arrow: Arrows are used to show activities.

Practice Problem
Consider the details of a project as shown in the following table:
Activity Immediate Predecessors Duration (Months)
A 2
B 5
C 4
D B 5
E A 7
F A 3
G B 3
H C, D 6
I C, D 2
J E 5
K F, G, H 4
L F, G, H 3
M I 12
N J, K 8
Practice Problem

Requirements:

a) Construct the CPM Network.

b) Determine the Critical Path and Project Completion time.
c) Compute Total Floats and Free Floats for non-critical activities
(a) Construct the CPM Network

E (7) J (5)
2 5 8
F (3 )

N
(2 )
) ( 4

(8
K

)
A

B (5) G (3) L (3)

1 3 6 9
( 5) ) 2 )
D (6 (1
C

H M
(4

7
)

4
I (2)
(b) Determining Critical Path and Project Completion time

Critical Path:
The Critical Path of a project is the longest path in the network.
This can be identified by simply listing out all the possible paths from the start node
to the end node of the project and then selecting the path with the maximum sum of
activity time.

Two Phases
i. Determine Earliest Start time (ES) of all the nodes. This is also known as
Forward Pass.
ii. Determine Latest Completion time (LC) of various nodes. This is called
Backward Pass.
(b) Determining Critical Path and Project Completion time

Determination of Earliest Start Times ES (B)

ES (B) = Max (ES A + Duration B)

Determination of Latest Completion Times LC (A)

LC (A) = Min (LC B - Duration B)
LC= Min (LC B - Duration B)
ES = Max (ES A + Duration
2 9 20
B)

E (7) J (5)
2 5 8
F (3 )

N
(2 )
) ( 4 28

(8
0
K

)
28
A

0 5 16

B (5) G (3) L (3)

1 3 6 9
( 5) ) 2 )
D (6 (1
C

H M
(4

7
)

4
10
I (2) 12
LC= Min (LC B - Duration B)
8 15 20
ES = Max (ES A + Duration
2 9 20
B)

E (7) J (5)
2 5 8
F (3 )

N
(2 )
) ( 4 28

(8
0 5 16
K

)
28
16
A

0 5

B (5) G (3) L (3)

1 3 6 9
( 5) ) 2 )
D (6 (1
C

H M
(4

7
)

4 10 16
10
I (2) 12
(b) Determining Critical Path and Project Completion time

Conditions for Critical Path

 ES (A) = LC (A)
 ES (B) = LC (B)
 ES (B) - ES (A) = LC (B) – LC (A) = Duration (B)

1>3>4>6>8>9
B>D>H>K>N
5+5+6+4+8=28
LC
8 15 20
ES 9 20
2

E (7) J (5)
2 5 8
F (3 )

N
(2 )
) ( 4 28

(8
0 5 16
K

)
28
16
A

0 5

B (5) G (3) L (3)

1 3 6 9
( 5) ) 2 )
D (6 (1
C

H M
(4

7
)

4 10 16
10
I (2) 12
(c) Compute Total Floats and Free Floats

Total Floats:
It is the amount of time that the completion time of an activity can be delayed
without affecting the project completion time.

TF (AB) = LC (B) – ES (A) – Duration (B)

Free Floats:
It is the amount of time that the activity completion time can be delayed without
affecting the Earliest Start time of immediate successor activities in the network.

FF (AB) = FF (B) – FF (A) – Duration (B)

(c) Compute Non-Critical Activities
Activity Duration Total Float Free Float
LC (B) -ES (A) –Dur (B) ES (B) – ES (A) – Dur (B)
A (1-2) 2 6 (8-0-2) 0 (2-0-2)
B (1-3) 5 0 (5-0-5) 0 (5-0-5)
C (1-4) 4 6 (10-0-4) 6 (10-0-4)
D (3-4) 5 0 (10-5-5) 0 (10-5-5)
E (2-5) 7 6 (15-2-7) 0 (9-2-7)
F (2-6) 3 11 (16-2-3) 11 (16-2-3)
G (3-6) 3 8 (16-5-3) 8 (16-5-3)
H (4-6) 6 0 (16-10-6) 0 (16-10-6)
I (4-7) 2 4 (16-10-2) 0 (12-10-2)
J (5-8) 5 6 (20-9-5) 6 (20-9-5)
K (6-8) 4 0 (20-16-4) 0 (20-16-4)
L (6-9) 3 9 (28-16-3) 9 (28-16-3)
M (7-9) 12 4 (28-12-12) 4 (28-12-12)
N (8-9) 8 0 (28-20-8) 0 (28-20-8)
LC= Min (LC B - Duration B)
8 15 20
ES = Max (ES A + Duration
2 9 20
B)

