Republic of the Philippines

EASTERN VISAYAS STATE UNIVERSITY

Tacloban City

CONSTRUCTION
PROJECT
MANAGEMENT

Prepared and Compiled by:

DANILO B. PULMA, D.M.

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(for internal use only)

I. PROJECT PLANNING AND SCHEDULING

Planning is the process of breaking a project down into specific tasks, and defining the sequences in
which those tasks can or must be performed. Planning is interestingly not the same as scheduling.
Scheduling is the process of defining the timeframe in which each task will be performed and thereby
determining the start and completion dates for each project.
It is therefor appropriate to say that planning defines “what” is to be done while scheduling defines
“when” it is to be done. The resource plan describes “how” the work is done.
Project Management begins with planning. Unless planning is effective other management functions
cannot be effective. Unfortunately, construction projects vary so much that no single plan can be
developed, each project must be planned individually.
Planning is a means of:
1. Organizing the work on the project.
2. Deciding who does what, when, how and for how much.
3. Determining the resources required.
4. Allocating these resources on a time-phased basis.
5. Allocating and defining responsibility.
6. Communicating between all those involved on a project.
7. Coordinating all the activities and people involved.
8. Controlling progress.
9. Estimating time to completion.
10. Handling unexpected events and changes.

It is also a:
1. Basis for the authority of the project manager.
2. Basis for the budgeting and financial control of the project.
3. Basis for self analysis and learning, i.e. real experience.
4. Means of orienting people to look ahead, and
5. Way of initiating and maintaining a sense of urgency that is time consciousness

The Potential Advantages of Planning

• Planning pre-supposes a willingness by management to; Spent a Time, Energy, and Money
• The planning process is utilized to reach distant goals that will assure both survival and
optimization of long-term profits.
• Planning can be used to organize the project task and resources within realistic time frames.

The Project Planning System

The flowchart below shows the project planning system which consist basically of three phases namely;
Planning Phase, Scheduling Phase and Control-Monitor Phase.

Planning Phase:
The flowchart starts with the establishment of the baseline or the basic input data. Project
documents such as bid document, technical specifications, drawing, etc. are reviewed to gather
relevant data needed in planning and estimating. A meeting of the project management team from
project manager and other key personnel who have something to do with the project shall be held
to discuss methods and techniques and other matters that will affect project execution.
Work Breakdown Structure shall be established and each component activity shall be properly
defined indicating the activity codes, cost center, responsibility codes, etc. to permit proper costing
and work assignment during implementation. Network diagram shall be developed following the
principles and procedures of networking techniques.

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PROJECT PLANNING SYSTEM FLOWCHART

PLANNING

1
PROJECT
DOCUMENT

2 WORK
BREAKDOWN
SCHEDULING

3 ESTIMATING 4 NETWORK
DIAGRAMMING

5 NETWORK
ANALYSIS
NO
YES

6 TIME
SCHEDULING

7 RESOURCES
SCHEDULING
CONTROL

NO

YES

8 MONITORING
9

EVALUATION 10 COST
ACCOUNTING
NO

YES
11 UPDATING
12
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DOCUMENTA
- TION
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Scheduling Phase:
Once the network and estimate are completed, scheduling tables, charts, graphs, cash flow are
prepared in the desired sequences which will be presented to project management for further
review and evaluation.

Control-Monitor Phase:
After the plan and schedule have been fully developed, the project management team can now
start the implementation of the project. Activities are monitored and status data are gathered and
compiled. Deviations are computed and different types of reports are prepared to give top
management, the project management team and other concerned groups, accurate and timely
information regarding the actual progress of the project. If the deviation is beyond the tolerable
limit which may result into chaos and delay, then the management will immediately make
necessary steps to improve performance or update the plan to bring back the remaining work on
schedule.

List of the Typical Activities which Occur as a Result of Poor Planning

1. Wild Enthusiasm
2. Disillusionment
3. Chaos
4. Search for the guilty
5. Punishment of the innocent
6. Promotion of the non-participant
7. Definition of the requirements

The Work Breakdown Structure

Once the project objective has been defined, the next step is to determine what work elements, or
activities, need to be performed to accomplish it. One of the project management tools that can help PM in
attaining this task is the Work Breakdown Structure (WBS). The WBS provides a way for identifying what
must be done, who will do it, how long it will take, and how much it will cost. Thus, WBS ties the entire
project together.

In any project, whether large or small, it is necessary to develop a well-defined Work Breakdown
Structure (WBS) that divides the project into identifiable parts that can be managed. The concept of the
WBS is simple. In order to manage a whole project, one must manage and control each of its parts. The
WBS is the cornerstone of the project work plan. It defines the work to be performed, identifies the needed
expertise, assists in selection of the project team, and establishes a base for project scheduling and control.

