Project Characteristics

 Single unit
 Many related activities
 Difficult production planning and
inventory control
 General purpose equipment
 High labor skills
 Examples of Projects
 Building Construction

 Research Project
 Project Organization
Works Best When
 Work can be defined with a specific
goal and deadline
 The job is unique or somewhat
unfamiliar to the existing organization
 The work contains complex interrelated
tasks requiring specialized skills
 The project is temporary but critical to
the organization
 Management of Projects
 Planning - goal setting, defining the
project, team organization
 Scheduling - relates people, money,
and supplies to specific activities
and activities to each other
 Controlling - monitors resources,
costs, quality, and budgets; revises
plans and shifts resources to meet
time and cost demands
 Project Management
Activities
 Planning
 Scheduling
 Objectives
 Project activities
 Resources
 Start & end times
 Work break-down
schedule  Network
 Organization

 Controlling
 Monitor, compare, revise, action
 Project Planning,
Scheduling, and Controlling

Before Start of project During

project Timeline project
 Project Planning,
Scheduling, and Controlling

Before Start of project During

project Timeline project
 Project Planning,
Scheduling, and Controlling

Before Start of project During

project Timeline project
 Project Planning,
Scheduling, and Controlling

Before Start of project During

project Timeline project
 Project Time/cost
Planning,
Budgets
estimates

Scheduling, and Controlling

Engineering diagrams
Cash flow charts
Material availability details

Budgets
Delayed activities report
Slack activities report

CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules

Before Start of project During

project Timeline project
 Project Planning
 Establishing objectives
 Defining project
 Creating work
breakdown structure
 Determining
resources
 Forming organization
 Project Organization
 Often temporary structure
 Uses specialists from entire company
 Headed by project manager
 Coordinates activities
 Monitors schedule
and costs
 Permanent
structure called
‘matrix organization’
 A Sample Project
Organization
President

Human Quality
Resources Marketing Finance Design Mgt Production

Project 1 Project
Manager
Mechanical Test Technician
Engineer Engineer

Project 2 Project
Manager
Electrical Computer Technician
Engineer Engineer
 Matrix Organization
Marketing Operations Engineering Finance

Project 1

Project 2

Project 3

Project 4
 The Role of
the Project Manager
Highly visible
Responsible for making sure that:

 All necessary activities are finished in order

and on time
 The project comes in within budget
 The project meets quality goals
 The people assigned to the project receive
motivation, direction, and information
 The Role of
the Project Manager
Highly visible
Responsible for making sure
Project that: should be:
managers
 Good coaches
 All necessary activities are finished in order
and on time  Good communicators
 The project comes inAble to organize
within budget activities
from a variety of disciplines
 The project meets quality goals
 The people assigned to the project receive
motivation, direction, and information
 Work Breakdown Structure
Level
1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or work packages)
to be completed
 Project Life Cycle:
Time Distribution of Project Effort
• Conception
• Selection
• Planning,
scheduling,
monitoring, control
• Evolution and
termination
Work Breakdown Structure
Level ID
Level Number Activity
1 1.0 Develop/launch Windows Longhorn OS
2 1.1 Development of GUIs
2 1.2 Ensure compatibility with earlier
Windows versions
3 1.21 Compatibility with Windows ME
3 1.22 Compatibility with Windows XP
3 1.23 Compatibility with Windows 2000
4 1.231 Ability to import files
 Work Breakdown Structure for
Computer Order Processing System
Project

21
 Organizational Breakdown Structure
 a chart that shows which organizational units
are responsible for work items
 Responsibility Assignment Matrix
 shows who is responsible for work in a project

22
 Project Scheduling
 Identifying precedence
relationships
 Sequencing activities
 Determining activity times & costs
 Estimating material and worker
requirements
 Determining critical activities
 Purposes of Project
Scheduling
1. Shows the relationship of each activity to
others and to the whole project
2. Identifies the precedence relationships
among activities
3. Encourages the setting of realistic time
and cost estimates for each activity
4. Helps make better use of people, money,
and material resources by identifying
critical bottlenecks in the project
Project Management
Techniques
 Gantt chart
 Critical Path Method
(CPM)
 Program Evaluation
and Review
Technique (PERT)
 A Simple Gantt Chart

Time
J F M A M J J A S

Design
Prototype
Test
Revise
Production
 Service For A Delta Jet
Deplaning
Passengers
Baggage claim
Baggage Container offload
Pumping
Fueling
Engine injection water
Cargo and mail Container offload
Main cabin door
Galley servicing
Aft cabin door
Lavatory servicing Aft, center, forward
Drinking water Loading
First-class section
Cabin cleaning
Economy section
Cargo and mail Container/bulk loading
Galley/cabin check
Flight services
Receive passengers
Operating crew Aircraft check
Baggage Loading
Passengers Boarding
0 15 30 45 60
Minutes
 Project Control Reports
 Detailed cost breakdowns for each task
 Total program labor curves
 Cost distribution tables
 Functional cost and hour summaries
 Raw materials and expenditure forecasts
 Variance reports
 Time analysis reports
 Work status reports
 Gantt Chart Advantages
•Good, fast and easy
•Easy to update
•Shows plan and schedule
•Excellent tool for small projects
•Good reporting tool
Disadvantages
•No critical path
•No dependency
© 2006 Prentice Hall, Inc. 3 – 29
 PERT and CPM
 Network techniques
 Developed in 1950’s
 CPM by DuPont for chemical plants (1957)
 PERT by Booz, Allen & Hamilton with the
U.S. Navy, for Polaris missile (1958)
 Consider precedence relationships and
interdependencies
 Each uses a different estimate of
activity times
 Six Steps PERT & CPM

