Chapter Five

Project Management

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 Introduction
 Many organizations today have a new or
renewed interest in project management
 The U.S. spends $2.3 trillion on projects
every year, or one-quarter of its gross
domestic product
 The world as a whole spends nearly $10
trillion of its 40.7% gross product on
projects of all kinds
 This is the landmark of project
management
Project management, 2011/12 1-2
 Introduction-Definition
 “A Project is a non-routine, non-repetitive
complex economic activity that requires
investments or commitments of scarce
resources to provide facilities, goods,
services, etc. whose benefits would exceed
the committed investments or resources.”

Project management, 2011/12 1-3

 Introduction
Elements of a project
 Non-routine/ non-repetitive
 One time operational activity
 Requires investment (allocation of scarce
resources)
 It has a sense of uniqueness
 Requires a unique organization (as
opposed to functional/institutional
organization)

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 Introduction-Cont’d
 A project is a set of activities that are related to
one another; and all the activities must be
completed in order to complete the project.
 Material resources and manpower resources are
the two basic things required for the completion
of a project.
 Thus a project management is a specialized
management technique to plan and control the
available resources under a strong single point
of responsibility for the successful completion
of the project.
Project management, 2011/12 1-5
 Types of Projects
 Duration
 Long duration e.g HE power
 Short duration e.g annual crop yield
 Goal
 goods production;
 Service production; E.g. transport
 Knowledge generating; E.g. research
station
 Information generating; E.g. mineral
exploration or other surveys

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 Types of Projects-cont’d
 Resource differentiated
 capital intensive
 Labor intensive
 Energy intensive, etc.
 Functional
 agricultural  Catering to

 Industrial – regional market

 Transportation – national market

– international market
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 Sources of Project Ideas
Macro-level Sources
1) National, regional, sectorial plan
e.g. reduce disparity of regional dev’t.
 the need is the source of project idea
Decision by macro-planners to reduce regional dev’t
imbalances.
2) Constrains in the dev’t effort
e.g. lack of infrastructure, health centers, roads,
ports, power, financial institutions.
3) Self-sufficiency objective in critical resources
e.g. in supply of food, finding of oil/petroleum.
4) Events such as drought, flood Natural
calamities/disasters.
Project management, 2011/12 1-8
 Micro-level Sources of
Project Ideas
1) Identification of unsatisfied demand
 Can be of macro-level magnitude e.g. Cement
2) Existence of unused/underutilized natural or
human resources.
3) Response to gov’t incentives
e.g. Charge in mortgage interest rate triggers construction of
houses  demand for construction materials.
4) Local group initiative for economic
independence.
e.g. Source of drinking water, feeder road, power supply.

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 There are different types of
projects

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 Construction project

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Project management, 2011/12 1 - 13
Project management, 2011/12 1 - 14
Project management, 2011/12 1 - 15
 Manufacturing project

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 Agricultural project

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 Discuss a new project on
progress in Ethiopia?

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 Introduction-Cont’d
 A project is generally deemed successful
if it meets predetermined targets set by the
client, performs the job it was intended to
do, or solves identified problem within
predetermined time, cost, and quality
constraints.
 To meet these targets the project manager
uses project management systems to
effectively plan and control the project.

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 Project management
 Managing projects is a matter of keeping
scope, schedule, and resources in balance.
 Generally project management means
planning, organizing, and tracking a project’s
tasks to accomplish the project objectives.
 Scope is the range of tasks required to
accomplish project goals.
 A schedule indicates the time and sequence of
each task, as well as the total project duration.
 Resources are the people and/or equipment
that perform or facilitate project tasks.
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 Project management-
History
 The history of project management is often
associated with the construction of
Egyptian Pyramids and Great Wall of China.
 They were certainly large and complex
structures, built to high standards, which
have stood the test of time and must have
required an enormous workforce, but with
no documented evidence the management
technique used can only be based on
assumption.

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 Project management-
History
 Modern day project management is
associated with Henry Gantt's development
of the bar chart (early 1900’s) and the
techniques developed during the military
and aerospace projects of the 1950’s and
1960’s in America and Britain.
 Although Henry Gantt may be
acknowledged as the father of planning
and control techniques, it is widely
accepted that the 1950's are the genesis of
modern day project management.
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 Journey through project
management history
 Before 1900  1900-1949
• Wonderful projects
• Emergency of
• People cheap, even expendable management science
• Urgency not driven by the rat- • People begin to study
race
work and people at
• Management organization work
structure seen in the church
and the military • Henry Gantt
• No management scientists introduce his famous
planning chart
• No project management
profession • Early development of
critical path network

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 Journey through project
management history
 1950-1969  1970-1979
• US defense projects exploit • Creation of professional
critical path network associations
analysis
• Mainframe computers can • More project
run project management management software
software in batch mode
• Project management
becomes a recognized
profession
• More concerned for people
at work