A WBS is a graphical display of the project that shows the division of work in a multilevel system. Its
development is a continuing process that usually starts when the project is first assigned to the designer and
continues until all work packages have been defined. The designer starts the process of developing the
WBS by identifying major areas of the project. As members of his project team define the work to be
performed in more detail, the WBS is adjusted accordingly. Thus, the WBS is used from the start to the
finish of the project for planning and controlling. It is an effective means of defining the whole project by
parts, and providing effective communication channels for exchange of information that is necessary for
management of the project by the contractor.

WBS is also the foundation of a project management system. Code numbers can be used to relate the
WBS to the Organizational Breakdown Structure (OBS) for management of people. Code numbers can also
be used to relate the WBS to the Cost Breakdown Structure (CBS) for management of costs. Similarly,
code numbers can relate the WBS to the Critical Path Method (CPM) schedule to manage time. Thus, the
WBS provides a systematic approach for identifying work, compiling the budget and developing an
integrated schedule. Since the WBS is developed jointly by the project team, the people that will actually

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perform the work, it is an effective tool for relating work activities to ensure that all work is included and
that work is not duplicated. Most importantly, it provides a basis for measurement of performance.

Format of the Work Breakdown Structure

There are two popular formats for the Work Breakdown Structure. The Standard Work
Breakdown Structure looks similar to an organization chart and may even be thought of as such, except that
the boxes represent work activities rather than reporting structures as shown below.

PROJECT

TASK 1 TASK 2 TASK 3

Figure 1. Standard Work Breakdown Structure

The second WBS format is Line-Indented as shown in figure 2. It is a straightforward listing of

project activities, with each new indentation being a lower of detail (smaller unit of work to be performed).
This is a convenient format to use, in that it can be produced entirely in text format on a computer,
complete with line numbering. However, it does not visually show the scope of the project.

Write Project Management Book

1. Develop Proposal
1.1 Survey competition
1.2 Estimate market potential
1.3 Identify publishers
2. Do Research
2.1 Review literature
2.2 Interview experts
2.3 Interview project managers
3. Write Text
3.1 Develop first draft
3.2 Revise
3.3 Submit to publisher
3.4 Approve edited copy
4. Develop Illustrations
4.1 Roughs
4.2 Final drafts
4.3 Camera-ready copy
5. Index
5.1 Make word list
5.2 Master document
5.3 Generate

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Figure 2. Line-Indented Work Breakdown Structure

Typical WBS Level Names

A typical work breakdown structure has six levels, named as shown in figure 3. It is
perfectly acceptable to use more than six levels, but it is almost impossible to devise names for
the lower ones. After the sixth level, most people just use the word "task" or "activity" to
designate the work. The main reason for using names is for communication purposes. If everyone
uses common terminology, then you can inquire about a work package, and everyone will know
that you are referring to level 5 of the structure.

1. Program

2. Project

3. Task

4. Subtask

5. Work Package

6. Level of Effort or Activity

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Figure 3. WBS Level Names

General Aspects of WBS

Following are some general aspects of the WBS that must be kept in mind:
• Up to 20 levels can be used. More than 20 is considered overkill. For smaller projects, four to six
levels will generally be adequate.
• All paths on a WBS do not have to go down to the same level. That is, you don't have to force the
structure to be symmetrical. On any given branch, when you arrive at a level that will produce an
estimate of the required accuracy, you stop.
• The WBS does not show sequencing of work except in the sense that all level 5 work packages
hanging below a given subtask must be complete for the subtask to be complete, and so on.
However, work packages below that subtask might be performed in series or parallel. Sequencing
is determined when schedules are developed.
• A WBS should be developed before tasks are scheduled and resources allocated. The objective is to
identify all the work to be done first, then think about who will do it, how long it will take, and
how much it will cost.
• The WBS should be developed by individuals knowledgeable about the work. This rule applies to
projects that involve a lot of disciplines.

PARKINSON’S LAW: “LAW OF DELAY”

“WORK EXPANDS TO FILL THE TIME

AVAILABLE FOR IT”

MURPHY’S LAW:

“IF ANYTHING CAN GO WRONG, IT WILL

What I Hear, I Forgot
GO WRONG”
What I See, I Remember

What I do, I Understand ...

Confucius

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ILLUSTRATIVE WORK BREAKDOWN STRUCTURE (WBS)

Project

Site Work On Site Utilities Buildings Level I

Major Facilities

Grading & Paving Office Maintenance Warehouse

Level II
Drainage Surfaces Bldg. Bldg. Bldg.
Sub Facilities

Drives Parking Architectural Structural Mechanical Electrical Level III

Work Item

Level IV
Foundation Shell
Tasks

Work Work Work

Package Package Package Level V
Work Package

Legend:
- denotes continued breakdown

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ASSIGNMENT:

Develop a WBS of at least four levels deep for a project familiar to you. (ex. To Construct a
Residential House, To Construct a Warehouse for Light Industry, etc.)