1. Define the project and prepare the

work breakdown structure
2. Develop relationships among the
activities - decide which activities
must precede and which must follow
others
3. Draw the network connecting all of
the activities
 Six Steps PERT & CPM

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
 Questions PERT & CPM
Can Answer
1. When will the entire project be
completed?
2. What are the critical activities or tasks in
the project?
3. Which are the noncritical activities?
4. What is the probability the project will be
completed by a specific date?
 Questions PERT & CPM
Can Answer
5. Is the project on schedule, behind
schedule, or ahead of schedule?
6. Is the money spent equal to, less than, or
greater than the budget?
7. Are there enough resources available to
finish the project on time?
8. If the project must be finished in a shorter
time, what is the way to accomplish this
at least cost?
© 2006 Prentice Hall, Inc. 3 – 35
 A Comparison of AON and
AOA Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)
A comes before
(a) A B C B, which comes
before C A B C
A A
A and B must both
(b) C be completed
before C can start C
B B
B
B and C cannot
(c) A begin until A is B
completed A
C C
 A Comparison of AON and
AOA Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

C and D cannot
A C begin until A A C
(d) and B have
both been
B D completed B D

C cannot begin
until both A and B
A C are completed; D A C
(e) cannot begin until Dummy activity
B is completed. A
B D dummy activity is
introduced in AOA B D
 A Comparison of AON and
AOA Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

B and C cannot
begin until A is
completed. D
A B D cannot begin A B D
until both B and
(f) C are completed. Dummy
A dummy C
C activity
activity is again
introduced in
AOA.

Figure 3.5
 Concurrent Activities

3
Lay foundation Lay Dummy
foundation 2 0
2 3

2
1 4
Order material
Order material

(a)Incorrect (b) Correct

precedence precedence
relationship relationship

© 2006 Prentice Hall, Inc. 3 – 39

 AON Example
Milwaukee Paper Manufacturing's
Activities and Predecessors
Immediate
Activity Description Predecessors
A Build internal components —
B Modify roof and floor —
C Construct collection stack A
D Pour concrete and install frame A, B
E Build high-temperature burner C
F Install pollution control system C
G Install air pollution device D, E
H Inspect and test F, G

Table 3.1
 AON Network for
Milwaukee Paper

Activity A
A (Build Internal Components)

Start

Activity B
Start B (Modify Roof and Floor)
Activity
 AON Network for
Milwaukee Paper
Activity A Precedes Activity C

A C

Start

B D

Activities A and B
Precede Activity D
 AON Network for
Milwaukee Paper

F
A C

E
Start H

B D G

Arrows Show Precedence

Relationships
Figure 3.8
 AOA Network for
Milwaukee Paper
C
2 4
(Construct
Stack)
F
Co (In
nt nal

nt sta
s)
ne e r
om ld A

(Build Burner)
ro ll
po I nt

ls
)
C ui

H
Dummy 7
(B

E
1 6
Activity (Inspect/
Test)
Ro (M B G
o f od l
/F ify t al n
s o
lo
or I( n luti e)
D o l ic
) 3 5 P ev
D
(Pour
Concrete/
Install Frame)
AOA Project Network for House

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 Select 1 1 Select
financing materials paint carpet
5

AON Project Network for House

Lay foundations Build house
2 4
Finish work
2 3
7
Start 1 1
3
Design house and 6
3
obtain financing 5 1
1
1 Select carpet
Order and receive 45
Select paint
materials
 Determining the Project
Schedule
Perform a Critical Path Analysis
 The critical path is the longest path
through the network
 The critical path is the shortest time in
which the project can be completed
 Any delay in critical path activities
delays the project
 Critical path activities have no slack
time
 Manager’s View of CPM

INPUTS
• List of project activities
• Precedence relationship among activities
• Estimate of each activity’s duration

CPM processing procedures

OUTPUTS
• Estimated duration of project
• Identification of critical activities
• Amount of slack for each activity
 Determining the Project
Schedule
Perform a Critical Path Analysis
Activity Description Time (weeks)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total Time (weeks) 25
 Determining the Project
Schedule
Perform a Critical Path Analysis
Earliest start (ES) =earliest time at
Activity Description
which an activity can start, Time (weeks)
assuming
A Build internal components
all predecessors 2
have been completed
B ModifyEarliest
roof and floor(EF) =earliest time at
finish 3
C which
Construct an activity
collection can be finished 2
stack
D Pour concrete and(LS)
Latest start install frame
=latest 4
time at which
E an activity can start
Build high-temperature so as to not delay
burner 4
F Install the completion
pollution control time of the entire 3
system
project
G Install air pollution device 5
Latest finish (LF) =latest time by which
H Inspect anand test has to be finished so as
activity 2 to
Total Time the completion time ofTable
(weeks)
not delay the 3.2
25
entire project
 Determining the Project
Schedule
Perform a Critical Path Analysis
Activity Name
or Symbol
A Earliest
Earliest ES EF
Start Finish

