SC 431

Lecture No. 9:
Part 1: PERT Networks
Part 2: Project Expediting using
CPM Networks
 Scope of the Lecture
• PERT Definition;
• Activity Time Estimates – Beta Distribution;
• Project Duration Estimations;
• Using Standard Normal Tables for Project
Duration Estimation;
• Project Expediting; and
• Crashing for Optimal Cost.
 PERT - Definition
• The program (or project) evaluation and review
technique, commonly abbreviated PERT, is a
statistical tool, used in project management,
which was designed to analyze and represent
the tasks involved in completing a given project.
• Why PERT?
 Activity Time Estimates
• It is very difficult to estimate activity durations
with certainty;
• Even when efforts have been made to get
“accurate” estimates, circumstances may
change on site;
• Activity durations are therefore likely to vary;
• Duration variability can be modelled such that
a certain level of probability can be associated
with a certain level of duration;
 CPM/PDM Scenario
• Estimates of durations are considered FIXED;
• The reality is that they are likely to VARY;
• Schedule management is therefore based on
UNREALISTIC (simplistic) assumptions;
• Way Out:
– Either plan with contingency allowance on
duration;
– Or Use more realistic activity duration estimates.
Contingency for Duration Approach
• Collect enough data on project durations of
similar nature;
• Determine the mean and distribution of the
difference between the original and final
duration estimate;
• Using this information, determine the
contingency allowance based on the statistical
distribution of the difference and the
sensitivity of the project
 The Drawbacks of Traditional CPM Technique
• Deterministic, single point, estimates of project
activities are therefore highly risky since it is
impossible to complete all the project activities
exactly within the estimated single-point
durations.
• Moreover, most estimators tend to estimate
activity durations that are closer to optimistic
durations than to the pessimistic durations.
• The most-likely estimates are the modal estimates
and the traditional Critical Path Method (CPM)
assumes activities are near-normally distributed.
• In any normal distribution, the most-likely
(modal) duration estimates have only 50% or
less chances of being completed within and
hence the critical path duration too.
• This means, we typically start a project with a
project completion time that has 50% chances
of being EXCEEDED from the day-1 we kick-off
the project.
 Illustrations
• The probability of reaching the city centre
within 15 minutes from the University by road
is say 5%;
• However, the probability of reaching the city
centre by road within 180 minutes is say 95%
• Between 5% and 95% there is a probability
distribution (probability function);
• The same applies for construction activity
durations.
 Activity Duration Probability Function

• Frequency Diagram - Beta Distribution

• Where y is the activity duration
Activity Duration Probability Function……
 Definition of terms
• optimistic time: the minimum possible time
required to accomplish an activity (o) or a path (O),
assuming everything proceeds better than is
normally expected
• pessimistic time: the maximum possible time
required to accomplish an activity (p) or a path (P),
assuming everything goes wrong (but excluding
major catastrophes).
• most likely time: the best estimate of the time
required to accomplish an activity (m) or a path
(M), assuming everything proceeds as normal.
 Definitions….
• expected time: the best estimate of the time
required to accomplish an activity (Te), accounting
for the fact that things don't always proceed as
normal (the implication being that the expected
time is the average time the task would require if
the task were repeated on a number of occasions
over an extended period of time).

• standard deviation of time : the variability of the

time for accomplishing an activity (σTe)
σTe = (Tp - To)/6
 Example 2
• Consider a project with the following PERT
network with durations in weeks

5,8,11 3,6,9 8,11,15

6
4,7,9 4,6,10

2,5,8 4,8,11 6,8,10

 Tasks
• Compute the mean and std deviations of
activities;
• Determine the critical path;
• What of the duration of the project?
• What is the standard deviation of the critical
path?
• Is the duration of the critical path variable?
 Solution
Activity Duration Parameters of Duration
O M P Mean Std Dev
A 4 7 9 6.83 0.83
B 5 8 11 8.00 1.00
C 2 5 8 5.00 1.00
D 3 6 9 6.00 1.00
E 4 8 11 7.83 1.17
F 8 11 15 11.17 1.17
G 6 8 10 8.00 0.67
H 4 6 10 6.33 1.00
 Critical Path

8.00 6.00 11.17

6.83 6.33

5.00 7.83 8.00

 Characteristics of the CP in PERT
• The length of the CP is 38.33
• Note that durations of activities in the CP are
variable;
• The length of the CP is therefore variable as well;
• Mean Length of CP, Tcp = Sum of durations of
individual activities in the CP
• Std dev.