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 Journey through project
management history
 1980-1989  1990-2000+
• Desktop computers • PCs and Notebooks can
can run powerful run all application
project management • More interest in project
software risk
• Managers less • Project management is
dependent on IT expert a respected profession,
• Wider acceptance of with flourishing
project management association
as profession
• World wide
communication by
satellite and the Internet
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 Project management
History
 Rapidly changing technology, fierce
competitive markets and a powerful
environmental lobby have all encouraged
companies to change their management
systems - in this sink or swim, adopt or die
market, the role of project management
and management-by-projects was found to
offer a real solution

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 Project Management-Why
Need Project Management?
 Complex project needs coordination of:
 Multiple people
 Multiple resources (labs, equipment, etc.)
 Multiple tasks – some must precede others
 Multiple decision points – approvals
 Phased expenditure of funds
 Matching of people/resources to tasks

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 Project Management-
Project Stakeholders
 Stakeholders are the people involved in or
affected by project activities
 Stakeholders include:
 The project  Customers
sponsor  Users
 The project
 Suppliers
manager
 And yes - opponents
 The project
to the project!
team
 Support staff

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 Project Management
Framework

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 Skill Requirements for
Effective Project Management

 Conflict Resolution
 Creativity and Flexibility
 Ability to Adjust to Change
 Good Planning
 Negotiation

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 Ten Most Important Skills and
Competencies for Project
Managers
6. Verbal communication
1. People skills
7. Strong at building
2. Leadership teams
3. Listening 8. Conflict resolution,
4. Integrity, ethical conflict management
behavior, consistent 9. Critical thinking,
5. Strong at building problem solving
trust 10. Understands,
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balances priorities 1 - 31
 The Triple Constraint
of Project Management –Goals

 Successful project
management means
meeting all three
goals (scope, time,
and cost) – and
satisfying the
project’s sponsor!
 However, quality is
the quadruple
constraint
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 Project Management-
Project Cycle
 It is convenient to think or project the work
as taking place in several distinct stages.
This chain of stages is commonly referred
to as the "project cycle".
 The term denotes that the stages are
closely linked to one another and follow a
logical progression, with the later stages
helping to provide the basis for renewal of
the cycle throughout subsequent project
work.
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 The World Bank model
Project life cycle

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 Identification
 The first phase of the cycle is concerned with
identifying project ideas that appear to represent
a high priority use of the country’s resources to
achieve an important development objective.
 Such project ideas should assure that technical
and institutional solutions at costs matching with
the expected benefits-will be found and suitable
policies adopted.

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 Preparation
 Once a project idea has passed the
identification “test“ it must be advanced to the
point at which a firm decision can be made
whether to or not to proceed with it.
 This requires a progressive refinement of the
design of the project in all its dimensions
technical, economical, financial, social,
institutional and so on.
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 Appraisal
 Before approving a loan external agencies normally
require a formal process of appraisal to assess the
overall soundness of the project and its readiness
for implementation for an internally generated and
financed investment.
 An explicit appraisal is necessary or at least a
desirable, part of the decision making process
before funds are committed.

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 Implementation
 The implementation stage covers the actual
development or Construction of the project, up
on the point at which it becomes fully
operational.
 It includes monitoring of all aspects of the work
or activity as it proceeds and supervision by
“over sight” agencies within the country or by
external lenders.

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 Evaluation
 The post evaluation of a completed projects to
determine whether the objectives have been
achieved as planned or not; and to draw
lessons from experience with the project that
can be applied to similar project in the future.

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 Fundamentals
 Every project has one specific purpose;
it starts at one specific moment and
ends up when its objectives are fulfilled

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 Check Points

 Define what is meant by a project and

explain its difference from other economic
activities.(2.5 pts)
 List the sources of project ideas.(2.5pts)

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 Project Management-
Objectives of project
 A project should be completed with in minimum of
elapsed time.
 It should use available manpower and other
resources as sparingly as possible, with out
delay.
 It should be completed, with minimum capital
investment, with out delay.
 To achieve the above objectives, Project
management involves the following three phases.

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 Project Planning
 In this phase, plan is made and strategies are
set taking into consideration the company's
policies, procedures and rules.

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 Steps in the planning process
 Define: the objective of a project in definite words
 Establish: goals and intermediate stages to attain
the final target
 Develop: forecasting methods and means of
achieving goals, i.e, activities
 Evaluate: organization's resources-financial,
managerial and operational- to carry out activities
and to determine what is feasible and what is not.

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  Determine: alternatives - individual course of
action that will allow to accomplish goals.
 Test: for consistency with company's policy.
 Choose: an alternative which is not only
consistent with its goals and concepts, but also
one that can be accomplished with the
evaluated resources.
 Decide: on a plan.