Latest LS LF Latest
Start 2 Finish

Activity Duration
 Forward Pass
Begin at starting event and work forward
Earliest Start Time Rule:

 If an activity has only one immediate

predecessor, its ES equals the EF of the
predecessor
 If an activity has multiple immediate
predecessors, its ES is the maximum of
all the EF values of its predecessors

ES = Max (EF of all immediate predecessors)

 Forward Pass
Begin at starting event and work forward
Earliest Finish Time Rule:

 The earliest finish time (EF) of an activity

is the sum of its earliest start time (ES)
and its activity time

EF = ES + Activity time
 ES/EF Network for
Milwaukee Paper

ES EF = ES + Activity time
Start
0 0

0
 ES/EF Network for
Milwaukee Paper
EF of A =
ES ES of A + 2
of A
A
Start 0 2
0 0

2
 ES/EF Network for
Milwaukee Paper
A
0 2

2 EF of B =
ES ES of B + 3
0
Start
0 of B
B
0 0 3

3
 ES/EF Network for
Milwaukee Paper
A C
0 2 2 4

2 2
Start
0 0

B
0 3

3
 ES/EF Network for
Milwaukee Paper
A C
0 2 2 4

2 2
Start
0 0
= Max (2, 3) D
0
3 7
B
0 3

3
4
 ES/EF Network for
Milwaukee Paper
A C
0 2 2 4

2 2
Start
0 0

B D
0 3 3 7

3 4
 ES/EF Network for
Milwaukee Paper
A C F
0 2 2 4 4 7

2 2 3
Start E H
0 0 4 8 13 15

0 4 2

B D G
0 3 3 7 8 13

3 4 5
 Backward Pass
Begin with the last event and work backwards

Latest Finish Time Rule:

 If an activity is an immediate predecessor

for just a single activity, its LF equals the
LS of the activity that immediately follows
it
 If an activity is an immediate predecessor
to more than one activity, its LF is the
minimum of all LS values of all activities
that immediately follow it
LF = Min (LS of all immediate following activities)
 Backward Pass
Begin with the last event and work backwards

Latest Start Time Rule:

 The latest start time (LS) of an activity is

the difference of its latest finish time (LF)
and its activity time

LS = LF – Activity time
 LS/LF Times for
Milwaukee Paper
A C F
0 2 2 4 4 7

2 2 3
Start E H
0 0 4 8 13 15
13 15
0 4 2

B LS = LF
D – Activity time
G
0 3 3 7 8 13

3 4 5 LF = EF
of Project
 LS/LF Times for
Milwaukee Paper
A C F
0 2 2 4 4 7

10 13
2 2 3
Start E H
0 0
LF =4 Min(LS
8 of 13 15
following activity) 13 15
0 4 2

B D G
0 3 3 7 8 13

3 4 5

Figure 3.12
 LS/LF Times for
Milwaukee Paper
LF = Min(4, 10)

A C F
0 2 2 4 4 7

2 4 10 13
2 2 3
Start E H
0 0 4 8 13 15

4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
8 13
3 4 5
 LS/LF Times for
Milwaukee Paper
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3
Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5
 Computing Slack Time
After computing the ES, EF, LS, and LF times
for all activities, compute the slack or free
time for each activity

 Slack is the length of time an activity can

be delayed without delaying the entire
project

Slack = LS – ES or Slack = LF – EF
 Computing Slack Time
Earliest Earliest Latest Latest On
Start Finish Start Finish Slack Critical
Activity ES EF LS LF LS – ES Path

A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes

Table 3.3
 Critical Path for
Milwaukee Paper
A C F
0 2 2 4 4 7

0 2 2 4 10 13
2 2 3
Start E H
0 0 4 8 13 15

0 0 4 8 13 15
0 4 2

B D G
0 3 3 7 8 13
1 4 4 8 8 13
3 4 5
 ES – EF Gantt Chart
for Milwaukee Paper
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-
temperature burner
F Install pollution
control system
G Install air pollution
device
H Inspect and test
 LS – LF Gantt Chart
for Milwaukee Paper
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build high-
temperature burner
F Install pollution
control system
G Install air pollution
device
H Inspect and test
 CPM Example:
• CPM Network
f, 15

g, 17 h, 9
a, 6
i, 6

b, 8
d, 13 j, 12

c, 5
e, 9
 CPM Example
• ES and EF Times
f, 15

g, 17 h, 9
a, 6
0 6 i, 6

b, 8
0 8 d, 13 j, 12

c, 5
0 5 e, 9
 CPM Example
• ES and EF Times f, 15
6 21
g, 17 h, 9
a, 6
0 6 6 23 i, 6

