PROJECT MANAGEMENT

CPM & PERT

TECHNIQUES
 MEMBERS
ADITI APTE – 01
RITU AGARWAL – 42
PAYAL GUPTA – 37
LINCIA FONSECA - 29
 FLOW OF PRESENTATION
INTRODUCTION
NETWORK PLANNING
ESTIMATING TIME
CPM AND CRASHING
PERT
GANTT CHARTS
 Project Management
Project :
A project is an interrelated set of activities that
has a definite starting and ending point and
that results in a unique product or service.

Project management :
Project management is a scientific way of
planning, implementing, monitoring &
controlling the various aspects of a project
such as time, money, materials, manpower &
other resources.
 Network Planning Methods
 What is network planning?
 Methods used for network planning are:
CPM
PERT
GANTT CHARTS

 Managing a project with network planning methods involves four steps:

1. Describing the Project.

2. Diagramming the Network.
3. Estimating time of completion.
4. Monitoring Project Progress.
 Network Diagram
Concepts
 Activity
 Precedence relationship
 Successor
 Event
 Guidelines for network diagram
1. Before an activity can begin, its preceding
activities must be completed.
2. Arrows indicate logical precedence.
3. Flow of the diagram is from left to right.
4. Arrows should not intersect.
5. Dangling should be avoided.
 APPRAOCHES FOR NETWORK
DIAGRAM
ACTIVITY ON ARC(AOA):
Uses arcs to represent activities and nodes to
represent events.
It is Event Oriented.

1 2 6 7 8

4 5
 DUMMY ACTIVITY
AOA approach requires the addition of a Dummy Activity
to clarify the precedence relationships between the two
activities. It is a zero time activity and consumes no
resources.

Dummy Activity is used in two situations:

1) When two or more activities start and end at the same
nodes

1 3

2
2) When two or more activities share the same precedence
activity but not all the precedence are shared.

1 3 5

2 4 6
ACTIVITY ON NODE(AON):
Uses nodes to represent activities and arcs indicate
precedence relationships between them.
It is Activity Oriented.
 ESTIMATING TIME OF
COMPLETION
Planning the schedule of the project

Time estimates include:

1) Total time for completion.
2) ES- Earliest start time: the earliest time at which the activity can
start given that its precedent activities must be completed first.

3) EF-Earliest finish time: equals to the earliest start time for the
activity plus the time required to complete the activity.

4) LF- Latest finish time: the latest time in which the activity can be
completed without delaying the project.

5) LS- Latest start time: equal to the latest finish time minus the time
required to complete the activity.
6) FORWARD PASS:
The early start and early finish times are calculated by
moving forward through the network and considering
the predecessor activities.
Considers maximum

7) BACKWARD PASS:
The latest start and finish times are calculated by moving
backward through the network.
Considers minimum

8) SLACK TIME:
Slack time for an activity is the difference between its
earliest and latest start time or between the earliest and
latest finish time.
Critical path is the path of activities having zero Slack time.
 A Simple Project

Activity Immediate Expected

Predecessor Time
A - 5
B - 6
C A 4
D A, B 2
Precedence Diagram
ES Earliest Starting (time)
EF Earliest Finishing
LS Latest Starting
LF Latest Finishing
Slack Difference Time
CRITICAL PATH METHODS(CPM)

HISTORY :
It was developed by J.E.KELLY of REMINGTON-RAND
and M.R.WALKER of DU PONT and the emphasis was
on the trade-off between the cost of project and its
overall completion time. The first test was made in
1958,when CPM was applied to the construction of a
new chemical plant.

DEFINITION:
Critical path is the sequence of activities between a
project’s start and finish that takes the longest time to
complete.
 STEPS IN DETERMINING
CRITICAL PATH
• Specify the individual activities.

• Determine the sequence of the activities.

• Draw the network diagram.

• Estimate the activity completion time.

• Identify the critical path.

• Update the CPM diagram.