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 Project Scheduling
 Scheduling is the allocation of resources. The
resources in conceptual sense are time and
energy; but in practical sense they encompass
time, space, equipment and effort applied to
material.

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 The steps in scheduling
 Calculate: detailed control information.
 Assign: timing to events and activities.
 Give: consideration to the resources. The
manager is generally concerned with those
resources whose availability is limited and
thereby imposes a constraint on the project.
 Allocate: the resources.

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 Project Controlling
 Project control is the formal mechanism
established to check deviations from the
basic plan, to determine the precise effect of
these deviations on the plan, and to re-plan
and reschedule to compensate for the
deviation. Controlling is accomplished in
the following well recognized steps:

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 The steps in controlling
 Establish: standards or targets. These targets are generally
expressed in terms of time.
 Measure: performance against the standards set down in the
first step.
 Identify: the deviation from the standards.
 Suggest and Select: correcting measures. This will involve
problem identifying, decision making, organizing the
leadership and improving leadership skill of the decision
maker.

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 Project Success Factors
 The success of a project depends on factors and
prevailing circumstances both within and outside of
the organization.
 Usually project financers (project sponsors, lenders
or host governments) look at the consideration, that
are particularly important for success.
 The following are some of the success factors that are
given higher priority

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 i. Financially sound, feasible
and affordable project
 First, the project must be financially and economically
sound.
 Secondly, it must be feasible from a practical stand point.
 Thirdly, the costs of the service of the fees charged must
be affordable for users.
 Sponsors and host governments must be convinced at the
start that the project will be successful throughout its
lifetime.

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 ii. The country risks must
be manageable
 Political instability, including the risk of
expropriation and changes of laws, may frighten off
potential private investors.
 The legal and economic framework in some countries
may not be sufficiently developed to support a
construction program.

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  Any foreign investment, even the most practical and
financially viable project, requires a stable political
and economic environment.
 Finance on reasonable terms may be unavailable in
countries with a very weak credit standing and
investment may not be attractive to sponsors and
lenders if the country risks are considered to be too
high.

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 iii. Strong government
support
 Strong government support is essential for any
project.
 The private sector’s interest in financing such a
project will be considerably strengthened if the host
government has announced and has demonstrated
practically that it wishes to promote public-private
partnerships.

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 iv. The project must rank high
on the host government’s list
 Some governments may not have enough resources to
pursue more than a short list of projects, and sponsors
and lenders are not likely to seriously pursue projects
that are not on that list.
 Sponsors and lenders must be assured that the project
under consideration has a high priority in the host
government’s project planning.

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 v. The legal framework must
be stable
 An appropriate and stable legal framework that clearly
sets forth which government agencies are authorized to
develop projects and the laws and regulations is widely
recognized as essential for a successful policy.
 This will apply to sponsors and lenders in areas like
foreign investment, corporate law, security legislation,
taxation and intellectual property rights.

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 vi. Efficient administrative
framework
 Bureaucratic procedures like seeking approval from
many different ministries and local authorities are
often cited as a serious obstacle to projects.

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 vii. Fair and transparent
bidding procedure
 Sponsors look at the clarity and the orderliness of
bidding procedures as an indicator for the success
of the proposed project.
 The bid evaluation criteria must be clearly defined
and the bids must be evaluated in a public and
proper manner.

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  Private sponsors cannot be expected to invest time
and resources in developing bids if the process for
awarding a project is not reasonably orderly, fair
and transparent so that the chances for success are
predictable.

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 viii. Structured transactions
 In the past, the long time and high cost of moving
from the announcement of a project to its conclusion
has been a major drawback and has kept a number of
projects from going forward.
 Sponsors are not enthusiastic to propose projects if
the host government has a history of carrying on long
and expensive negotiations that never reach a
conclusion.

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 ix. Experienced and reliable sponsors

 The technical ability, experience and financial

strength of the private sponsors is of utmost
importance and must be clearly known.

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 x. Financial strength of
sponsors
 Attracting sufficient equity is one of the key
challenges for all projects.
 Governments and lenders will require the private
sponsors to have a large enough financial interest
in the project to make it difficult for them to
abandon or neglect the project.

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 xi. Experienced and resourceful
construction contractors

 The lenders will insist that the prime contractor,

preferably selected on competitive basis, has the
technical and managerial competence, staffing and
financial strength to fulfill its contractual
responsibilities.

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 xii. Adequate financial
structure
 Lenders require that the project will pay off the
loans as they become due and that adequate security
is provided in case of difficulty.
 The ultimate success or failure of a project revolves
around the sponsors’ ability to arrange financing.

