Project Planning:

Network Scheduling
Techniques

1
 Scheduling Techniques
 Gantt or bar charts
 Milestone charts
 Line of balance
 Networks
 Program Evaluation and Review Technique (PERT)
 Arrow Diagram Method (ADM) [Sometimes called
the Critical Path Method (CPM)]
 Graphical Evaluation and Review Technique
(GERT)
 Precedence Diagram Method (PDM)
2
 Advantages of Scheduling
Techniques
 Form the basis of planning and predicting
 Provide visibility and easy to control
 Help the evaluation of alternatives on
 How time delays
 Where slack exists
 What elements are crucial
 Provide the basis for decision making

3
 Cont’d…
 Determine man-power, material, and capital
requirement
 Provide the basic structure for reporting
information
 Reveal the interdependencies of activities
 Facilitate the “what-if” exercises
 Identify the longest path or critical paths
 Aid in risk scheduling risk analysis

4
PERT and CPM Differences
 PERT uses three time estimates (optimistic,
most likely, and pessimistic), CPM uses one
time estimate that represent the normal time
 PERT is probabilistic in Nature, based on beta
distribution for each activity time and normal
distribution for expected time duration; CPM is
based on a single time estimate and is
deterministic in nature

5
Cont’d…
Both PERT and CPM permit the use of
dummy activities in order to develop the
logic
PERT is used for R&D projects where the
risk in calculating time duration have a
high variability; CPM is used for
construction projects that are resource
dependent and based on accurate time
estimates.

6
Cont’d….
 PERT is used on those projects where percent
complete is almost impossible to determine
except at completed milestones;
 CPM is used for those projects where percent
complete can be determined with reasonable
accuracy and customer billing can be
accomplished based on percent complete

7
What is Critical Path?
The critical path is vital for successful
control of the project because:
There is no slack time in any of the events on
this path
The events on this path are the most critical
for the success of the project

8
How
Stepscantowe
determine
determine
critical
the
Critical
path:--------
Path?
To determine critical path

 Step 1: Draw a Network Diagram

 Step 2: Calculate length (durations) of all the
paths
 Step 3: The longest path is the critical path
 The activities on the longest path is the critical
activities.
9
A) Project Scheduling using CPM
Example: a) draw the network? B) what is the project duration?
C) what are the critical activities? D) what are the critical path?

Immediate Duration
Activity Description
Predecessor (weeks)
A Develop product specifications None 4
B Design manufacturing process A 6
C Source & purchase materials A 3
D Source & purchase tooling & equipment B 6
E Receive & install tooling & equipment D 14
F Receive materials C 5
G Pilot production run E&F 2
H Evaluate product design G 2
I Evaluate process performance G 3
J Write documentation report H&I 4
K Temesgen B.
Transition to manufacturing J 2 10
Step 1- Diagram the Network for

Temesgen B. 11
Step 2 (a)- Add Deterministic Time
Estimates and Connected Paths

Temesgen B. 12
Step 2 (a) (Con’t): Calculate the
Project Completion Times
Paths Path duration
ABDEGHJK 40
ABDEGIJK 41
ACFGHJK 22
ACFGIJK 23
 Step 3:The longest path (ABDEGIJK) limits
the project’s duration (project cannot finish in
less time than its longest path)
 ABDEGIJK is the project’s critical path
Temesgen B. 13
B. Project Scheduling using PERT

Activity completion times are seldom known

with 100% accuracy.

PERT is a technique that treats activity

completion times as random variables.

Completion time estimates are obtained by the

Three Time Estimate approach.