b, 8
0 8 d, 13 j, 12
8 21
c, 5
0 5 e, 9
5 14
 CPM Example

• ES and EF Times f, 15
6 21
g, 17 h, 9
a, 6
6 23 21 30
0 6 i, 6
23 29
b, 8
0 8 d, 13 j, 12
8 21 21 33
c, 5
0 5 e, 9
Project’s EF =
5 14 33
 CPM
CPM Example
Example
• Float
f, 15
3 6 21 h, 9
9 24
21 30
a, 6 g, 17 3
6 23 24 33
i, 6
3 0 6 4
10 27
3 9 4 23 29
b, 8 27 33
0 8 d, 13 j, 12
0
0 8 0 8 21 21 33
8 21 0
c, 5 21 33
0 5 e, 9
7
7 12 7 5 14
12 21
 CPM Example
• Critical Path
f, 15

g, 17 h, 9
a, 6
i, 6

b, 8
d, 13 j, 12

c, 5
e, 9
Variability in Activity Times

 CPM assumes we know a fixed time

estimate for each activity and there
is no variability in activity times
 PERT uses a probability distribution
for activity times to allow for
variability
 Variability in Activity Times

 Three time estimates are required

 Optimistic time (a) – if everything goes
according to plan
 Most–likely time (m) – most realistic
estimate
 Pessimistic time (b) – assuming very
unfavorable conditions
 Variability in Activity Times
Estimate follows beta distribution
Expected time:
t = (a + 4m + b)/6
Variance of times:
v = [(b – a)/6]2
 Variability in Activity Times
Estimate follows beta distribution
Expected time:
t = (a + 4m + b)/6
Probability of
Variance of times:
1 in 100 of Probability
Probability

< a occurring of 1 in 100 of

v = [(b − a)/6]2 > b occurring

Activity
Time

Optimistic Most Likely Pessimistic

Time (a) Time (m) Time (b)
 Computing Variance
Most Expected
Optimistic Likely Pessimistic Time Variance
Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 1 2 3 2 .11
B 2 3 4 3 .11
C 1 2 3 2 .11
D 2 4 6 4 .44
E 1 4 7 4 1.00
F 1 2 9 3 1.78
G 3 4 11 5 1.78
H 1 2 3 2 .11
 Probability of Project
Completion
Project variance is computed by
summing the variances of critical
activities
2 =pProject variance

= (variances of activities
on critical path)
 Probability of Project
Completion
Project variance is computed by
summing the variances of critical
Project variance
activities
2 =p.11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

p = Project variance
= 3.11 = 1.76 weeks
 Probability of Project
Completion
PERT makes two more assumptions:

 Total project completion times follow a

normal probability distribution
 Activity times are statistically
independent
Probability of Project
Completion
Standard deviation = 1.76 weeks

15 Weeks
(Expected Completion Time)
 Probability of Project
Completion
What is the probability this project can
be completed on or before the 16 week
deadline?

due expected date

Z = date – of completion /p

= (16 wks – 15 wks)/1.76

= 0.57 Where Z is the number of

standard deviations the due
date lies from the mean
 Probability of Project
Completion
From Appendix I
What is the probability
.00 .01 this project
.07 can
.08
be completed on or before the
.1 .50000 .50399
16 week
.52790 .53188
deadline?.2 .53983 .54380 .56749 .57142

due expected date

.5 Z.69146
= date .69497
− of completion p
.71566 /.71904
.6 .72575 .72907 .74857 .75175
= (16 wks − 15 wks)/1.76

= 0.57 Where Z is the number of

standard deviations the due
date lies from the mean
 Probability of Project
Completion

0.57 Standard deviations

Probability
(T ≤ 16 weeks)
is 71.57%

15 16 Time
Weeks Weeks
 Determining Project
Completion Time

Probability
of 0.99

Probability
of 0.01

2.33 Standard Z
From Appendix I deviations
0 2.33
 DIFFERENCE BETWEEN PERT and CPM
PERT
A probabilistic model with uncertainty in activity
duration. The duration of each activity is normally
computed from multiple time estimates with a view
to take into account time uncertainty. These
estimates are ultimately used to arrive at the
probability of achieving any given scheduled date
.of project completion
It is said to be event oriented as the results of
analysis are expressed in terms of events or distinct
.points in time indicative of progress
The use of dummy activities is required for
.representing the proper sequencing
It is used for repetitive jobs
It is applied mainly for planning and scheduling
.research programmes
.PERT analysis does not usually consider costs
CPM
A deterministic model with well known activity
(single) times based upon the past experience, it
.therefore, does not deal with uncertainty in time
It is activity oriented as the results of calculations
are considered in terms of activities or operations
.of the project
.The use of dummy activities is not necessary
.It is used for non-repetitive jobs
.It is used for construction and business problems
CPM deals with costs of project schedules and
their minimization. The concept of crashing is
.applied mainly to CPM models
 ADVANTAGES OF PERT/CPM
1. Especially useful when scheduling and controlling
large projects.
2. Straightforward concept and not mathematically
complex.
3. Graphical networks aid perception of relationships
among project activities.
4. Critical path & slack time analyses help pinpoint
activities that need to be closely watched.
5. Project documentation and graphics point out who
is responsible for various activities.
6. Applicable to a wide variety of projects.
7. Useful in monitoring schedules and costs.