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 xiii. The currency, foreign
exchange and inflation issues
 Currency convertibility, foreign exchange and inflation risks
can be large stumbling blocks to the success of projects.
 The sponsors and the lenders will have to be comfortable
regarding repayment of the principal and interest on any
foreign exchange financing, project revenues to be converted
to the currency of the loans and protection against losses from
exchange rate fluctuation and inflation

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 xiv. Co-ordinated
contractual framework
 All the contractual agreements should be clear to all
parties.
 If a party feels that the contract terms are unfair
there is a danger that it will walk away from the
project or at least be uncooperative

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 What is a successful
project?
 Customer Requirements satisfied/exceeded
 Completed within allocated time frame
 Completed within allocated budget
 Acceptance by the customer

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 Why do projects fail?
 Lack of clarity on what’s really needed
 Problems avoided, covered up, or minimized
 Inadequate planning (the devil is in the details)
 Ineffective process to deal with changes or problems
 Lack of willingness or discipline to monitor progress
 Unresolved conflicts
 Lack of committed, dedicated resources
 Lack of understanding of project management

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 Project management tools

 Work Breakdown Structure(WBS)

 Project organization
 Bar chart or Milestone chart, and
 Network scheduling

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 WBS - Purpose
To plan a project, the total scope of work must be:
 identified
 subdivided into manageable segments
 assigned to individuals responsible to do the
work
 documented

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 Work Breakdown Structure
(WBS)

 It is a methodology for converting a

large-scale project into detailed schedules
for its thousands of activities for
planning, scheduling, and control purpose
 The objective of developing a WBS is to
study the elemental components of a
project in detail

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 Using a WBS, a large project may be broken down
into smaller subprojects which may, in turn, be
further subdivided into another, lower level of
more detailed sub component activities, and so on.
 Eventually, all the tasks for every activity are
identified, commonalities are discovered, and
unnecessary duplication can be eliminated.
 Thus by applying the WBS approach, the overall
project planning and control can be improved.

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 Individual components in a WBS are referred to as
WBS elements and the hierarchy of each is
designated by a level identifier.
 Elements at the same level of subdivision are said
to be the same WBS level.
 Descending levels provide increasingly detailed
definition of project tasks. The complexity of
project and the degree of control desired
determine the number of levels in the WBS.
 Each WBS component is successively broken down
into smaller details at lower levels.

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 Level 1: This level contains only the final
project purpose. This item should be
identifiable directly as an organizational
budget item.
 Level 2: This contains the major
subcomponents of the project. This
subdivision is usually identified by their
contiguous location or by their related
purposes.
 Level 3: Contains definable components of
the level 2 subdivisions. 1 - 74
Project Breakdown Structure

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Project Breakdown Structure

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Project Breakdown Structure

Work Breakdown Structure for

Computer Order Processing
System Project 1 - 77
 Project Organization

 Like any organization, projects can be

managed and controlled by using different
type of organizational structure.
 Before selecting an organizational
structure, the project team should assess
the nature of the job to be performed and
its requirements.

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 The structure may be defined in terms of
functional specializations, departmental
proximity, standard management boundaries,
operational relationships, or product
requirements
 Large and complex projects should be based
on well-designed structures that permit
effective information and decision processes.

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 Bar Charts or Milestone Charts

 The history of project planning techniques

can be accurately traced back to World
War I when an American, Henry Gantt,
designed the barchart as a visual aid for
planning and controlling his projects.
 The beginning and the end of each bar
represent the time of start and the time
of finish of that activity

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 Once the project has started, the Gantt chart
can further be used as a tool for project
control.
 This is achieved by drawing a second line under
the planned schedule to indicate activity
progress.
 The relative position of the progress line to
planned line indicates percentage complete and
remaining duration, while the relative position
between the progress line and Time now
indicates actual progress against planned
progress.
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 Example of Gantt Chart
Month
0 | 2 | 4 | 6 | 8 | 10
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials

Build house

Select paint

Select carpet

Finish work
1 3 5 7 9
Months
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 Example

 Draw the bar chart for "finalization of

design and work orders" for a building
project.

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Activity Description Time of
Completion
A Site selection and survey 4 weeks
B Design 6 weeks
C Preparation of drawings 3 weeks
D Preparation of specification
and tender document 2 weeks
E Tendering 4 weeks
F Selection of contractor 1 week
G Award of work order 1 week

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Bar chart for a building Project

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 The benefits of Gantt chart can be clearly
seen not only are the calculations simple
but it combines all the above information
on one page.

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 Network Scheduling

 The most common network scheduling

methods are Critical Path Method (CPM)
and Program Evaluation and Review
Technique (PERT).
 Two approaches may be used for the
assessment of duration for activity
completion.