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THE DIFFERENT NETWORK NOTATION SYSTEMS

Several network systems have emerged during the second half of the twentieth century, but these all fit
within one or other of two principal groups, determined by the method of notation:
1. The Activity-On-Arrow (AOA) System (often simply called arrow networks). The names used within
this group include:
• ADM (Arrow Diagram Method), CPM (Critical Path Method) or CPA (Critical Path Analysis).
All of these are practically synonymous.
• PERT (Program Evaluation Review Technique)
2. The Activity-On-Node (AON) networks. These include
• PDM (Precedence Diagram Method), which are by far the most common
• The Roy Method (named after its Inventor), otherwise known as the method of potentials (MOM
or MPM). This is an early activity-on-node system, very similar to precedence notation, now
rarely used.

CRITICAL PATH METHOD (CPM)

CPM was developed by J. E. Kelly of Remington Rand and M. R. Walker of Du Pont to help
schedule maintenance in chemical plants. It is a systematic approach of planning, analyzing and controlling
projects. It offers additional information’s for project control and other purposes which are not provided by
other project scheduling.
The fundamental departure of CPM from PERT is that CPM brings the concept of cost more
prominently into the planning and control process. Under the CPM system, two time and cost estimates are
indicated for each activity in the network; these two are normal estimate and crash estimate. The normal
estimate of time approximates the most likely time estimate in PERT. Normal cost is that associated with
finishing the project in the normal time. The crash time estimate is the time that would be required if no
costs were spared in reducing the project time. Crash cost is the cost associated with doing the job on a
crash basis so as to minimize completion time.

PROGRAM EVALUATION REVIEW TECHNIQUE (PERT)

PERT was developed by the Navy Special Projects Office in cooperation with Booz, Allen and
Hamilton, a management consulting firm. It was specifically directed at planning and controlling the
Polaris Missile Program, a massive project which had 250 prime contractors and over 9,000 subcontractors.
This is actually a management tool that is suited for research and development projects which are generally
non-repetitious in nature and are therefore sometimes called “once-through” projects. Duration time for
activities in research and development projects are subject to uncertainty. PERT handles the uncertainty
problem by the use of three time estimates, the optimistic time estimate, the most likely time estimate and
the pessimistic time estimate.
a) Optimistic Time Estimate, a - is the estimated minimum time an activity will take place.
This is the expected activity duration when all the breaks are right. A rule of thumb is that
there should be only one chance in ten of completing the activity in less than the optimistic
time estimate.
b) Most Likely Time, m - is the estimated normal length of time an activity takes. This is the
time, it is believed, that will most frequently be required for an activity, if it were done again
and again under identical conditions.
c) Pessimistic Time, b - is the estimated maximum time an activity would take, barring a
catastrophe. This is the expected activity duration when there is an abnormal run of bad
breaks.
a + 4m + b
Expected time, t=
6

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Advantages of PERT/CPM
1. Illustrating task relationships. By providing a graphic representation of how the performance of each
task is dependent on others, networks offer a distinct advantage over simpler graphs such as bar charts.
2. Encouraging Effective Planning. Drawing up a network requires that the project manager plan the
project from start to finish in considerable detail.
3. Pinpointing problem areas. Bottlenecks and potential trouble spots are discovered early enough for
preventive measures or corrective action to be taken.
4. Improving Communications. The network diagram provides a common frame of reference for all
parties involved in a project, such as designers, managers, contractors and other employees.
5. Comparing Alternative Actions. Managers are provided with an opportunity to compare the impact
on time and cost of different methods for reaching the project goal.
6. Allowing Concentration on Key Jobs. By identifying critical tasks, PERT/CPM allow managers to
apply their attention where it is most needed. At the same time, the network will indicate when other
tasks are falling behind schedule. This will allow managers to take immediate action.
7. Creating Flexibility. In a complex project, the critical path may change a number of times, as time
estimates prove inaccurate. PERT/CPM provide managers with the ability to identify the current
critical path on a continuing basis.

BASIC ELEMENTS and TERMS OF A NETWORK DIAGRAM

1. ACTIVITY - an activity is the effort, work or operation required to complete a task or a project, or in
some cases, a segment of that task. It is the actual work between events.
2. EVENT - an event represents the completion of an activity. It denotes the completion of all preceding
activities and the beginning of one or more succeeding activities. The event is shown on the network as
a circle, an ellipse, a square or other geometrical symbols and a number written therein for
identification.
3. ARROW - an arrow is drawn to represent each activity included in the network for a project, joining
two events. An arrow is designated by two numbers, one at the tail and one at the head, with the
number at the head always larger than the number at the tail.
4. NETWORK - this is an arrow diagram drawn to represent the relations of the activities and events. It is
a common practice to start time and the first arrow or arrows at the left end of the network and to
proceed to the right.
5. DUMMY - a dummy is an artificial activity, represented on the arrow diagram by a dotted line, which
indicates that an activity following the dummy cannot be started until the activity or activities
preceding the dummy are completed. A dummy activity does not consume time.
6. DURATION - this is the estimated time it takes an activity to be finished
7. EARLIEST START ( ES ) - this is the earliest time that an activity can be started.
8. EARLIEST FINISH ( EF ) - this is the earliest time that an activity can be finished. It is the earliest
starting time plus the duration of an activity. EF = ES + D
9. LATEST START ( LS ) - this is the latest time that an activity may be started without delaying the
completion of a project. LS = LF - D
10. LATEST FINISH ( LF ) - this is the latest time that an activity can be finished without delaying the
completion of the project.
11. TOTAL FLOAT ( TF ) - this is the amount of time that the start or finish of an activity can be delayed
without delaying the completion of a project. TF = LF - EF or TF = LS - ES
12. FREE FLOAT ( FF ) - this is the amount of time that the finish of an activity can be delayed without
delaying the earliest starting time for a following activity; FF = ES ( following activity ) - EF ( of this
activity ).
13. CRITICAL PATH - is the longest path in the network of activities representing a project. The critical
path is the series of interconnected activities through the network for which each activity has zero
float time, the critical path determines the minimum time required to complete a project.
14. CRITICAL ACTIVITY - these are the activities along the critical path, any delay in their completion
would result in a delay of a project completion.