• Where S1 –Sn = std deviations of activities in the CP.

 What if the Shape of the Distribution of
Project Duration
• The variability of the length of the CP has normal
distribution with shape parameters Tcp and Scp .
• Recall :Central limit theorem
• In probability theory, the central limit theorem
establishes that, in some situations, when
independent random variables are added, their
properly normalized sum tends toward a normal
distribution even if the original variables
themselves are not normally distributed.
Normal Distribution
Standard Normal Distribution
 Questions:

• Given that the mean duration is 38.33

weeks:
– What is the probability of completing the
project within less than 38.33 weeks, 35
weeks, 45 weeks?
– What is the probability of the project
duration taking between 36 and 42 weeks?
– What is the 90%, 95%, 99% confidence
interval of duration?
– Std. Normal tables required!
 Scenario
You have established that the mean duration of a
construction project is 48 weeks with a std deviation of 4
weeks.
A the start of the project you are asked by a high ranking
government official on how long the project will take. What
will be your answer?

a) 40 wks; b) 48 weeks or c) 56 wks?

WHY?
Remember: This is no WRONG answer in construction
management. There is reasonable and unreasonable
answer.
 Part 2

Project Expediting
Critical Path Method - Crashing a Project
• CPM includes a way of relating the project
schedule to the level of physical resources
allocated to the project;
• This allows the project manager to trade time
for cost, or vice versa;
• In order to reduce project duration, crashing
or project expediting is necessary;
• This has to be performed in a systematic and
cost effective manner.
Chapter 9-1
 Critical Path Method - Crashing a Project
• In CPM, two activity times and two costs are
specified, if appropriate for each activity;
• Normal times are “normal” in the same sense as
the ‘m’ time estimate of the three times used in
PERT
– Refer to a, m and b) estimates.
• Crash times result from an attempt to expedite the
activity by the application of additional resources.
• Costs associated with normal time are referred to
as normal costs;
• Costs associated with crash time are referred to as
crash costs;
Chapter 9-2
Critical Path Method - Crashing a Project
• Careful planning is critical when attempting to
expedite (crash) a project
• Expediting tends to create challenges; and the
solution to one challenge often creates several
more challenges that require solutions.

Chapter 9-3
 Possible reasons for expediting
• Project is late and we need to recover lost
time;
• We need to speed up due to anticipated risks;
• Project need complete early (benefit from
bonus clause, if it exists);
• Requested by the Employer to expedite
project.
 Result of Expediting
• Possibly more expensive methods – less than
optimal;
• Less than normal productivity – work overtime
including night work, work in less than optimal
workgroups; less than optimal level of
supervision;
• More rework due to speed (lower quality);
• ………………….
• More expensive for the same task.
 Critical Path Method - Crashing a Project

• Use of three times (a, m, and b) may reduce

this kind of situation to some extent, but can
not totally rule out the same;
• Deterministic times are more prone to
changes;
• Last minute changes by Employers or pressure
from authorities (political or otherwise),
unforeseen situations make crashing a way of
life.
 Typical Scenario
• We need to crash the activities of some project to
ensure timely completion;
• We have the labour and materials;
• But we do not have specialized equipment
• Our equipment is committed elsewhere
• We can not hire it locally
• We can hire it from a far off place but it costs a lot
more.
• We may need to subcontract some part of the
works to other contractors
 Ultimate result
• Crashing an activity is likely to increase the
cost of the activity
• Normal cost is generally lower than crash
costs.
 Crashing – Sample Network