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 The first approach is the deterministic
approach, in which we may assume that we
know enough about each job or operation, so
that a single estimate of their duration is
sufficiently accurate to give reasonable
results.
 The second approach is the probabilistic
approach, in which one may only be able to
state limits with-in which it is virtually certain
that the activity duration will lie. Between
these limits we must guess what the
probability of executing the activity is.
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 Both methods (CPM and PERT) are
extensively used as dynamic control tools
in the management of a large project.
 They give the project manager a
comprehensive picture of the project
status at any time.

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 Network Diagram

 For a project plan to be effective it must

equally address the parameters of activity
time and network logic.
 As project becomes larger and more
complex, the Gantt chart was found to be
lacking as a planning and control tool,
because it could not indicate the logical
relationships between activities.

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 This logical relationship is required to model
the effect schedule variance will have down
stream in the project.
 In the 1950’s feedback from industry and
commerce indicated that project cost and
time overruns were all too common.

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 It was suggested at the time that the
project estimates were on the optimistic
side in order to gain work. However, a
more important reason emerged which
indicated that the planning and control
technique, available to manage large
complex projects, were inadequate.
 With these shortcomings in mind, network
planning techniques were developed

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 In network modeling of projects, the arrow
diagram is of primary importance. Some of the
advantages of network diagram or arrow diagram
are:
 It clearly shows the inter-relationship between
events.
 The project is seen as integrated whole, thus making
it easier for control.
 It can be used even for highly complicated projects
consisting of a large number of activities.
 It directly indicates the time required in between two
activities.

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 Event: it is defined to be an instant in
time. In a project, an event, may mark the
initiation of an activity, the completion of
an activity, or the time after which an
activity may be initiated.
 Design completed, pipe line laid, electricity
installed, etc are examples of events. It is

o
represented by a circle ‘ ’ in a network
which is also known as a node or connector.

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An event can be further classified into the
following categories:
 Merge event: When more than one activity come
and join an event, such event is known as merge
event.
 Burst event: When more than one activity leave an
event, such event is known as a burst event.
 Merge and burst event: An activity may be a
merge and burst event at the same time as with
respect to some activities it can be a merge event
and with respect to some other activities it may
be a burst event.

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Different types of event formation

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 Activity: Any individual operation, which
utilizes resources and has a beginning and
an end, is called activity.
 A project may be divided into activities
that are time consuming tasks or
subprojects like: assembly of parts, mixing
of concrete, preparing budget, etc.
 Each activity in a project must be under
the direction of a single individual. The
other criterion is that an activity must be
performed in a single shop.
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 An arrow is commonly used to represent an
activity with its head indicating the
direction of progress in the project.

A
k

 An arrow representing an activity “A” whose

estimated duration is “k” unit of time.
Usually an activity can be classified into the
following four categories.
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 Predecessor activity: Activities that must
be completed immediately prior to the
start of another activity are called
predecessor activities.
 Successor activity: Activities that cannot
be started until one or more of other
activities are completed, but immediately
succeed them are called successor
activities.

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 Concurrent activities: Activities that
cannot be accomplished concurrently are
known as concurrent activities. It may be
noted that an activity can be a
predecessor or successor to an event or it
may be concurrent with one or more of
the other activities.
 Dummy activity: An activity which does not
consume any kind of resource but merely
depicts the technological dependence is
called a dummy activity.
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 It may be noted that the dummy activity
is inserted in the network to clarify the
activity pattern in the following two ways:
o To make the activities with common
starting and finishing points
distinguishable, and
o To identify and maintain the proper
precedence relationship between activities
that are not connected with arrows

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 For example, consider a situation where A
and B are concurrent activities, C is
dependent on A, and D is dependent on A
and B both.
 Such a situation can be handled by using a
dummy activity

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 Another situation, consider a case where
B and C have the same job reference and
they can be started independently on
completion of A.
 But, D could be started only completion
of B and C.

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 An event is that particular instant of time
at which some specific part of a project
has been or is to be achieved.
 While an activity is actual performance of
a task. An activity requires time and
resource for its completion.

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Correct & Incorrect Use of Network Dummies.

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 Rules for Drawing Network Diagram
 In order to draw a network diagram, the
following general rules have to be
considered:
 Each activity is represented by one and only
one arrow in the network:
 This implies that no single activity can be
represented twice in the network.
 This is to be distinguished from the case
where one activity is broken into segments.

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 No two activities can be identified by the same
events: For example, activities a and b have the
same end events. The procedure is to introduce
a dummy activity either between a and one of
end events or between b and one of the events.
 Modified representations after introducing a
dummy activity d is shown in figure

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 As a result of using the dummy, activities a and
b can now be identified by unique end events.
 It must be noted that a dummy activity does not
consume any time or resource.

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 Dummy activities are also useful in
establishing logical relationship in the arrow
diagram which otherwise cannot be
represented correctly.
 Suppose jobs a and b in a certain project
must precede the job c, on the other hand,
the job e is preceded by the job b only.