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CRITICAL PATH SCHEDULING

For preparing critical path method of scheduling for any construction project, it is suggested that the
following steps be used:
a) Prepare a list of all the activities of the project.
b) Estimate the duration of each activity.
c) Determine which activity or activities immediately precede each activity.
d) Determine which activity or activities immediately follow each activity.
e) Draw a network with the activities and events properly interconnected.
f) Assign numbers to the events, being sure that the number at the head of each arrow is larger
than the number at the tail of the arrow.
g) Prepare a chart with vertical columns and horizontal lines on which to list each activity with
an appropriate designation, duration, earliest start, earliest finish, latest start, latest finish
and total float. A column for free float may be included, if this information is desired.
h) Determine which activities lie on the critical path.

SAMPLE PROBLEM :
Given:
ACTIVITIES THAT IMMEDIATELY
ACTIVITY DURATION
PRECEDE FOLLOW

A 2 None D
B 4 None F, G, H
C 1 None E
D 3 A I
E 2 C J
F 5 B I
G 2 B J
H 1 B None
I 4 D, F None
J 3 E, G None

Required:
1. Draw the network diagram for the above project.
2. Prepare a chart indicating the activities, events, D, ES, EF, LS, LF, TF, and FF.

Solution:

D 5
a)
2 3
I
4
A F
2 4 5
B 2 H
1
4 3 1 7
4
G
C 2
J
1
E 3
4 6
2

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b) The Forward Pass: Beginning at the start of the network, earliest event times are calculated using the
equation:
Dj = Max (Di + Cij) where: Dj = is the earliest event time at the head event
Dj = is the earliest event time at the tail event
Cij = is the time of moving from event i to j.
This is done for all events. Di for the starting event is 0.

9
2 D 5
2 3
I
4
A F
0
2 5
B 4 H 13
1
4 3 1 7
G
C 2
J
1 1 6
E 3
4 6
2

c) The Backward Pass: To start with, the last event is assigned the same value for earliest and latest times.
Then starting from the last event, the latest event times are calculated using the
equation:
Di = Min (Dj - Cji) where: Dj = is the latest event time at the head event
Di = is the latest event time at the tail event
Cij = is the time of moving from event j to i.

Two checks at this time are good for manual calculations. First, the two times at the
start event must be zero. The second is that there should be at least one route through
the network for which the earliest and latest event times are equal.

9
2 D 5
2 3 9 I
6 4
A F
0
2 5
B 4 2 H 13
1
4 3 1 7
0 G
4 13
C 2
J
1 1 6
E 3
4 6
2
8 10

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d) Computation of the Critical Path

The critical path is the longest (most time consuming) path of the network diagram.

Path A-D-I = 2 + 3 + 4 = 9 wks

Path B-F-I = 4 + 5 + 4 = 13 wks (critical path or the longest path)
Path B-H = 4 + 1 = 5 wks
Path B-G-J = 4 + 2 + 3 = 9 wks
Path C-E-J = 1 + 2 + 3 = 6 wks
9
2 D 5
3 Critical path = B-F-I
2 9 I
6 4
A F
0
2 5
B 4 2 H 13
1
4 3 1 7
0 G
4 13
C 2
J
1 1 6
E 3
4 6
2
8 10

e) The Table of Starts, Finishes and Floats of the Project

ACTIVITY DURATION ES EF LS LF TF FF REMARKS

A 2 0 2 4 6 4 0
B 4 0 4 0 4 0 0 critical
C 1 0 1 7 8 7 0
D 3 2 5 6 9 4 4
E 2 1 3 8 10 7 3
F 5 4 9 4 9 0 0 critical
G 2 4 6 8 10 4 0
H 1 4 5 12 13 8 8
I 4 9 13 9 13 0 0 critical
J 3 6 9 10 13 4 4

SEAT WORK/BOARD WORK/ASSIGNMENT

Problem No. 1:
Draw a network diagram representing the following logic:
G follows F but precedes H
G follows D but precedes J
M follows H but precedes L
K follows A but precedes L
F follows A
A and D start at the same time
J and L terminate at the same time

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Problem No. 2
Draw a network diagram representing the following informations: The project starts with three
activities namely A, B, and C, which can be done concurrently. When A is finished, D can start; when B is
finished, F can start: when B and D are finished, E can start. The project is complete when activities C, E
and F are finished.