E (7) J (5)
2 5 8
F (3 )

N
(2 )
) ( 4 28

(8
0 5 16
K

)
28
16
A

0 5

B (5) G (3) L (3)

1 3 6 9
( 5) ) 2 )
D (6 (1
C

H M
(4

7
)

4 10 16
10
I (2) 12
(c) Compute Non-Critical Activities

Any critical activity will have Zero total Float and Zero Free Float.
Based on this property Critical Path Activity
(c) Compute Non-Critical Activities
Activity Duration Total Float Free Float
LC (B) -ES (A) –Dur (B) ES (B) – ES (A) – Dur (B)
A (1-2) 2 6 (8-0-2) 0 (2-0-2)
B (1-3) 5 0 (5-0-5) 0 (5-0-5)
C (1-4) 4 6 (10-0-4) 6 (10-0-4)
D (3-4) 5 0 (10-5-5) 0 (10-5-5)
E (2-5) 7 6 (15-2-7) 0 (9-2-7)
F (2-6) 3 11 (16-2-3) 11 (16-2-3)
G (3-6) 3 8 (16-5-3) 8 (16-5-3)
H (4-6) 6 0 (16-10-6) 0 (16-10-6)
I (4-7) 2 4 (16-10-2) 0 (12-10-2)
J (5-8) 5 6 (20-9-5) 6 (20-9-5)
K (6-8) 4 0 (20-16-4) 0 (20-16-4)
L (6-9) 3 9 (28-16-3) 9 (28-16-3)
M (7-9) 12 4 (28-12-12) 4 (28-12-12)
N (8-9) 8 0 (28-20-8) 0 (28-20-8)
PERT-PROGRAM EVALUATION
AND REVIEW TECHNIQUE
PERT-Program Evaluation and Review Technique

“It is a method used to examine the tasks in a schedule and

determine a Critical Path Method variation (CPM). It analyzes the
time required to complete each task and its associated
dependencies to determine the minimum time to complete a
project.”
Three Estimates
1. aij = optimistic estimate of duration – the shortest possible time
(Optimistic time)
2. bij = pessimistic estimate of duration – the longest time that the activity
(Pessimistic Time)
3. mij = most likely estimate of duration – the time that would occur most often
(Most likely time)
Three Estimates
■ expected completion time of the activity
Expected Duration=

■ standard deviation for each activity

Variance= σ2

• the critical path has 2 phases :

- Esj= earliest start time- forward pass
-Lci= latest completion time- backward pass
• Esj= max (Esi+ Dij) where Esi=earliest time; Dij=duration
• Lci= min (Lcj-Dij)
 Considering the following table summarizing the details of a project:

Duration (Week)
to(Optimistic tm(most likely tp(Pessimistic
Activity Predecessor (s)
time) Time) Time)
A - 5 6 7
B - 1 3 5
C - 1 4 7
D A 1 2 3
E B 1 2 9
F C 1 5 9
G C 2 2 8
H E,F 4 4 10
I D 2 5 8
J H,G 2 2 8

a) Construct the project network

b) Find the expected duration and variance of each activity
c) Find the Critical path and expected project completion time
d) What is the probability of completing the project on or before 22 weeks?
a) The project network

D I
A 2 5 8

B E
J
1 3 6
H

F
C

7
4
G
 b) the expected duration and variance of each activity
Duration (Week)
to(Optimisti tm(most tp(Pessimist te (expected σ2 Expected duration of each activity
Activity
c time) likely Time) ic Time) duration) (Variance)
A 5 6 7 6 0.11 A=te= {5+ (4*6) + 7} /6
=6
B 1 3 5 3 0.44
B=te= {1+ (4*3) +5} / 6
C 1 4 7 4 1 =3
D 1 2 3 2 0.11
E 1 2 9 3 1.78
F 1 5 9 5 1.78
Variance=σ2
G 2 2 8 3 1 A= {(7-5)/6}^2
H 4 4 10 5 1 =0.11
I 2 5 8 5 1 B= {(5-1)/6}^2
=0.44
J 2 2 8 3 1