© 2006 Prentice Hall, Inc. 3 – 91

 LIMITATIONS OF PERT/CPM
1. Assumes Clearly Defined, Independent,
& Stable Activities
2. Specified Precedence Relationships
3. Activity Times (PERT) Follow Beta
Distribution
4. Subjective Time Estimates
5. Over-emphasis on Critical Path

© 2006 Prentice Hall, Inc. 3 – 92

 Crashing Projects
• A methodical approach to reducing project duration
– Focus on the time of activities on the critical path
– Looking for greatest improvement with least cost
• Additional labor, machinery
• Overtime and temporary employees
• Premiums paid to outside contractors for early delivery
• Steps
– Create network
– Identify critical path
– Identify costs of reducing each activity on path
– Reduce most cost effective activity
– Look for critical path changes
• Beware of multiple critical paths
– Crash next activity
Crashing Projects: Create the
Network
Crashing Projects: Identify the Critical
Path
B C
7 7
A D F H
8 10 8 5
E G
12 9

A-B-C-F-H
Critical Path = 35 days
Crashing Projects: Identify Costs of
Crashing Each Activity
Crashing Projects: Reduce Most Cost
Effective Activity
6
B C
7 7
X
A D F H
8 10 8 5
E G
12 9
Crashing Projects: Look for Critical
Path Changes
6
B C
7 7
X
A D F H
8 10 8 5
E G
12 9

Old Critical Path Completion = 35 days

Activity C Crashed by 1 day project completion = 34 days
Did that effect the critical path?
Crashing Projects: Look for Critical
Path Changes
6
B C
7 7
X
A D F H
8 10 8 5
E G
12 9

Multiple Critical Paths Appear!!!

Critical Path = 34 days

 Crashing Projects: Crash Next Activity
Exhibit 8.25: Crash Time and Costs

Both C.P. Path 1 Only Path 2 Only

 Crashing Projects: Summary
Exhibit 8.26: Crashing Summary
Solution
 Caveats
• Time estimates are frequently wrong
• Early finishes are absorbed
• Cushions get wasted
• Resources aren’t always available when
needed
PROJECT COST
 Project Crashing
• Crashing
– reducing project time by arranging additional resources
• Crash time
– an amount of time an activity is reduced
• Crash cost
– cost of reducing activity time
• Goal
– reduce project duration at minimum cost
 Activity crashing

Crash
cost Crashing activity
Activity cost

Slope = crash cost per unit time

Normal Activity
Normal
cost
Normal
time
Crash Activity time
time
 Time Cost data

Activity Normal Normal Crash Crash Allowable slope

time cost Rs time cost Rs crash time
1 12 3000 7 5000 5 400
2 8 2000 5 3500 3 500
3 4 4000 3 7000 1 3000
4 12 50000 9 71000 3 7000
5 4 500 1 1100 3 200
6 4 500 1 1100 3 200
7 4 1500 3 22000 1 7000
75000 110700
 Practice Example
A social project manager is faced with a project with the following
activities:
Activity Description Duration
Social work team to live in village 5w
Social research team to do survey 12w
Analyse results of survey 5w
Establish mother & child health program 14w
Establish rural credit programme 15w
Carry out immunization of under fives 4w

Draw network diagram and show the critical path.

Calculate project duration. darla/smbs/vit
 Practice problem
Activity Description Duration
1-2 Social work team to live in village 5w
1-3 Social research team to do survey 12w
3-4 Analyse results of survey 5w
2-4 Establish mother & child health program 14w
3-5 Establish rural credit programme 15w
4-5 Carry out immunization of under fives 4w

4
2
1 5
3
PROJECT COST
 Cost consideration in project
• Project managers may have the option or requirement to crash the
project, or accelerate the completion of the project.
• This is accomplished by reducing the length of the critical path(s).
• The length of the critical path is reduced by reducing the duration
of the activities on the critical path.
• If each activity requires the expenditure of an amount of money to
reduce its duration by one unit of time, then the project manager
selects the least cost critical activity, reduces it by one time unit,
and traces that change through the remainder of the network.
• As a result of a reduction in an activity’s time, a new critical path
may be created.
• When there is more than one critical path, each of the critical paths
must be reduced.
• If the length of the project needs to be reduced further, the process
is repeated.
 Project Crashing
• Crashing
– reducing project time by expending additional resources
• Crash time
– an amount of time an activity is reduced
• Crash cost
– cost of reducing activity time
• Goal
– reduce project duration at minimum cost
 Activity crashing

Crash
cost Crashing activity
Activity cost

Slope = crash cost per unit time

Normal Activity
Normal
cost
Normal
time
Crash Activity time
time
 Time-Cost Relationship
 Crashing costs increase as project duration decreases
 Indirect costs increase as project duration increases
 Reduce project length as long as crashing costs are less than
indirect costs
Time-Cost Tradeoff
Min total cost = Total project cost
optimal project
Indirect
time
cost
cost