Problem No. 3:
Draw a network diagram representing the following logic:
1. A is the first job on the project
2. O and N are the two final jobs for project completion
3. K precedes O
4. N follows L & M
5. J restricts the start of K & M
6. C and B depend on the completion of A
7. D follows B and may go on in parallel with C & E
8. E follows C
9. I restricts the start of J and L
10. H and G also restrict K and M
11. F must precede G and may go in parallel with H
12. E and D restrict H and I
13. C must precede F

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Problem No. 4
Given:

ACTIVITIES THAT IMMEDIATELY

ACTIVITY DURATION
PRECEDE FOLLOW

A. Design Frame 4 wks None H, E, F

B. Design Wheels 3 None H, E, F
C. Design Gears 3 None D
D. Design Handlebars 2 C H, E, F
E. Test Steering 1 A, B, D G
F. Test Gears 2 A, B, D G
G. Performance Test 3 E, F J, K
H. Manufacturing Layout 3 A, B, D I
I. Manufacture Demonstrators 5 H L
J. Prepare Advertising 2 G L
K. Prepare User’s Manual 4 G L
L. Distribute to Dealers 2 I, J, K None

Required:
3. Draw the network diagram for the above project.
4. Prepare a chart indicating the activities, events, D, ES, EF, LS, LF, TF, and FF.

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DURATION COMPRESSION

There are instances where the owner wants a project completed sooner than planned or where the
contractor must recover load time due to delays in order to catch up with schedules. For these reasons, the
project manager finds himself faced with the situation of having to expedite work. The Critical Path
Method (CPM) offers a solution for crashing work by trading time for cost.
Crashing is the process of determining shortest time, called crash time, within which an activity can
be accomplished using additional crew or equipment, overtime or extra shifts, or special techniques such as
high early strenght concrete and prefabricated components. Crashing, however, leads to increased cost
arising from, among others, the application of additional resources, increased material cost, and
inefficiency of larger crews. The cost associated with the crash time is called crash-cost.

Time-cost Trade-off
The total cost of a project is the sum of its direct and indirect costs. The direct cost, which is usually
calculated by activity, includes expense of materials, labor, equipment and subcontract. Indirect cost
includes project overhead expenses, contingency and miscellaneous expenses as well as contractor's tax.
Since it is difficult to identify which portion of the indirect cost is associated with an individual activity, it
is usually computed as a percentage of total direct cost.
For each activity, duration and cost are estimated under the assumption that resource loading are
normal. In CPM parlance, these are called the normal time and normal cost. The normal time is the activity
duration estimated during the network scheduling phase. It is based on formulated construction work
standards which are usually adjusted to reflect labor and equipment productivity, weather and actual site
conditions, crew and equipment fleet sizes, and construction methods to be employed. The normal cost is
the least direct cost necessary to accomplish the activity. It is taken from the detailed estimates of direct
costs. The minimum time to which an activity can be realistically reduced is called its crash time and the
corresponding cost is called the crash cost.
For each activity, the direct cost is related to its duration. As the pace of the activity is accelerated,
its direct cost will rise. Conversely, if it is dragged out, the cost will likewise rise. The coordinates of this
optimum point are referred to as the normal time and normal cost of the activity.
In general, a linear relationship may be assumed between indirect cost and project duration. As the
project duration is compressed, indirect cost decreases. This means that while direct cost increase as an
activity is compressed, indirect cost decreases as the project is shortened.

Crashing Procedure
In order to shorten the duration of a project, the longest path in the network, the critical path, is
compressed. It should be stressed however, that when this is crashed, it may not be necessary to crash all
the critical activities, partially or fully. Crashing should be carried out only to the desired crash duration of
the project.
When crashing the critical path, critical activities are ranked in accordance with the job-cost slope,
which is the unit change in cost for a reduction in the activity time duration. The job-cost slope can be
determined from the following formula:

Crash cost - Normal cost

Job-cost Slope =
Normal time - Crash time

Each critical activity is then crashed in the order of the job-cost slope, starting with the one having the
lowest job-cost slope, until the desired project duration is attained
The network is then examined to determine the effect of the charges on the con-critical activities.
In general, crashing the critical path reduces the float of other activities.
Thus, the shifting of the critical paths to a non-critical one is highly possible. In such cases, the
normal duration of the affected non-critical activity is compressed. Finally, the costs resulting from
crashing the critical and non-critical activities are compressed.

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The foregoing, procedures generally apply in projects having only one critical path. In a where the
projects has two or more critical paths, it would be necessary to identify all crashing alternatives and to
calculate the incremental costs corresponding to each alternative before the before the most sophisticated
alternative is chosen. In some cases, even if the project has only one critical path, complexities in the
network logic may require the use of the latter approach to get the least-cost solution.
In the succeeding sections, two examples problems will be discussed to illustrate the detailed
procedures for crashing the single and multiple critical path project cases.