14
 Cont’d....
 PERT is based on the assumption that an activity’s
duration follows a probability distribution instead
of being a single value
 Three time estimates are required to compute the
parameters of an activity’s duration distribution:
 pessimistic time (tp ) - the time the activity would
take if things did not go well
 most likely time (tm ) - the consensus best
estimate of the activity’s duration
 optimistic time (to ) - the time the activity would
take if things did go well

15
Cont’d....
tp + 4 tm + t o
Mean (expected time): te =
6

tp - to
Variance: Vt =2 = 6

16
Probability computation
 Determine probability that project is
completed within specified time

x-
Z=

where  = te = project mean time
 = project standard mean time
x = (proposed ) specified time

17
Normal Distribution of Project Time

Probability

Z

 = tp x Time

18
The Standard Deviation of
Each Activity

σte = (tp-to)/6


2
σtotal =
i
i 1

19
The Standard Deviation of
Each Activity

20
 Example in PERT:
 Project activity initial information:
Immed. Optimistic Most Likely Pessimistic
Activity (i) Predec. Time (weeks) Time (wk.) Time (wk.)
A — 4 6 8
B — 1 4.5 5
C A 3 3 3
D A 4 5 6
E A 0.5 1 1.5
F B,C 3 4 5
G B,C 1 1.5 5
H E,F 5 6 7
I E,F 2 5 8
J D,H 2.5 2.75 4.5
K G,I 3 5 7
)
Temesgen B. (PhD
12/25/21
.
 Cont’d…..
 Activity Expected Time and Variances
ti = (ai + 4mi + bi)/6 2i = ((bi-ai)/6)2
Activity (i) Expected Time Variance (week2)
A 6 4/9
B 4 4/9
C 3 0
D 5 1/9
E 1 1/36
F 4 1/9
G 2 4/9
H 6 1/9
I 5 1
J 3 1/9
K 5 4/9
Temesgen B. (PhD)
12/25/21
.
Cont’d…

 PERT Activity Node Representation

Earliest Start Earliest Finish

A ES EF
Expected
6 LS LF
Duration of
the activity

Latest Start Latest Finish

Temesgen B. (PhD)
12/25/21
.
 Cont’d…
 Earliest/Latest Times
Activity ES EF LS LF Slack
A 0 6 0 6 0 *critical
B 0 4 5 9 5
C 6 9 6 9 0*
D 6 11 15 20 9
E 6 7 12 13 6
F 9 13 9 13 0*
G 9 11 16 18 7
H 13 19 14 20 1
I 13 18 13 18 0*
J 19 22 20 23 1
K 18 23 18 23 0*
 The estimated project completion time is t0 = 23 (weeks) at
FINISH.
Temesgen B. (PhD)

12/25/21
.
 Cont’d….
 Probability the project will be completed within t1=24
weeks
project time variance 2 = 2A + 2C + 2F + 2I + 2K
= 4/9 + 0 + 1/9 + 1 + 4/9
= 2 (weeks-squared)
project time standard deviation  = 1.414 (weeks).
z1 = (24 - 23)/  = (24-23)weeks/1.414weeks = .71
From the Standard Normal Distribution table:
P(z < z1=.71) = .5 + .2611 = .7611
More precisely,
P(t < t1) = P(t-t0 < t1-t0) = P[(t-t0)/ < (t1-t0)/]
= P(z < z1=.71) = .7611
if we define z= (t-t0)/ and z1 = (t1-t0)/.
Temesgen B. (PhD)

12/25/21
.
 Probability Analysis of the Project: Example 2
Question: If the mean project completion time is X0 = 25, what is the probability
that the project will be completed within X1=30 weeks?
2 = 6.9,  = 2.63. Z1 = (X1 - X0)/  = (30 -25)/2.63 = 1.90
Z1 value of 1.90 corresponds to probability of .4713 in Table A.1, appendix A.
•Z
Probability of completing project in 30 weeks or less : (.5000 + .4713) = .9713.
More precisely, P(x < X1) = P(x- X0 < X1 - X0) = P[(x- X0)/  < (X1 - X0)/  ]
•More
= P(z < Z1=1.90) = .9713
if we define
z= (x - X0)/  (new variable)
and
Z1 = (X1 - X0)/  (constant).