Direct cost

time
 Project Crashing example

2 4
1
8 2
7
1 4
1
2

3 6
4 5 4
4
 Time Cost data

Activity Normal Normal Crash Crash Allowable slope

time cost Rs time cost Rs crash time
1 12 3000 7 5000 5 400
2 8 2000 5 3500 3 500
3 4 4000 3 7000 1 3000
4 12 50000 9 71000 3 7000
5 4 500 1 1100 3 200
6 4 500 1 1100 3 200
7 4 1500 3 22000 1 7000
75000 110700
 R500 R7000
Project duration = 36
2 4
8 12 R700
7
1 From…..
4
12

R400 3 6
4 5 4
4 R200
R3000
R200

R500 R7000

2 4
8 12 R700

To….. 7
1 4
7
Project 6
R400 3
4 5 4
duration = 31 4 R200
R3000
R200
Additional cost
= R2000
 Project Crashing
Crashing
– reducing project time by expending additional resources
Crash time
– an amount of time an activity is reduced
Crash cost
– cost of reducing activity time
Goal
– reduce project duration at minimum cost

darla/smbs/vit 117
 Activity crashing

Crash cost
Crashing activity

Slope = crash cost per unit time

Activity cost

Normal Activity
Normal
cost
Normal
time

Crash time Activity time

darla/smbs/vit 118
 Time-Cost Relationship
 Crashing costs increase as project duration decreases
 Indirect costs increase as project duration increases
 Reduce project length as long as crashing costs are less than indirect costs

Time-Cost Tradeoff
Min total cost = Total project cost
optimal project
time Indirect cost
cost

Direct cost

darla/smbs/vit time 119

 Project Crashing example

2 4
1
8 2
7
1 4
1
2

3 6
4 5 4
4

darla/smbs/vit 120
 Time Cost data

Activity Normal Normal Crash Crash Allowable slope

time cost Rs time cost Rs crash time
1 12 3000 7 5000 5 400
2 8 2000 5 3500 3 500
3 4 4000 3 7000 1 3000
4 12 50000 9 71000 3 7000
5 4 500 1 1100 3 200
6 4 500 1 1100 3 200
7 4 1500 3 22000 1 7000
75000 110700

darla/smbs/vit 121
 R500 R7000
Project duration = 36
2 4
8 12 R700
7 From…..
1 4
12

R400 3 6
4 5 4
4 R200
R3000
R200

R500 R7000

2 4
8 12 R700
To….. 7
1 4
7
Project
R400 3 6
duration = 31 5 4
4
Additional cost = 4 R200
R3000
R2000 R200
darla/smbs/vit 122
 Practice Example
A social project manager is faced with a project with the following activities:

Activity Description Duration

Social work team to live in village 5w
Social research team to do survey 12w
Analyse results of survey 5w
Establish mother & child health program 14w
Establish rural credit programme 15w
Carry out immunization of under fives 4w

Draw network diagram and show the critical path. Calculate project
duration.
darla/smbs/vit 123
 Example: EarthMover, Inc.

EarthMover is a manufacturer of road construction

equipment including pavers, rollers, and graders. The
company is faced with a new
project, introducing a new
line of loaders. Management
is concerned that the project might
take longer than 26 weeks to
complete without crashing some
activities.
 Example: EarthMover, Inc.

Immediate
Completion
Activity Description Predecessors Time (wks)
A Study Feasibility --- 6
B Purchase Building A 4
C Hire Project Leader A 3
D Select Advertising Staff B 6
E Purchase Materials B 3
F Hire Manufacturing Staff B,C 10
G Manufacture Prototype E,F 2
H Produce First 50 Units G 6
I Advertise Product D,G 8
 Example: EarthMover, Inc.

PERT Network
D
6 I
B 8
Start
A 4 E
Finish
6 3
C G H
3 F 2 6
10
 Example: EarthMover, Inc.

Earliest/Latest Times

Activity ES EF LS LF Float
A 0 6 0 6 0*
B 6 10 6 10 0*
C 6 9 7 10 1
D 10 16 16 22 6
E 10 13 17 20 7
F 10 20 10 20 0*
G 20 22 20 22 0*
H 22 28 24 30 2
I 22 30 22 30 0*
 Example: EarthMover, Inc.

Critical Activities
D 10 16
6 16 22 I 22 30
B 6 10 8 22 30
Start
A 0 6 4 6 10 E 10 13 Finish
6 0 6 3 17 20
C 6 9 G 20 22 H 22 28
3 7 10 F 10 20 2 20 22 6 24 30
10 10 20
 Example: EarthMover, Inc.

Crashing
The completion time for this project using normal
times is 30 weeks. Which activities should be crashed,
and by how many weeks, in order for the project to be
completed in 26 weeks?
 CRASHING OF PROJECT

The time cost relationship can be visualized

graphically in the form of a time versus cost
curve which is for a limited portion at least, Activity cost
sloping downwards. If the activity takes more
time than the cost increases due to inefficient
use of resources. Also, if the activity has to be Activity time
completed in a less time, then more funds have
to be spent, which implies more costs.
Example-

Activity Normal time Crash time Crash cost/day

a 6 6 ---
b 10 8 500
c 5 4 300
d 4 1 700
e 9 7 600
f 2 1 800

B (10)
A (6) F (2)

C (5) E (9)
D (4)
a-b-f =18 days
Critical path  c-d-e-f = 20 days
Arrange activities in increasing order of cost

c 300
e 600
d 700
f 800

Crash c by one day, critical path = 19 days

Cost= 300
Save= 700

Crash e by one day, critical path = 18 days

Cost= 900 (300 +600)
Save= 1100

Now both paths have become critical with duration of 18 days, to further crash the project we have to crash 1 day each from both the paths in
that case either we can choose 1 day of either activities from both the path or choosing activity common in both path.