Example 1.

Given the following data for a project, find the least cost schedule if the project has to be completed in
12 weeks.

Duration Cost Cost to Reduce

Activity Predecessors
Normal Crash Normal Crash per week
A - 6 4 10,000.00 14,000.00
B - 4 3 5,000.00 8,000.00
C A 3 2 4,000.00 5,000.00
D B 8 6 9,000.00 12,000.00
E C 7 4 7,000.00 8,000.00

Solution: (Normal Time)

Determine the project duration and critical activities using the normal time.

6 9
C
2 4
3
A 6 9 E
0 6
7 16

1
5
0 B D
4 16

4 3 8

Compute for the Cost Slope of each activity:

14000 − 10000
Cost Slope of Activity A = = 2000
6− 4
8000 − 5000
Cost Slope of Activity B = = 3000
4− 3

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5000 − 4000
Cost Slope of Activity C = = 1000
3− 2

12000 − 9000
Cost Slope of Activity D = = 1500
8− 6

8000 − 7000
Cost Slope of Activity E = = 333.33
7− 4

Activity Cost to Reduce per week Order of Crashing

A 2,000 4*
B 3,000 5
C 1,000 2*
D 1,500 3
E 333.33 1*

Note: In order to arrive with the least cost schedule, we begin crashing the activities with the
least expensive activity on the critical path.

Crash Time:
6 8
C
2 4
2
A 6 8 E
0 6
4 12
1
5
0 B 4 D
12
4
8
3

Project Cost = Normal Cost + Crash Cost of Activity C & E

Project Cost = 35000 + {(1 x 1000) + (3 x 333.33)}
Project Cost = 37,000.00

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Example No 2.

Given the following data for a program, determine the least - cost schedule if the project is to
be completed in 15 weeks.

Duration Cost
Activity Predecessors Cost to Reduce/ week
Normal Crash Normal Crash
A - 8 6 8,000.00 10,000.00
B - 7 5 6,000.00 8,400.00
C A 5 4 7,000.00 8,500.00
D B 4 3 3,000.00 3,800.00
E A 3 2 2,000.00 2,600.00
F D, E 5 3 5,000.00 6,600.00
G C 4 3 6,000.00 7,000.00

Solution: (Normal Time)

G
C

1 A 2 E 5 F 6

B D

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B.] Crash Time

G
C

1 A 2 E 5 F 6

B D

SUPPLEMENTARY PROBLEMS

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Problem No. 1
Prepare an arrow diagram and a list of starts, finishes, and floats for a project involving the listed activities.

Activities w/c
DURATION
ACTIVITY

STARTS FINISHES FLOATS

immediately

PRECEDE FOLLOW ES LS EF LF TF FF

A 3 None B, C
B 5 A D, E

C 4 A F, I

D 7 B G
E 6 B H

F 11 C H

G 6 D J

H 4 E, F K

I 3 C K, L

J 6 G M

K 5 H, I N

L 7 I O

M 5 J P

N 3 K P

O 2 L P

P 4 M, N, O None

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Problem No. 2

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Prepare an arrow diagram and a list of starts, finishes, and floats for a project involving the listed activities.

Activities w/c

DURATION
ACTIVITY STARTS FINISHES FLOATS
immediately

PRECEDE FOLLOW ES LS EF LF TF FF

A 3 None C
B 5 None D, E

C 4 A F, G

D 8 B F, G

E 9 B H, I

F 6 C, D J, K, L, M

G 8 C, D K, L, M

H 6 E K, L, M

I 5 E P

J 4 F N

K 7 F, G, H O

L 6 F, G, H Q

M 7 F, G, H P

N 4 J R

O 8 K R

P 4 I, M R

Q 5 L R

R 3 N, O, P, Q None

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Problem No. 3

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Prepare an arrow diagram and a list of starts, finishes, and floats for a project involving the listed activities.

Activities w/c

DURATION
ACTIVITY STARTS FINISHES FLOATS
immediately

PRECEDE FOLLOW ES LS EF LF TF FF

A 3 None B, C, D
B 5 A E

C 4 A F, G

D 6 A G, H

E 4 B I

F 5 C J

G 3 C, D K

H 6 D L

I 5 E N

J 7 F O

K 4 G P

L 5 H M, Q

M 3 L P

N 4 I S

O 5 J S, T

P 6 K, M T

Q 4 L R

R 4 Q T

S 5 N, O U

T 4 O, P, R U

U 3 S, T None

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Problem No. 4

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The data shown below is for the construction of an important utility. Determine the least-cost schedule, if
the project must be completed in 24 weeks.