Figure 8.14
Probability the network will
be completed in 30 weeks or
less . .
12/25/21
 Probability Analysis of the Project: Example 3
Question: If the mean project completion time is X0 = 25, what is the probability that
the project will be completed within X1=22 weeks?
Z1 = (22 - 25)/2.63 = -1.14
Where Z1 value of 1.14 (ignore negative) corresponds to probability of 0.3729 in Table
A.1, appendix A. Probability that customer will be retained is .1271

Figure 8.15
Probability the network
will be completed in 22
weeks or less

. 12/25/21
.
Slack Time

28
Slack Time Definition
The time differential between the scheduled
completion date and the required date to
meet the critical path

29
PERT Network with Slack Time
 TE: The earliest time on which an event can
be expected to take place

 TL: The latest time on which an event can take

place without extending the completion time of
the project

 Slack Time = TL -TE

30
Slack Time Definition
 ES: the earliest time when an activity can start
 EF: the earliest time when an activity can finish
 LS: the latest time when an activity can start
 LF: the latest time when an activity can finish

31
 Activity and event times
 To calculate the Total Project Time (TPT),
carry out a forward pass whereby the earliest
starting times (EST) for each activity are
calculated.
 In the calculation it will sometimes be
necessary to refer to the earliest finishing time
(EFT) of an activity, given by:
 Earliest finishing time = Earliest starting time + Duration

32
Cont’d...
 The critical path is then identified by
carrying out a backward pass whereby the
latest finishing time (LFT) of an activity
and its associated latest starting time (LST)
is given by:
 Latest starting time = Latest finishing time
– Duration

33
Cont’d...
 It is important to recognise that activity
times are indirectly derived from the
forward and backward passes which
directly give the event times for the nodes.
A node has two times associated with it:
one, from the forward pass, its earliest
event time (EET), the earliest time the event
can be realised;
34
Cont’d...
 the other, from the backward pass, its latest
event time (LET), the latest time by which
the event must be realised if the total
project time is to be achieved. The EET is
the EST of all emerging activities, whilst
the LET is the LFT of all entering
activities.

35
 Slack Identification

ACTIVITY EARLIEST START TIME

EARLIEST FINISH TIME

C (8,10)
2 (15,17)

LATEST FINISH TIME

TIME
LATEST START TIME

36
 Example

Immediate
Activity Description Predecessor(s) Responsibility

A Select administrative and medical staff.

B Select site and do site survey.
C Select equipment.
D Prepare final construction plans and layout.
E Bring utilities to the site.
F Interview applicants and fill positions in
nursing, support staff, maintenance,
and security.
G Purchase and take delivery of equipment.
H Construct the hospital.
I Develop an information system.
J Install the equipment.
K Train nurses and support staff.

37
 Comprehensive Example
Activity Duration

Immediate
Activity Description Predecessor(s) Responsibility
1212
A Select administrative and medical staff. — Johnson
B Select site and do site survey. — 9 Taylor
C Select equipment. A 10 Adams
D Prepare final construction plans and layout. B 10 Taylor
E Bring utilities to the site. B 24 Burton
F Interview applicants and fill positions in A 10 Johnson
nursing, support staff, maintenance,
and security.
35
G Purchase and take delivery of equipment. C Adams
H Construct the hospital. D 40 Taylor
I Develop an information system. A 15 Simmons
J Install the equipment. E,G,H 4 Adams
K Train nurses and support staff. F,I,J 6 Johnson

38
 Diagramming the Network
Immediate
Predecessor
I
A
—
B A F K
—
C
A
D Start C G Finish
B
E
B
F B D H J
A
G
C
E
H
D
I 39
 Cont’d…

I
Paths are the sequence of
activities between a
project’s start and finish. A F K

Path Time (wks)

Start C G Finish

A-I-K 33
A-F-K 28
B D H J
A-C-G-J-K 67
B-D-H-J-K 69
B-E-J-K 43
E

40
 Cont’d…
The critical path is the
longest path! I

Path Time (wks) A F K

A-I-K 33
A-F-K 28 Start C G Finish
A-C-G-J-K 67
B-D-H-J-K 69
B-E-J-K 43 B D H J

Project Expected
E
Time is 69 wks.
41
 Developing the Schedule

 The project team must make time estimates for

each activity.
 Activity times may be risky, in which case a
probability distribution can be used (CPM).
 For this project the times will be certain.
 Activity slack is the maximum length of time
that an activity can be delayed without delaying
the entire project.
 For St. Adolf’s we can’t go beyond 69 weeks.
42
 Developing the Schedule