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 Check the precedence relationship: In
order to ensure the correct precedence
relationship in the arrow diagram, the
following questions must be checked
whenever any activity is added to the
network.
 What activity must be completed immediately
before this activity can start?
 What activities must follow this activity?
 What activities must occur simultaneously with
this activity?
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 Apart from this, a few important
suggestions for drawing good networks are:
 Try to avoid arrows which cross each
other.
 Use straight arrows.
 Do not attempt to represent duration
of activity by arrow length.

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 Use arrows from left to right (or right
to left). Avoid mixing two directions,
vertical and standing arrows may be used
if necessary.
 Use dummies freely in rough draft but
final network should not have any
redundant dummies.
 The network has only one entry point-
called the start event and one point of
emergence-called the end event.
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 In many situations, all these may not be
compatible with each activity and some of
them are violated.
 The idea of having a simple network is to
facilitate easy reading for all those who
are involved in the project.

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 Common Errors in Drawing Networks

 Three types of errors are most commonly

observed while drawing network diagrams.
 Dangling: To disconnect an activity before
the completion of all activities in a
network diagram is known as dangling.

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 Drawing error diagram

As shown in the figure, activities (b - c) and (d - e)

are not the last activities in the network. So the
diagram is wrong and indicates the error of
dangling.

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 Looping (or Cycling): Looping errors is
also known as cycling errors in a
network diagram.
 Drawing an endless loop in a network is
known as an error of looping as shown in
the following figure.

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Looping or cycling error diagram

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 Redundancy: Unnecessarily inserting the
dummy activity in a network diagram is
known as the error of redundancy as
shown in the following diagram.

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 3
Lay Dummy
foundation
2 0 Build Finish
3 1 house work
1 2 4 6 7
Design house Order and 3 1
and obtain receive 1 1
Select Select
financing materials paint carpet
5

Lay foundations Build house

2 4
Finish work
2 3
7
Start 1 1
3
Design house 6
3
and obtain 5 1
financing
1
1 Select carpet
Order and receive
Select paint
materials
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 Project Management
Activity Description Pre Time
(Weeks)
A Excavate - 2
B Lay the foundation A 4
C Put up the rough wall B 10
D Put up the roof C 6
E Install the exterior C 4
plumbing
F Install the interior E 5
plumbing
G Put up the exterior siding D 7
H Do the exterior painting E,G 9
I Do the electrical work C 7
J Put up the wall board F,I 8
K Install the flooring J 4
L Do the interior painting J 5
M Install the exterior fixtures H 2
N Install the interior fixtures K,L,M 6
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 The AOA- Diagram
ES/
LF 5
G
D
H
1 A 2 B C 4 E 6 D1 8 10 M 13
3
I F N
11
7 J L
9 D2
K 12

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 Critical Path Method (CPM)
 The Critical Path Method (CPM) was developed
in 1957 by Remington Rand Univac as a
management tool to improve the planning and
control of a construction project.
 CPM was initially set-up to address the time
cost trade-off dilemma often presented to
project managers, where there is a complex
relationship between project time to complete
and cost to complete.

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 CPM enables the planner to model the
effect various project time cycles have on
direct costs.
 Shortening the project duration will
reduce indirect costs, but may increase
the direct costs.
 This technique is often called Project
crashing or acceleration,

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 Time Estimate and Critical Path
in Network Analysis:

 Once the network of a project is

constructed, the time analysis of the
network becomes essential for planning
various activities of the project.
 An activity-time is a forecast of the time
an activity is expected to take from its
starting point to its completion under
normal conditions.

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The main objective of the time analysis is to prepare
a planning schedule of the project, which should
include the following factors:
 Total completion time for the project.
 Earliest time when each activity can start.
 Latest time when each activity can be started without
delay of the total project.
 Float for each activity, i.e., the amount of time by
which the completion of an activity can be delayed
without delaying the total project completion.
 Identification of critical activities and critical path.

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 The following notations are used for the basic
scheduling computation techniques:
(i, j ) = Activity (i, j) with tail event i and head event j.

TE or Ei = Earliest occurrence time of event i.

TL or L j = Latest allowable occurrence time of event j.