Activities w/ immediately Duration Cost Cost to Reduce

Activity
Precede Follow Normal Crash Normal Crash per week
A None B, C, D 4 3 10000 14000
B A H, I 5 3 15000 20000
C A F 2 1 5000 8000
D A E 3 2 7000 10000
E D G, I 5 4 20000 24000
F C H 6 4 25000 30000
G E J 6 5 20000 23000
H B, F K 8 4 30000 45000
I B, E L 2 1 10000 15000
J G None 9 5 25000 35000
K H None 8 6 15000 24000
L I None 5 4 20000 22000

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Problem No. 5
For the following project, use the CPM method to crash the project so that the total duration will be
reduced by 20%.

Activities w/ immediately Duration Cost Cost to Reduce

Activity
Precede Follow Normal Crash Normal Crash per week
A None B, C, D 3 1 11000 17000
B A F 6 3 6000 9000
C A G 5 4 3000 5000
D A E, H, K, J 8 2 7000 31000
E D G 2 1 1000 6000
F B O, I 11 3 13000 17000
G C, E O, I 10 7 9000 13500
H D M 5 1 4000 14000
I F, G M 3 2 5000 8500
J D L 9 4 3000 5000
K D None 4 1 8000 8900
L J None 3 2 9000 16000
M I, H N 8 3 15000 19000
N O, M None 2 1 7000 13000
O F, G N 11 4 20000 24200

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DEVELOPING THE PERT NETWORK DIAGRAM

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PERT is very similar to critical path analysis and the two methods are often confused with each other.
PERT it is commonly used in projects that have never been done before or in research and development
projects. Construction of the network diagram is carried out in the same as the CPM. There main
difference only is on the estimate of the activity duration. The duration of this type of projects are subject to
uncertainty so the estimated time will be much better described by a probability distribution than by a
single estimate.
PERT handles the uncertainty problem by the use of three time estimates, the optimistic time estimate,
the most likely time estimate and the pessimistic time estimate.

a + 4m + c
Expected time, t=
6
Studies have been made of the accuracy and validity of “t” computed by the formula above. The
procedure and calculations of Early Start, Early Finish, Late Start, Late Finish, Total Float and Free Float
are the same as those made using single estimate duration.
To describe the variation or dispersion in the uncertain activity times in a PERT network, we use the
standard deviation of the activity times. This can be done because we have three time estimates for each
activity.

b− a
Standard deviation of an activity, S.D. =
6
Using the Standard Deviation of each task along the critical path, we can calculate the SD of the
duration of the project. This can help us learn more about our project especially on estimating the chance of
finishing the project earlier than the target duration. This information is important in the management of the
project and when discussing with the owner or stakeholders. The SD of other paths must also be computed
to identify any dangers that might change them to critical.
The SD of the project duration is readily calculated by taking the square root of the sum of the
squared standard deviation of the individual activities on the critical path of the network.

S.D. = ( SD1stactivity ) 2 + ( SD2 ndActivity ) 2 + ( SD3rdaActivity ) 2 + ...........

The Standard Deviation of the critical path coupled with the table of The Standard Normal Probability
Distribution can help us forecast the chance for finishing earlier or later than the expected duration of the
project. Only three steps are needed:
1. Determine the deviation of your target duration from the project’s expected duration:
D = TT – Te
2. Convert this deviation into the number of SD’s:
D
z=
SD
3. Read the probability from the Standard Normal Probability Distribution table.

For example you have a project whose expected duration is 18.5 weeks and the SD of the critical path
is 1.53 weeks. Statistical theory tells us that the t e durations have a 50 percent chance of being realized.
Therefore, there is a 50 percent chance of the project being finished in the expected time of 18.5 weeks. If
we wanted to complete the project one SD (1.53 wks) sooner than the expected duration (18.5 – 1.53 =
16.97 wks), by following the three steps discussed above, the result shows that we have only 16 % chance
of doing it. While if we determine the probability of finishing the project in 20 weeks (
z = (20 − 18.5) 1.53 = 0.98 ), there is an 84% chance.

Sample Problem

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Problem No. 1
A project has the following characteristics:

Optimistic time, Most likely time, Pessimistic time,

Activity Predecessors
a m b
A None 2 3 4
B A 2 3 8
C A 3 4 5
D C 2 6 7
E B 3 5 17
F D 1 2 5
G E, F 2 3 8

Construct a PERT network and compute the probability that the project will be completed in 17 weeks and
22 weeks. Round off the computed expected time values.