 Earliest Start Time (ES) is the latest earliest finish time

of the immediately preceding activities.
 Earliest Finish Time (EF) is an activity’s earliest start
time plus its estimated duration.
 Latest Start Time (LS) is the latest finish time minus the
activity’s estimated duration.
 Latest Finish Time (LF) is the earliest latest start time of
the activities that immediately follow.
 For simplicity, all projects start at time zero.
43
 What AON Nodes look like
Determined by the earliest finish
Slack is the difference, if any,
time of the precedent activity. If
between the earliest start and latest
there are two or more precedent
start times (or the earliest finish and
activities, this time is the same as
latest finish times).
precedent activity with the latest
“Earliest Finish” time. S = LS – ES or S = LF– EF
Slack
The earliest you can complete
an activity -- determined by
Activity
adding the activity time to the
Earliest Earliest
Finish
earliest start time.
Start
This is the Latest
Latest Latest
Finish time minus Finish
Start Activity The latest you can finish an
the activity time.
Duration activity without delaying the
project completion date. It is the
same as the Latest Start time of
the next activity. If there are two
or more subsequent activities,
this time is the same as the
earliest of those “Latest Start”
44
times.
 Earliest Start and Earliest Finish Times

12
I 27

Earliest start time

15 Earliest finish time

0 A 12 12 F 22 63
K 69

12 10 6

12
C 22 22
G 57
Start Finish
10 35

0
B 9 9
D 19 19
H 59 59
J 63

9 10 40 4

Example 9 E 33
24
45
 Earliest Start and Earliest Finish Times

12
I 27 The Critical Path
15 takes 69 weeks

A K 69
0 12 12 F 22 63
12 10 6

12
C 22 22
G 57
Start Finish
10 35

0
B 9 9
D 19 19
H 59 59
J 63
Critical Path 9 10 40 4

Example 9 E 33
24
46
 Latest Start and Latest Finish Times

12
I 27
48 15 63

A K
0 12 12 F 22 Latest 63 69 Latest
2 12 14 53 10 63 start 63 6 69
finish
time time
C
12 22 22 G 57
Start Finish
14 1 24 24 59
35
0

0
B 9 9
D 19 19
H 59 59
J 63
0 9 9 9 10 19 19 40 59 59 4 63

Example 9 E 33
35 24 59

47
 Earliest start time I Earliest finish time
12 27
48 15 63 Latest finish time
Latest start time

A K
0 12 12 F 22 63 69
2 12 14 53 10 63 63 6 69

C
12 22 22 G 57
Start Finish
14 10 24 24 59
35

0
B 9 9
D 19 19
H 59 59
J 63
0 9 9 9 10 19 19 40 59 59 4 63

Example 9 E 33
35 24 59

48
 Project Schedule
 A Gantt Chart is a project schedule, usually created by the
project manager using computer software, that superimposes
project activities, with their precedence relationships and
estimated duration times, on a time line.
 Activity slack is useful because it highlights activities that need
close attention.
 Free slack is the amount of time an activity’s earliest finish
time can be delayed without delaying the earliest start time
of any activity that immediately follows.
 Activities on the critical path have zero slack and cannot be
delayed without delaying the project completion.

49
 Activity Slack Analysis
12
I 27
48 15 63

A
0 12 12 F 22 63 K 69
2 12 14 53 10 63 63 6 69

C
12 22 22 G 57
Start Finish
14 10 24 24 59
35

0
B 9 9
D 19 19
H 59 59
J 63
0 9 9 9 10 19 19 40 59 59 4 63

Example 9 E 33
35 24 59
50
 Analyzing Cost-Time Trade-Offs
 There are always cost-time trade-offs in project
management.
 You can completing a project early by hiring more
workers or running extra shifts.
 There are often penalties if projects extend beyond
some specific date, and a bonus may be provided for
early completion.
 Crashing a project means expediting some
activities to reduce overall project completion
time and total project costs.
51
 Project Costs
 The total project costs are the sum of direct costs, indirect costs,
and penalty costs.

 Direct costs include labor, materials, and any other costs directly
related to project activities.
 Indirect costs include administration, depreciation, financial,
and other variable overhead costs that can be avoided by
reducing total project time.

 The shorter the duration of the project, the lower the indirect
costs will be.