Crash f by one day, critical path = 17 days

Cost= 1700
Save= 3000

Crash b and e by one day each, critical path = 16 days

Cost= 2800
Save= 2900

Project cannot be crashed further.

Graph of Normal and Crash Points
Activity
cost

Crash
Crash cost

Normal cost Normal

Crash time Normal time Activity duration

Sample Problem (Crashing):
The objective is to find the most efficient allocation of
additional funds to reduce project completion time (at
least cost)

Activity Normal time Crash time Normal Cost Crash Cost

(days) Days
A 6 4 P 10,000 P 14,000
B 4 3 5,000 8,000
C 3 2 4,000 5,000
D 8 6 9,000 12,000
E 7 4 7,000 8,000
Total Cost P 35,000 P 47,000
Solution: Construct the networks of the project’s activities with the normal
times and w/ all crash times

Figure 1:
Network With the normal times

T= 3 9
6 4
2 C

9
0 T=6
E
1 A T=7
0 16
B
T=
4 5
D
3
T=8
Figure 2:
Network With all crash times

T= 2 6
4 4
2 C

6
0 T=4
E
1 A T=4
0 10
B
T=
3 5
D
3
T=6
In Fig.1 The critical path is A, C, E and the project
Completion time Tc is 16 weeks at a total cost of
P35,000.
Fig.2 shows the Project with all crash times, has now an
earliest time of 10 weeks at a total cost of P47,000.
The objective here is to reduce the project completion
time without increasing the cost by P12,000
(P47,000-35,000).
This table shows the relationship between Activity completion
time and costs.

Activity Normal Crash Maximum Normal Crash Cost Cost

time time Days Reduction Cost saved/day
(days) (TN-TCR) Cc-Cn
Tn-TCR
A 6 4 2 P 10,000 P 14,000 P 2,000

B 4 3 1 5,000 8,000 3,000

C 3 2 1 4,000 5,000 1,000

D 8 6 2 9,000 12,000 1,500

E 7 4 3 7,000 8,000 333

Total Cost P 35,000 P 47,000

Cont:
With Tc=16, the total cost is P35,000. There are two
Paths through the network; A,C, E and B,D. To reduce
the project completion time, crash activities on both
paths. On the upper path A,C,E start crashing the
least expensive activity E, then C, and the A. On the
lower path B,D, the least expensive activity to crash is
D. At this point, all the activities A,C,E on the upper
path and activity D on the lower path have been
crashed to their minimum times and crashing activity
B will not produce any further benefits, since the
project completion time is now reduced to 10 days at
a total cost of P44,000.
This figure now shows the network with Activities A, C, E and D
crashed. Activity B is the only one not crashed.

Figure 3:
After crashing T= 2 6
4 4
2 C

6
0 T=4
E
1 A T=4
0 10
B
T=
4 5
D 10
4 3
4 T=6
 How to get the total Cost after crashing each activity

1. Crashing E to 4 days: Tc= P8,000 + P9,000 + P4,000 + P5,000+ P10,000

= P36,000
2. Crashing C to 2 days: Tc= P8,000 + P5,000 + P9,000 + P5,000+ P10,000
= P37,000
3. Crashing D to 6 days: Tc= P8,000 + P5,000 + P12,000 + P5,000+ P10,000
= P40,000
4. Crashing A to 4 days: Tc= P8,000 + P5,000 + P12,000 + P5,000+ P14,000
= P44,000
 The resulting Values are summarized in this table

Project Duration (Days) Total Cost

1. Original network (Table 1) 16 P 35,000
2. Crashing E to 4 days 13 36,000
3. Crashing C to 2 days 12 37,000
4. Crashing D to 6 days 12 40,000
5. Crashing A to 4 days 10 44,000

The most efficient allocation of funds at the least additional

expense is to crash A to 4 days, C to 2 days, D to 6 days, and E to
4 days at a total cost of P 44,000.
PROJECT COST
 Cost consideration in project
 Project managers may have the option or requirement to crash the
project, or accelerate the completion of the project.
 This is accomplished by reducing the length of the critical path(s).
 The length of the critical path is reduced by reducing the duration
of the activities on the critical path.
 If each activity requires the expenditure of an amount of money to
reduce its duration by one unit of time, then the project manager
selects the least cost critical activity, reduces it by one time unit,
and traces that change through the remainder of the network.
 As a result of a reduction in an activity’s time, a new critical path
may be created.
 When there is more than one critical path, each of the critical
paths must be reduced.
 If the length of the project needs to be reduced further, the process
is repeated.