Solution:

Computation of the Expected time for each activity;

a + 4m + b 2 + ( 4)(3) + 4
Activity A = = = 3.0 wks
6 6
a + 4m + b 2 + (4)(3) + 8
Activity B = = = 3.67 wks say 4.0 wks
6 6
a + 4m + b 3 + (4)(4) + 5
Activity C = = = 4.0 wks
6 6

a + 4m + b 2 + ( 4)(6) + 7
Activity D = = = 5.5 wks say 6.0 wks
6 6
a + 4m + b 3 + (4)(5) + 17
Activity E = = = 6.67 wks say 7.0 wks
6 6
a + 4m + b 1 + (4)(2) + 5
Activity F = = = 2.33 wks say 2.0 wks
6 6
a + 4m + b 2 + (4)(3) + 8
Activity G = = = 3.67 wks say 4.0 wks
6 6 7
B E
4
4 7
8

THE PERT NETWORK DIAGRAM

0 3 7 13 15 19
A C D F
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1 2 3 5 6 7
3 4 6 2 4
0 3 7 13 15 19
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The Standard Deviation of each activity;

b− a 7− 2
SD of each activity = SD of D = = 0.83
6 6
4− 2 17 − 3
SD of A = = 0.33 SD of E = = 2.33
6 6
8− 2 5− 1
SD of B = = 1.00 SD of F = = 0.67
6 6
5− 3 8− 2
SD of C = = 0.33 SD of G = = 1.00
6 6

Optimistic Most likely Pessimistic Expected

time, time, time, Time
Standard Deviation,
Activity
a m b te SD
A* 2 3 4 3.0 0.33
B 2 3 8 4.0 1.00
C* 3 4 5 4.0 0.33
D* 2 6 7 6.0 0.83
E 3 5 17 7.0 2.33
F* 1 2 5 2.0 0.67
G* 2 3 8 4.0 1.00

Standard Deviation of the Critical Path = ( SD A ) 2 + ( SDC ) 2 + ( SD D ) 2 + ( SD F ) 2 + ( SDG ) 2

Standard Deviation of the Critical Path = (0.33) 2 + (0.33) 2 + (0.83) 2 + (0.67) 2 + (1.0) 2

Standard Deviation of the Critical Path = 1.53

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Probability of Finishing the Project in 17 weeks:

D = TT – Te = 17 – 19 = - 2
D − 2
z= = = − 1.31
SD 1.53
from the Normal Probability Distribution table, a value of z = -1.31 means the project has only 9.51%
chance that it will be completed in 17 weeks.

Probability of Finishing the Project in 22 weeks:

D = TT – Te = 22 – 19 = 3
D 3
z= = = 1.96
SD 1.53
from the Normal Probability Distribution table, a value of z = 1.96 means the project has
97.50% chance that it will be completed in 22 weeks.

Problem No. 2
Pioneer Audio has completed the design and testing of a new type of miniature speaker, the Response 1000,
which Pioneers thinks can be produced and distributed at a price that will give it the strongest market
position in the industry. Rollie Tillman, Pioneer’s promotion and advertising director, plans an extensive
promotion campaign. So, Rollie put together a careful list of all the different activities involved in the
promotional campaign. The table below is a list of activities necessary in the promotion campaign together
with the corresponding estimated duration.

Optimistic time, Most likely time, Pessimistic time,

Activity Predecessors
a m b
A None 1 2 3
B None 1 2 3
C None 1 2 3
D A 1 2 9
E A 2 3 10
G B 3 6 15
H B 2 5 14
I D, E 1 4 7
J C 4 9 20
K H, J 1 2 9
L G, I, K 4 4 4

Using the information above, construct a PERT network; a table of starts, finishes and floats; compute the
probability that the project will be completed 1 day ahead of schedule; and what is the chances of finishing
the project 2 days behind the original schedule. Round off the computed expected time values.

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ASSIGNMENT

Problem No. 1

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Ottawa Construction, Ltd., is preparing a PERT network for laying the foundation for a new art museum.
They have the following activities to perform, with time estimates in weeks:

Optimistic time, Most likely time, Pessimistic time,

Activity Predecessors
a m b
A. Survey Site None 2 3 4
B. Excavation A 9 12 15
C. Prepare Drawings None 4 6 7
D. Soil Study B 1 1 1
E. Preliminary Report C, D 1 2 3
F. Approve Plans E 1 1 1
G. Concrete Forms F 5 6 9
H. Procure Steel F 2 3 4
I. Order Cement F 1 1 1
J. Deliver Gravel G 2 3 5
K Pour concrete. H, I, J 8 10 14
L. Cure Concrete K 2 2 2
M. Strength Test L 2 2 2

Construct the PERT network for the project and determine the critical path as well as the slack for each
activity.
a) If Ottawa plans to include a completion date in their bid for this work, what completion time
should they quote if it is their policy to ensure a 90% probability of being completed?
b) If the Canadian Ministry of Art desires to have the work completed within 41 weeks, determine
the probability of meeting this objective.
c) The contract specifies a $10,000 per week penalty for each week the completion of the project
extends past week 43. What is the probability they will have to pay a $20,000 penalty.

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Problem No. 2
A project has the following characteristics:

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Optimistic time, Most likely time, Pessimistic time,

Activity Predecessors
a m b
A None 0.5 1 2
B A 1 2 3
C A 1 3 5
D B 3 4 5
E C 2 3 4
F C 3 5 7
G D, E 4 5 6
H F 6 7 8
I G, H 2 4 6
J G, H 5 6 8
K I 1 2 3
L J 3 5 7

Construct a PERT network and compute the probability that the project will be completed within 30 weeks.
Round off the computed expected times.

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