52
 Cost to Crash
 To assess the benefit of crashing certain activities,
either from a cost or a schedule perspective, the
project manager needs to know the following times
and costs.
 Normal time (NT) is the time necessary to complete
and activity under normal conditions.
 Normal cost (NC) is the activity cost associated with
the normal time.
 Crash time (CT) is the shortest possible time to
complete an activity.
 Crash cost (CC) is the activity cost associated with the
crash time.
53
 Cost to Crash per Period

The Cost to Crash per Period =

CC − NC
NT − CT

Crash Cost − Normal Cost

Normal Time − Crash Time

54
 Cost-Time Relationships in Cost
Analysis

8000 —
Crash cost (CC)
Direct cost (dollars)

7000 —
Linear cost assumption
6000 — Estimated costs for
5200 a 2-week reduction,
5000 — from 10 weeks to
8 weeks
4000 —

3000 — Normal cost (NC)

| | | | | |
0— 5 6 7 8 9 10 11
(Crash time) (Normal time)
Time (weeks) 55
 Minimizing Costs

 The objective of cost analysis is to

determine the project schedule that
minimizes total project costs.
 A minimum-cost schedule is determined
by starting with the normal time schedule
and crashing activities along the critical
path in such a way that the costs of
crashing do not exceed the savings in
indirect and penalty costs.
56
 Minimum Cost Schedule
 Use these steps to determine the minimum cost schedule:
1. Determine the project’s critical path(s).
2. Find the activity or activities on the critical path(s) with
the lowest cost of crashing per week.
3. Reduce the time for this activity until…
a. It cannot be further reduced or
b. Until another path becomes critical, or
c. The increase in direct costs exceeds the savings that result from
shortening the project (which lowers indirect costs).
4. Repeat this procedure until the increase in direct costs is
larger than the savings generated by shortening the
project.
57
 Example
Activity Duration

Immediate
Activity Description Predecessor(s) Responsibility
1212
A Select administrative and medical staff. — Johnson
B Select site and do site survey. — 9 Taylor
C Select equipment. A 10 Adams
D Prepare final construction plans and layout. B 10 Taylor
E Bring utilities to the site. B 24 Burton
F Interview applicants and fill positions in A 10 Johnson
nursing, support staff, maintenance,
and security.
35
G Purchase and take delivery of equipment. C Adams
H Construct the hospital. D 40 Taylor
I Develop an information system. A 15 Simmons
J Install the equipment. E,G,H 4 Adams
K Train nurses and support staff. F,I,J 6 Johnson

58
 Diagramming the Network
Immediate
Predecessor
I
A
—
B A F K
—
C
A
D Start C G Finish
B
E
B
F B D H J
A
G
C
E
H
D
I 59
 Cont’d…

I
Paths are the sequence of
activities between a
project’s start and finish. A F K

Path Time (wks)

Start C G Finish

A-I-K 33
A-F-K 28
B D H J
A-C-G-J-K 67
B-D-H-J-K 69
B-E-J-K 43
E

60
 Cont’d…
The critical path is the
longest path! I

Path Time (wks) A F K

A-I-K 33
A-F-K 28 Start C G Finish
A-C-G-J-K 67
B-D-H-J-K 69
B-E-J-K 43 B D H J

Project Expected
E
Time is 69 wks.
61
 Direct Cost and Time Data

Maximum Cost of
Normal Normal Crash Crash Time Crashing per
Time Cost Time Cost Reduction Week
Activity (NT) (NC) (CT) (CC) (wk) (CC-NC)

A 12 $ 12,000 11 $ 13,000 1 $ 1,000

B 9 50,000 7 64,000 2 7,000
C 10 4,000 5 7,000 5 600
D 10 16,000 8 20,000 2 2,000
E 24 120,000 14 200,000 10 8,000
F 10 10,000 6 16,000 4 1,500
G 35 500,000 25 530,000 10 3,000
H 40 1,200,000 35 1,260,000 5 12,000
I 15 40,000 10 52,500 5 2,500 Shorten
J 4 10,000 1 13,000 3 1,000 first
K 6 30,000 5 34,000 1 4,000
Totals $1,992,000 $2,209,500

62
 Finding the minimum cost schedule:
Example
Stage 1
• The project completion time is 69 weeks.
• The direct costs for that schedule are $1,992,000.
• The indirect costs are $8000 per week.
• Penalty costs after week 65 are $20,000 per week.
• Total cost is $2,624,000 for 69 weeks
($1,992,000 + 69($8000) + (69 –65)($20,000)

Step 1: The critical path is: B-D-H-J-K.