Dij = Estimated completion time of activity (i , j)

( ES ) ij = Earliest starting time of activity (i , j)

( E f ) ij

( LS ) ij = Latest starting time of activity (i , j)

( L f ) ij = Latest finish time of activity (i , j)

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 Thus the basic scheduling computation can be put
under the following three categories.
i) Forward Pass Computations: Before starting
computations, the occurrence time of initial
network event is fixed. Then, the forward pass
computation yields the earliest start and earliest
finish time for each activity (i, j), and indirectly
the earliest expected occurrence time for each
event. This is mainly done by using the following
steps:

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 Step 1. The computations begin from the ‘start’ node and move
towards the ‘end’ node.
Step 2.
a) Earliest starting time of activity (i, j) is the earliest event time of
the tail end event i.e.,

( E S ) ij  Ei
b) Earliest finish time of activity (i, j) is the earliest starting time
plus the activity time. i.e.,

( E f ) ij  ( E S ) ij  Dij
or

( E f ) ij  Ei  Dij

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c) Earliest event time for event j is the maximum of the earliest
finish times of all activities ending into that event. That is,

Ej  max.i [(Ef )ij for all immediate predecessor of (i, j) ]or Ej  max.i [Ei  Dij ]

The computed ‘E’ values are put over the respective circles
representing each event.

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ii) Backward Pass Computations

 The latest event time, (L) indicates the time by

which all activities entering into that event must be
computed without delaying the computation of the
project.

 These can be computed by reversing the method of

calculation used for earliest event times. This is
done in the following steps:

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Step 1. For ending event assume

EL
Remember that all E’s have been computed by forward pass
computations.

Step 2. Latest finish time of activity (i, j) is equal to the latest event
time of event j. i.e.,

( L f ) ij  L

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Step 3. Latest starting time of activity (i , j) = the latest
completion time of activity (i , j) – the activity time, or

( LS ) ij  ( L f ) ij  Dij
or

( L S )ij  L j  Dij

Step 4. Latest event time for event I is the minimum of the latest
start time of all activities originating from the event, i.e.,

Li  min. j [(LS )ij for all immediate successors of (i, j)]  min.j[(Lf )ij - Dij ]  min.j[ L j  Dij ]

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iii) Determination of Float and Slack Times
 When the network diagram is completely
drawn, properly labeled, and earliest (E)
and latest (L) event times are computed as
discussed so far, the next objective is to
determine the float and slack times of a
project.

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iii) Determination of Float and Slack Times
 Total float: The amount of time by which the
completion of an activity could be delayed beyond the
earliest expected completion time without affecting
the overall project duration time.
 Mathematically, the total float of an activity (i , j) is
the difference between the latest start time and the
earliest start time of that activity. Hence the total
float for an activity (i , j), denoted by
(T f ) ij  ( Latest start  Earliest start )
(T f ) ij  ( LS ) ij  ( E S ) ij 1 - 134
 Event slacks: For any given event, the
event slack is defined as the difference
between the latest event and earliest event
times. Mathematically, for a given activity
(i, j),
Head event slack  L j  E j

Tail event slack  Li  Ei

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 Determination of the Critical
Path
i. Critical event: Since the slack of an event is the
difference between the latest and earliest event
times. i.e.,

Slack (i )  Li  Ei
the events with zero slack times are called critical
events. In other words, the event i is said to be critical
if
Ei  Li

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ii) Critical activity: Since the difference
between the latest start time and earliest
start time of an activity is usually called
as total float, the activities with zero
total float are known as critical activities.
In other words an activity is said to be
critical if a delay in its start will cause a
further delay in the completion date of
the entire project.

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 Obviously, a non-critical activity is such
that the time between its earliest start
and its latest completion dates (as allowed
by the project) is longer than its actual
duration. In this case, non-critical activity
is said to have a slack or float time.

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iii) Critical path: The sequence of critical
activities in a network is called the critical
path.
The critical path is the longest path in
the network from the starting event to
ending event and defines the minimum time
required to complete the project.
The length of the path is the sum of the
individual times of the activities lying on
the path.

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 If the activities on a critical path are
delayed by a day, the project would also
be delayed by a day unless the times of
the future critical activities are reduced
by a day by different means.

 The critical path is denoted by double or

darker lines to make distinction from the
other non-critical paths.

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 Thus the critical path has two features:
 If the project has to be shortened, then
some of the activities on that path must
also be shortened. The application of
additional resources on other activities will
not give the desired result unless that
critical path is shortened first.
 The variation in actual performance from
the expected activity duration time will be
completely reflected in one-to-one fashion
in the anticipated completion of the whole
project.
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 Example
 Consider the following project to
manufacture a simple mobile stone crasher.
The list of each activities, their
relationship, and the time required to
complete them are given in the following
table. We are interested to find the time it
will take to complete this project. What
jobs are critical to the completion of the
project in time, etc?