Mean Variance
te = ( to+ 4*tm+ tp)/6 σ2= {(tp-to)/6}^2
Duration (weeks)

D (2) I (5)
(6) 2 5 8
A

B (3) E (3)
J (3)
1 3 6 H (5
)
( 5)
)
(4

F
7
C

4
G(3)
 c) The Critical path and expected project completion time

■ the critical path has 2 phases :

■ - Esj= earliest start time- forward pass
■ -Lci= latest completion time- backward pass

■ Esj= max (Esi+ Dij)

where Esi=earliest starting time of the starting note;
Dij=duration
■ Lci= min (Lcj-Dij)
Where Lci= latest completion time of the same note
 earliest start time- forward pass
C)
6 8

D (2) I (5)
(6)
A
2 5 8 17

0 3 9

B (3) E (3) J (3)

1 3 6 H (5
)
( 5)
(4)

F
7
C

14

4
4
G(3)
C) latest completion time- backward pa
10 12
6 8

D (2) I (5) 17
(6) 2 5 8 17

0 6 9
A

0 3 9

B (3) E (3) J (3)

1 3 6 H (5
)
( 5)
4)

F 14
(

7
C

14

4 4
4
G(3)
■ Critical path
Conditions-
1) Esi= Lci (earliest starting time of the starting note= latest completion time of the same note)
2) Esj= Lcj (earliest starting time of the ending note= latest completion time of the same note)
3) Esj-Esi=Lcj- Lci= DiJ= duration of the each activity
C) 10 12
6 8

D (2) I (5) 17
(6 ) 2 5 8 17

0 6 9
A

0 3 9

B (3) E (3) J (3)

1 3 6 H (5
)
(5 )
4)

F 14
(

7
C

14

4 4
4 G(3)
critical path=
1-4-6-7-8

So expected project completion time= duration of the path

= (1-4)+(4-6)+(6-7)+(7-8)
= (4+5+5+3) weeks
=17 weeks
WHAT IS THE PROBABILITY OF
COMPLETING THE PROJECT ON
OR BEFORE 22 WEEKS
 10 12
6 8

D (2) I (5) 17
2 5 8 17
( 6)
0 6 9
A

0 3 9

B (3) E (3) J (3)

1 3 6 H (5
)
(5 )
4)

F 14
(

G ( 3) 7
C

14

4 4
4
Activity Mean Duration Variance
C 4 1.00

F 5 1.78

H 5 1.00

J 3 1.00

Total 17 4.78
  
Standard Deviation,
Probability:
σ=
P(x ≤ 22) = P [ X-µ
σ
≤ 22 - 17
2.19
] =
= 2.19 weeks

=P [ z ≤ 2.28 ]
= .9887

This value is obtained from Std. normal distribution table. Therefore, the probability of
completing the project on or before 22 weeks is 0.9887 .

Or, 98.87%
 Standard Normal Distribution
Table

2.28
2.20 0.08 .
9887
0
 Project Crashing

The process by which we shorten the duration of a project in the

cheapest manner possible is called project crashing .
 Example

 A casting may need to be heat-treated in the furnace for 48

hours

 A house may need to be completed within 4 days instead of

10 days.
 When choosing which activities to crash, and by how
much, we need to ensure the following:

 The amount by which an activity is crashed is, in fact, permissible

 Taken together, the shortened activity durations will enable us to
finish the project by the due date
 The total cost of crashing is as small as possible
 Crashing a project involves four steps:

■
■  STEP 1: Compute the crash cost per week (or other time period) for
each activity in the network.
If crash costs are linear over time, the following formula can be used:
Crash cost per period =

■ STEP 2: Using the current activity times, find the critical path(s) in the project network.
Identify the critical activities.
■ STEP 3: If there is only one critical path, then select the activity on this
critical path that
(a) can still be crashed and
(b) has the smallest crash cost per period. Crash this activity by one period.

If there is more than one critical path, then select one activity from each
critical path such that
(a) each selected activity can still be crashed and
(b) the total crash cost per period of all selected activities is the smallest. Crash each activity by one
period.