3 8
6 6 6
3 10 7
1 2 4 0
11 5 5

Critical Path = 3 + 6 + 8 + 6 = 23 Time Units

 Crashing – An Example
Activity Normal Normal Crash Crash Max
Time Cost Time Cost Slope Crsh Tm

1-2 3 $50 2 $70

2-3 6 $80 4 $160
2-4 10 $60 9 $90
2-5 11 $50 7 $150
3-6 8 $100 6 $160
5-7 5 $40 4 $70
6-7 6 $70 6 $70
 Cost/Time Slope
• Step1: compute a cost /time slope that can be
crashed.
• Slope is defined as
Crash Cost  Normal Cost
Slope 
Crash Time  Normal Time
• Slope is the “Cost Per unit time of crashing a project”
• Slope is negative which means “As time required for
a project or task is reduced, cost is increased”.
 Cost/Time Slope
• In the above activity 6-7 can not be crashed
• Calculating the slope this way might give the
impression that activities can be crashed in
increments of one day
• In practice, it might be that one has on option of
crashing by fixed number of days instead of
incremental days;
• Example – An activity could be carried out in eight
days or Four days (No intermediary times are
possible)
• The crash has to be four days in this case
 Crashing – Sample Network

3 $100
$80 6 $70
$50 $60 7
1 2
4 $40
$50 5

“Normal” Project Total Cost = $50 + $80 + $100 + $70 +

$60 + $50 + $40 = $450
 Crashing
• First task – Develop a table or graph of cost of
the project as a function of the project’s
various completion dates
• Starting with the normal schedule, crash
selected activities one at a time, to decrease
the project duration at the minimum
additional cost
 Crashing
• Two principles
– 1. Focus on critical path when trying to shorten
the duration of the project. (with the exception
that the resource needed for one activity, not on
the critical path is needed for another project)
– 2. when shortening a project duration, select the
least expensive way to do it.
• AOA example is easier to illustrate than AON
• Note that FULL CRASH COST for the project is
sum of all crash costs – assumes that all
activities are crashed.
 Crashing – An Example
Activity Normal Normal Crash Crash Max
Time Cost Time Cost Slope Crsh Tm

1-2 3 $50 2 $70 20 1

2-3 6 $80 4 $160 40 2
2-4 10 $60 9 $90 30 1
2-5 11 $50 7 $150 25 4
3-6 8 $100 6 $160 30 2
5-7 5 $40 4 $70 30 1
6-7 6 $70 6 $70 0 0
 Crashing – Sample Network

Critical Path = 23 Days

3 8
6 $100 6
$80 6 $70
3
10
$50 $60 7
1 2 4

$50 5 $40
11 5
“Normal” Project Total Cost = $50 + $80 + $100 + $70 +
$60 + $50 + $40 = $450
 Crashing – Sample Network

Critical Path = 23 Days “Crashed”Path = 20 Days

3 6
6 $160 6
$80 6 $70
2
10
$70 $60 7
1 2 4

$50 5 $40
11 5
“Crashed” Project Total Cost = $70+ $80 + $160 + $70 +
$60 + $50 + $40 = $530
 Crashing – Sample Network

Critical Path = 23 Days “Crashed”Path = 18 Days

3 6
4 $160 6
$160 6 $70
2
10
$70 $60 7
1 2 4

$50 5 $40
11 5
“Crashed” Project Total Cost = $70+ $160 + $160 + $70 +
$60 + $50 + $40 = $610
 Crashing – Sample Network
• Further crashing of CP is not possible as we
have used up the complete (maximum) crash
time possible.
• Crashing other paths will not shorten the
project duration
 Fast-Tracking
• Another way to expedite a project is known
as “fast-tracking”
• It refers to overlapping the design and build
phases of a project
• Because design is usually completed before
construction starts, overlapping the two
activities will result in shortening the project
duration.
Chapter 9-4
• End