Step 2: The cheapest activity to crash is “J” at $1000.
Step 3: Crash activity J by its limit of three weeks
because the critical path remains unchanged.
The new project length becomes 66 weeks.
63
 Finding the minimum cost schedule:
Example
Stage 1
• The project completion time is 69 weeks.
• The direct costs for that schedule are $1,992,000.
• The indirect costs are $8000 per week.
• Penalty costs after week 65 are $20,000 per week.
• Total cost is $2,624,000 for 69 weeks

Crashing by 3 weeks saves $81,000 for a new total cost of

$2,543,000.

Savings is 3 weeks of indirect costs (3 * $8000 = $24,000)

plus 3 weeks of penalties (3 * $20,000 = $60,000)
less the cost of crashing (3 * $1,000 = $3,000)

64
 Finding the minimum cost schedule:
Example Stage 2
• The indirect costs are $8000 per week.
• Penalty costs after week 65 are $20,000 per week.

Step 1: The critical path is still B-D-H-J-K.

Step 2: The cheapest activity to crash per week is now D at
$2,000 a week.
Step 3: Crash D by 2 weeks.
• The first week of reduction saves $28,000 by eliminating
both the penalty and indirect costs (but $2,000 goes toward
crashing costs.)
• The second week of reduction had no penalty, so it saves
only the indirect costs of $8,000.
Total cost is now $2,511,00 ($2,543,00 - $28,000 - $8,000 +
$4,000)
65
 Finding the minimum cost schedule:
Example Stage 3

I
15
Shortening D and J have
created a second critical A F K
path, A-C-G-J-K. Both 12 10 6
critical paths are 64
weeks.
C G
Start Finish
Both must now be 10 35
shortened to realize any
savings in indirect costs.
B D H J
9 8 40 1

E
24
66
 Finding the minimum cost schedule:
Example Stage 3
• The indirect costs are $8000 per week.

• The alternatives are to crash one of the following

A $ 1,000 combination of activities: A-B, A-H, C-B, C-H, G-B, G-H,
B 7,000 or
C 600
D 2,000 • Crash activity K which is on both critical paths.
E 8,000
F 1,500 • (J and D have already been crashed.)
G 3,000
H 12,000 •The cheapest alternative is to crash activity K.
I 2,500
J 1,000 •It can only be crashed by one week at a cost of $4,000
K 4,000
•The net savings are $8,000 − $4,000 = $4,000
•Total project cost now becomes $2,507,000
67
 Finding the minimum cost schedule:
Example
Stage 4
The critical paths remain the same
but are now both 63 weeks. I
15

A $ 1,000
B 7,000 A F K
C 600 12 10 5
63 wks
D 2,000
E 8,000
F 1,500 C G
Start Finish
G 3,000 10 35
H 12,000
I 2,500
B D H J
J 1,000
9 8 40 1
K 4,000

E
24
68
 Finding the minimum cost schedule:
Example
Stage 4
• The indirect costs are $8000 per week.

• B and C are the only remaining activities that can be

A $ 1,000 crashed simultaneously without exceeding the
B 7,000
C 600 potential savings of $8000 per week in indirect costs.
D 2,000
E 8,000 • Crash activities B and C by two weeks (the limit for
F 1,500 activity B)
G 3,000
H 12,000 • Net savings are 2($8,000) − 2($7,600) = $800
I 2,500
J 1,000 • Total project costs are now $2,506,200
K 4,000

69
 Summary
Example
The minimum cost schedule is 61 weeks. Activities J, D, K, B,
and C were crashed for a total savings of $117,800

70
Application

71
Application

72
Application

73
Application

74
Application

75
Application

76
 ......

Temesgen B. (PhD)
77