Philippine School of Business Administration

826 R. PAPA STREET, SAMPALOC MANILA

PROJECT MANAGEMENT:
 Project management is a carefully planned and organized effort to accomplish a specific
(and usually) one-time effort, for example, constructs a building or implements a new
computer system.
 Project management includes developing a project plan, which includes defining project
goals, and objectives, specifying tasks or how goals will be achieved, what resources are
needed, and associating budgets and timelines for completion.
 It also includes implementing the project plan the project plans, along with careful
controls to stay on the critical path, that is to ensure the plan is being managed
according to plan.
 It usually follows major phases (with various titles for these phases), including feasibility
study, project planning, implementation, evaluation and support/maintenance.
 It is a network model that aims to finish at the shortest possible time at the least
possible cost.
A project consists of interrelated activities which are to be executed in a certain order before
the entire task is completed.
Project is presented in the form of a network for the purpose of analytical treatment to get
solutions for scheduling and controlling its activity.
The activities are interrelated in a logical sequence which is known as precedence relationship.
PHASES OF PROJECT MANAGEMENT:
 PLANNING
- Dividing the project into distinct activities.
- Estimating time requirement for each activity.
- Establishing precedence relationship among the activities
- Construction of arrow diagram (NETWORK)
 SCHEDULING
- Determines the start and end time of each and every activity.
 CONTROLLING
- Uses the arrow diagram and time chart for continuous monitoring and progress
reporting.
This lecture will introduce two methods presented in different sections.
Section 1. Critical Path Method (CPM)
Section 2. Program Evaluation and Review Technique (PERT)
CRITICAL PATH METHOD (CPM):
 It implies that the time periods are determined and are certain in nature.
GUIDELINES FOR NETWORK CONSTRUCTION:
1. The starting event and ending event of an activity are called tail event and head event,
respectively.
2. The network should have a unique starting node (tail event).
3. The network should have a unique completion node (head event).
4. No activity should be represented by more than one arc in the network.
5. No two activities should have the same staring node and the same ending node.
6. Dummy activity is an imaginary activity indicating precedence activity only. Duration of a
dummy activity is zero.

Dominic Q. Taday
 Philippine School of Business Administration
826 R. PAPA STREET, SAMPALOC MANILA
Example: MTV Music Summit
Poly is the event manager of MTV Music Summit and she is task to organize the
preparation at the earliest possible time. She was able to determine the sequence of activities
and the time in days needed to finish each activity. The figures are summarized in table 1.1
1. When is she going to finish the project?
2. What is the critical path?

STEP 1. Draw the Network Diagram.

STEP 2. Develop the Critical Path.

1. Do the forward pass with the earliest start time (ESj) for each activity.
FOREWARD PASS:
ESj = max(i) (ESi + Dj)
Where:
J = ending activity
i = starting activity
Dij = Duration
Activity A: ESj = 0 + 16 = 16 Activity E: ESj = 44 + 20 = 64
Activity B: ESj = 16 + 10 = 26 Activity F: ESj = 44 + 12 = 56
Activity C: ESj = 26 + 18 = 44 Activity G: ESj = 56 + 22 = 78
Activity D: ESj = 16 + 24 = 40 Activity H: ESj = 78 + 14 = 92

2. Do the backward pass with the latest completion time (LCi) for each activity.
BACKWARD PASS:
LCi = Min (j) (LCj - Dj)
Activity H: LCi = ESj = 92 Activity D: LCi = 78 - 22 = 56
Activity G: LCi = 92 – 14 = 78 Activity C: LCi = 56 - 12 = 44
Activity F: LCi = 78 - 22 = 56 Activity B: LCi = 44 - 18 = 26
Activity E: LCi = 92 – 14 = 78 Activity A: LCi = 26 - 10 = 16

Dominic Q. Taday
 Philippine School of Business Administration
826 R. PAPA STREET, SAMPALOC MANILA

3. Compute the slack and determine the critical activities:

SLACK = ESj - LCi
= critical if 0, not critical if otherwise
Activity A: 16 – 16 = 0 Activity E: 78 – 64 = 14
Activity B: 26 – 26 = 0 Activity F: 56 – 56 = 0
Activity C: 44 – 44 = 0 Activity G: 78 – 78 = 0
Activity D: 56 – 40 = 16 Activity H: 92 – 92 = 0

STEP 3. Draw the Critical Path.

CRITICAL PATH =A+B+C+F+G+H
92 = 16 + 10 +18 +12 + 22 + 14

Thus, the earliest time to finish the project is 92 days.

PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT):

 The Program Evaluation and Review Technique (PERT) is used if the time periods are
estimates and are probabilistic in nature.
 Activities will have three time estimates
- Optimistic time
- Probable time (most likely time)
- Pessimistic time

Example: Body Shop (new branch):

Roger is the project manager of BODY SHOP and he is task to open a new branch in Bacolod as
part of the company’s expansion program at the earliest possible time. He was able to
determine the sequence of activities and the time estimates (optimistic, probable, and
pessimistic) in days needed to finish ach activity.
When is he going to finish the project? What is the critical path?

Dominic Q. Taday
 Philippine School of Business Administration
826 R. PAPA STREET, SAMPALOC MANILA

STEP 1: Draw the network

STEP 2: Set up the variance table

1) Compute the mean (expected) time (𝒕𝒆 ) based on optimistic time (𝒕𝒐 ), probable (most
likely) time (𝒕𝒎 ), pessimistic time (𝒕𝒑 ):

(𝒕𝒆 ) = [𝒕𝒐 + 𝟒(𝒕𝒎 ) + (𝒕𝒑 ) ]/𝟔

ACTIVITY A: [ 24 + 4(25) + 32] / 6 = 26
ACTIVITY B: [ 13 + 4(20) + 21] / 6 = 19
ACTIVITY C: [ 9 + 4(10) + 17] / 6 = 11
ACTIVITY D: [ 27 + 4(30) + 33] / 6 = 30
ACTIVITY E: [ 37 + 4(45) + 47] / 6 = 44
ACTIVITY F: [ 33 + 4(40) + 41] / 6 = 39
ACTIVITY G: [ 28 + 4(35) + 36] / 6 = 34
ACTIVITY H: [ 12 + 4(15) + 18] / 6 = 15
ACTIVITY I: [ 2 + 4(5) + 8] / 6 =5
2.) Compute the Variance:
𝒕𝒑 −𝒕𝒐
𝝈𝟐 = [ ( ) ]𝟐
𝟔
ACTIVITY A: [ (32 – 24 ) / 6 ]𝟐 = 1.78
ACTIVITY B: [ (21 – 13 ) / 6 ]𝟐 = 1.78
ACTIVITY C: [ (17 – 9 ) / 6 ]𝟐 = 1.78
ACTIVITY D: [ (33 – 27 ) / 6 ]𝟐 = 1
ACTIVITY E: [ (47 – 37 ) / 6 ]𝟐 = 2.78

Dominic Q. Taday
 Philippine School of Business Administration
826 R. PAPA STREET, SAMPALOC MANILA
ACTIVITY F: [ (41 – 33 ) / 6 ]𝟐 = 1.78
ACTIVITY G: [ (36 – 28 ) / 6 ]𝟐 = 1.78
ACTIVITY H: [ (18 – 12 ) / 6 ]𝟐 = 1
ACTIVITY I: [ (8 – 2 ) / 6 ]𝟐 = 1

STEP 3: Develop the critical path table

1. Do the forward pass with the earliest start time (ESj) for each activity.
FOREWARD PASS:
ESj = max(i) (ESi + Dj)
Where:
J = ending activity
i = starting activity
Dij = Duration
Activity A: ESj = 0 + 26 = 26 Activity F: ESj = 56 + 39 = 95
Activity B: ESj = 26 + 19 = 45 Activity G: ESj = 95 + 34 = 129
Activity C: ESj = 45 + 11 = 56 Activity H: ESj = 100 + 15 = 115
Activity D: ESj = 26 + 30 = 56 Activity I: ESj = 129 + 5 = 134
Activity E: ESj = 56 + 44 = 100

2. Do the backward pass with the latest completion time (LCi) for each activity.
BACKWARD PASS:
LCi = Min (j) (LCj - Dj)
Activity I: LCi = ESj = 134 Activity D: LCi = 129 – 34 = 95
Activity H: LCi = 134 – 5 = 129 Activity C: LCi = 95 – 39 = 56
Activity G: LCi = 134 – 5 = 129 Activity B: LCi = 56 – 19 = 45
Activity F: LCi = 129 – 34 = 95 Activity A: LCi = 45 – 19 = 26
Activity E: LCi = 129 – 15 = 114

Dominic Q. Taday
 Philippine School of Business Administration
826 R. PAPA STREET, SAMPALOC MANILA

3. Compute the slack and determine the critical activities:

SLACK = ESj - LCi
= critical if 0, not critical if otherwise
Activity A: 26 – 26 = 0 Activity F: 95 – 95 = 0
Activity B: 45 – 45 = 0 Activity G: 129 – 129 = 0
Activity C: 56 – 56 = 0 Activity H: 129 – 115 = 14
Activity D: 95 – 56 = 39 Activity I: 134 – 134 0
Activity E: 114 – 100 = 14
STEP 4: Draw the CRITICAL PATH

DECISION:
Roger will finish the project in 134 days.

Dominic Q. Taday