Note that the same activity may be common to more than one critical path.
■ STEP 4: Update all activity times. If the desired due date has been
reached, stop. If not, return to Step 2.
Exercise
Suppose the plant manager at Milwaukee Paper Manufacturing has been given only 13 weeks
(instead of 16 weeks) to install the new pollution control equipment. The length of Julie Ann
Williams’s critical path was 15 weeks, but she must now complete the project in 13 weeks.

APPROACH:

Williams needs to determine which activities to crash, and by how much, to meet this
13-week due date. Naturally, Williams is interested in speeding up the project by 2 weeks, at the least
Additional cost.
The current critical path (using normal times) is Start–
A–C–E–G–H, in which Start is just a dummy
starting activity. Of these critical activities, activity A
has the lowest crash cost per week of $750. Julie
Ann Williams should therefore crash activity A by 1
week to reduce the project completion time to
14 weeks. The cost is an additional $750. Note that
activity A cannot be crashed any further, since it has
reached its crash limit of 1 week.
At this stage, the original path Start–A–C–E–G–H
remains critical with a completion time of 14 weeks.
However, a new path Start–B–D–G–H is also critical
now, with a completion time of 14 weeks. Hence,
any further crashing must be done to both critical paths.
On each of these critical paths, we need to identify one
activity that can still be crashed. We also want
the total cost of crashing an activity on each path to be
the smallest. We might be tempted to simply pick
the activities with the smallest crash cost per period in
each path. If we did this, we would select activity
C from the first path and activity D from the second
path. The total crash cost would then be $2,000
(= $1,000 + $1,000).
But we spot that activity G is common to both
paths. That is, by crashing activity G, we will
simultaneously reduce the completion time of
both paths. Even though the $1,500 crash cost
for activity G is higher than that for activities C
and D, we would still prefer crashing G because
the total crashing cost will now be only $1,500
(compared with the $2,000 if we crash C and D).

INSIGHT : To crash the project down to 13

weeks, Williams should crash activity A by 1
week and activity G by 1 week. The total
additional cost will be $2,250 (= $750 + $1,500).
This is important because many contracts for
projects include bonuses or penalties for early or
late finishes.
A critique of PERT and CPM

PERT
CPM
 Advantages

1. Especially useful when scheduling and controlling large projects.

2. Straightforward concept and not mathematically complex.
3. Graphical networks help highlight relationships among project activities.
4. Critical path and slack time analyses help pinpoint activities that need to be closely
watched.
5. Project documentation and graphs point out who is responsible for various activities.
6. Applicable to a wide variety of projects.
7. Useful in monitoring not only schedules but costs as well.
 Limitations

1. Project activities have to be clearly defined, independent, and stable in their

relationships.
2. Precedence relationships must be specified and networked together.
3. Time estimates tend to be subjective and are subject to fudging by managers who fear
the dangers of being overly optimistic or not pessimistic enough.
4. There is the inherent danger of placing too much emphasis on the longest, or critical,
path. Near-critical paths need to be monitored closely as well.
 Using Microsoft project to Project
Step 1: Entering Data
Management
a. Create a Task List
b. Add Start and Finish Dates to Each Task
c. Add Tasks to the Timeline
Step 2: Viewing the Project Schedule
a. Switch to the Gantt chart
b. Open the Task Form
c.  Select a Task to Assign
Step 3: PERT Analysis
Microsoft Project does not perform the PERT probability calculations. However, by
clicking View|Toolbars|PERT Analysis , we can get Microsoft Project to allow us to enter
optimistic, most likely, and pessimistic times for each activity.
Step 4: Tracking the Time Status
of a Project
a. Mark Tasks That Are on
Track
b. Use Predetermined
Percentages to Track Tasks
c. Update Tasks
Milwaukee paper co.
 Summary

■ Managers use such techniques to segment projects into discrete activities ,identifying
specific resources and time requirements for each.
■ With PERT and CPM, managers can understand the status of each activity, including its
earliest start, latest start, earliest finish, and latest finish times.
■ By controlling the trade-off between ES and LS, managers can identify the activities
that have slack and can address resource allocation, perhaps by smoothing resources.
■ Effective project management also allows managers to focus on the activities that are
critical to timely project completion. B
Thank You