144
Project Crashing
 Crashing
 reducing project time by expending additional resources
 Crash time
 an amount of time an activity is reduced
 Crash cost
 cost of reducing activity time
 Goal
 reduce project duration at minimum cost

145
 Activity crashing

Crash cost
Crashing activity

Slope = crash cost per unit time

Activity cost

Normal Activity
Normal
cost
Normal
time

Crash time Activity time

146
 Time-Cost Relationship
 Crashing costs increase as project duration decreases
 Indirect costs increase as project duration increases
 Reduce project length as long as crashing costs are less than indirect costs

Time-Cost Tradeoff
Min total cost = Total project cost
optimal project time
Indirect cost
cost

Direct cost

time
147
Project Crashing example

2 4
1
8 2
7
1 4
1
2
3 6
4 5 4
4

Project duration = 36

148
Time Cost data

149
 R500 R7000
Project duration = 36
2 4
8 12 R700
7 From…..
1 4
12

R400 3 6
4 5 4
4 R200
R3000
R200

R500 R7000

2 4
8 12 R700
To….. 7
1 4
7
Project
R400 3 6
duration = 31 5 4
4
Additional cost = 4 R200
R3000
R2000 R200
150
  Useful at many stages of project management

Benefits of CPM/PERT
 Mathematically simple

 Give critical path and slack time

 Provide project documentation

 Useful in monitoring costs

151
CPM/PERT can answer the following
important questions:
۩ How long will the entire project take to be completed? What
are the risks involved?
۩ Which are the critical activities or tasks in the project which
could delay the entire project if they were not completed on
time?
۩ Is the project on schedule, behind schedule or ahead of
schedule?
۩ If the project has to be finished earlier than planned, what is
the best way to do this at the least cost?
×Limitations to CPM/PERT
× Clearly defined, independent and stable activities
× Specified precedence relationships
× Over emphasis on critical paths
× Deterministic CPM model
× Activity time estimates are subjective and depend on judgment
× PERT assumes a beta distribution for these time estimates, but
the actual distribution may be different
× PERT consistently underestimates the expected project
completion time due to alternate paths becoming critical

To overcome the limitation, Monte Carlo simulations can be performed on the network
to eliminate the optimistic bias

153
Computer Software
for Project Management

 Microsoft Project (Microsoft Corp.)

 MacProject (Claris Corp.)
 PowerProject (ASTA Development Inc.)
 Primavera Project Planner (Primavera)
 Project Scheduler (Scitor Corp.)
 Project Workbench (ABT Corp.)

154
 Practice Example
A social project manager is faced with a project with the following activities:

Activity Description Duration

Social work team to live in village 5w
Social research team to do survey 12w
Analyse results of survey 5w
Establish mother & child health program 14w
Establish rural credit programme 15w
Carry out immunization of under fives 4w

Draw network diagram and show the critical path. Calculate project duration.

155
 Practice problem
Activity Description Duration
1-2 Social work team to live in village 5w
1-3 Social research team to do survey 12w
3-4 Analyse results of survey 5w
2-4 Establish mother & child health program 14w
3-5 Establish rural credit programme 15w
4-5 Carry out immunization of under fives 4w

4
2

1 5

3
156
157
 Project Crashing
 Crashing
 reducing project time by expending
additional resources
 Crash time
 an amount of time an activity is reduced
 Crash cost
 cost of reducing activity time
 Goal
 reduce project duration at minimum cost

9-158
Project Crashing: Example

2 4
1
8 2
7
1 4
1
2

3 6
4 5 4
4

9-159
Project Crashing: Example (cont.)
$7,000 –

$6,000 –
Crash cost

$5,000 – Crashed activity

Slope = crash cost per week

$4,000 –

$3,000 – Normal activity

Normal cost
$2,000 –

$1,000 –
Crash time Normal time
| | | | | | |
–
0 2 4 6 8 10 12 14 Weeks

9-160
 Normal Activity and Crash Data

TOTAL
NORMAL CRASH ALLOWABLE CRASH
TIME TIME NORMAL CRASH CRASH TIME COST PER
ACTIVITY (WEEKS) (WEEKS) COST COST (WEEKS) WEEK

1 12 7 $3,000 $5,000 5 $400

2 8 5 2,000 3,500 3 500
3 4 3 4,000 7,000 1 3,000
4 12 9 50,000 71,000 3 7,000
5 4 1 500 1,100 3 200
6 4 1 500 1,100 3 200
7 4 3 15,000 22,000 1 7,000
$75,000 $110,700

9-161
 $500 $7000
Project Duration:
2 4
$700
36 weeks
8 12
0
7
1
12
4 FROM …

$400 3 6
4 5 4
4 $200
$3000
$200

$500 $7000

2 4
8 12 $700
0
7
1
TO… 7
4

Project Duration: $400 3 6

31 weeks 4 5 4
Additional Cost: 4 $200
$3000
$2000 $200

9-162
 Time-Cost Relationship
 Crashing costs increase as project
duration decreases
 Indirect costs increase as project
duration increases
 Reduce project length as long as
crashing costs are less than indirect
costs

9-163
 Time-Cost Tradeoff
Minimum cost = optimal project time
Total project cost

Indirect cost
Cost ($)

Direct cost

Crashing Time
Project duration
9-164