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List of Activities
Activity Symbol Duration Restriction
(weeks)
Preliminary design A 3 A < B, Cl
Engineering analysis B 1 B < Dl, F, H
Prepare layout I Cl 2 Cl < C2, Dl
prepare layout II C2 2 C2 < E
Prepare material request Dl 1 Dl < D2
Receive requested material D2 1 D2 < E
Fabricate Parts E 4 E<J
Requisition Parts F 1 F<G
Receive Parts G 2 G<J
Place subcontracts H 1 H<I
Receive subcontracted parts I 5 I<J
Assemble J 2 I<K
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Inspect and test K 1
 Program Evaluation and Review
Techniques (PERT)
 The US Navy set up a development team with
the Lockheed Aircraft Corporation, and a
management consultant Booz Allen & Hamilton,
to design PERT as an integrated planning and
control system to manage their Polaris
Submarine project.
 The PERT technique was developed to apply a
statistical treatment to the possible range of
activity time durations
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 A three time probabilistic model was developed,
this includes:
t
Optimistic time 0 limit of completion time if every thing goes all-right.

Pessimistic time t p limit of completion time if every thing goes all-

wrong (in case climatic conditions, explosions,
accidents, etc., come into effect to retard the
activity).

Most likely time t l the duration that would occur most often if
the activity was repeated many times under
the same conditions.

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 The three times were imposed on a normal
distribution to calculate the activity’s
expected time te as,

(t o  4t l  t p )
te 
6

1 - 146
Example
A contractor has received order for
constructing a cottage on a sea side resort.
The delivery of materials must be planned
and the complete job finished in 13 weeks.
The work involves and the time required to
complete each activities are given in the
table below.

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Job Description Immediate Time, days
predecessors to tl tp

A Buying bricks and cement - 8 10 14

B Roof tiles buying - 20 24 30
C Repairing foundation A 12 14 16
D Erecting shell structure of C 18 20 24
building
E Laying drains C 12 14 15
F Wiring for electrical G 16 20 26
G Constructing roof B,D 8 8 10
H Plastering G 12 12 18
I Landscaping K 4 4 6
J Painting and cleaning F,I,N 10 12 14
K Laying pathway E 4 4 4
L Installing doors and G 4 4 4
fittings
M Plumbing G 20 24 30
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 Question

a) construct a logical PERT diagram.

b) find the critical path and project
duration.
c) determine whether the project is
completed within the planed estimated time
or not?

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 Solution:

 Before constructing the PERT diagram, the

expected time (te) for each of the
activities has to be calculated by using the
following formula

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 (t o  4t l  t p )
te 
6
where

to = optimistic time

tl = most likely time

tp = pessimistic time
and also the precedence of the activities has to be determined.

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Job Description Immediate Time, days (t o  4t l  t p )
te 
predecessors to tl t p 6

A Buying bricks and cement - 8 10 14 10

B Roof tiles buying - 20 24 30 24
C Repairing foundation A 12 14 16 14
D Erecting shell structure of C 18 20 24 20
building
E Laying drains C 12 14 15 14
F Wiring for electrical G 16 20 26 20
G Constructing roof B,D 8 8 10 8
H Plastering G 12 12 18 13
I Landscaping K 4 4 6 4
J Painting and cleaning F,I,N 10 12 14 12
K Laying pathway E 4 4 4 4
L Installing doors and G 4 4 4 4
fittings
M Plumbing G 20 24 30 24
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Network Diagram

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Activity Duration Start Finish Total Float
(i - j)
Dij
Earliest Latest Earliest Latest
(1) (2) (3) Ei (4)  (6) - (2) (5)  (3)  (2) (6) L j (7)  (4) - (3)

A 0 0 10 10 0
B 24 0 20 24 44 20
C 14 10 10 24 24 0
D 20 24 24 44 44 0
E 14 24 64 38 78 40

G 8 44 44 52 52 0
H 13 52 63 65 76 11
I 4 42 82 46 86 40
J 12 86 86 98 98 0
K 4 38 78 42 82 40
L 4 52 72 56 76 20
M 24 52 52 76 76 0
N 10 76 76 86 86 0 1 - 154
 Project Crashing

 The crash time estimate is the shortest

time that could be achieved if all effort
were made to reduce the activity time.
The use of more workers, better
equipment, overtime, etc, would generate
higher direct cost for individual
activities.

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 Step1. Identify the activities that need to
be crashed (where an activity has negative
float for instance). This can happen at any
time from the initial project planning phase
to project completion.
 Step 2. Identify the critical path. To crash
non-critical activities is a waste of financial
resource because it will simply increase the
float on that activity without affecting the
end date of the project.

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 Step 3. Prioritize the activities to be crashed. When there are
many activities which can be crashed, it is necessary to know
which activity will be crashed first? This can be done by selecting
the activity

• with the least cost per day to crash.

• that is the easiest to crash.

• which can be crashed soonest to bring the project back on

course.

• As project manager you do not want to approach the end of

the project with a number of activities running behind schedule
and the prospects of further problems during commissioning

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 Step 4. Crash activities one day at a time, then
re- analyze the network to see if any other
activities have gone critical.

Continue this iterative process until there are

no activities with negative float. These crashing
steps may vary with the different types of
projects.

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