 ADVANTAGES
 Provides a graphical view of the project.
 Predicts the time required for completing
the project.
 Shows which activities are critical to
maintaining the schedule and which are
not.
 DISADVANTAGES
• There can be potentially hundreds or thousands
of activities making the network diagram
complex.

• Any changes introduced in the diagram makes

the calculation of critical path difficult.
 CRASHING
Crashing is process of reducing overall project completion
time and total project cost.

Total Project Cost includes

1. Direct cost
Labor, Materials ,Machinery etc
2. Indirect cost
Administration, Depreciation, other variable overhead
cost .
3. Penalty cost
Extension of the project date, Bonus provided for early
completion
 TIME AND COST IN CRASHING
 NORMAL TIME :
Time to complete activity under normal conditions.
 NORMAL COST :
Activity cost associated with normal time.
 CRASH TIME :
Shortest possible time to complete the activity.
 CRASH COST :
Activity cost associated with crash time.
 STEPS IN CRASHING
 Determine projects critical path.
 Calculate cost slope for each activity.
cost slope = crash cost – normal cost
normal time – crash time

 Find activities on critical path(s) with lowest cost of

crashing.
 Reduce the time for this activity until
a) It cannot be further reduced.
b) Another path becomes critical.
c) Increase in direct cost exceeds the savings.
 Repeat the procedure until increase in direct cost is
larger than the savings.
Activity Precede Normal Normal Crash Crash Cost
nce time Cost time cost slope
(week) (Rs)

A - 3 300 2 400 100

B A 3 30 3 30 0
C A 7 420 5 580 80
D A 9 720 7 810 45
E D 5 250 4 300 50
F B,C,E 6 320 4 410 45
G F 4 400 3 470 70
H F 13 780 10 900 40
I G 10 1000 9 1200 200
Total 4220
 4 7

1 2 5 6

3
8
Overhead cost as per the given data- Rs.50
Paths in the network diagram :
A-D-F-G-I = 32
A-D-F-H = 31
A-C-F-H = 29
A-C-F-G-I = 30
A-B-E-F-H = 30
A-B-E-F-G-I = 31
 Critical path – A-D-F-G-I = 32
4 7

1 2 5 6

3
8
 Total normal cost = 4220
 Project duration = 32 weeks
 Total project cost = Total normal cost +
Overhead cost x Project duration.
 Total project cost = 4220 + 50 x 32
= Rs. 5820
 Crashing activity D
A-D-F-G-I = 31
A-B-E-F-G-I = 31

4 7

1 2 5 6

3
8
 Crashing activity F Twice
A-D-F-G-I = 29
A-B-E-F-G-I = 29

4 7

1 2 5 6

3
8
 Project Cost and Time after Crashing
• Total project duration = 29 weeks
• Crash cost = 135
• Total cost = 4220 + 135 + 50 x 29
= Rs. 5805
OR
• Savings = Rs.15
• Total cost = Cost before crashing – savings
= 5820 – 15
= Rs.5805
 PERT
HISTORY :
Pert (Program Evaluation and Review Technique)
was developed in 1958 by BOOZ ALLEN and
HAMILTON Inc along with US Navy for planning and
control of Polaris Missile Project and emphasis was on
completing the project in the shortest possible time.
 TIME ESTIMATES
o Optimistic time (to) – It is the shortest time in which the
activity can be completed.
o Most likely time (tm) – It is the probable time required to
perform the activity.
o Pessimistic time (tp) – It is the longest estimated time
required to perform an activity.
o Expected time
te = to + 4tm + tp
6
 STEPS IN PERT
1. Identify the specific activities.

2. Determine proper sequence of the activities.

3. Construct the network diagram.

4. Estimate the time required for each activity.

5. Determine the critical path.

6. Update the PERT chart.

Activity Descrip Preced Optimis Most Pessimi Expecte
tion ence tic time Likely stic d time
time time

A Initial - 12 16 26 17
design

B Survey A 6 9 18 10
market

C Build A 8 10 18 11
prototype

D Test C 2 3 4 3
prototype

E Redesign B,D 3 4 11 5
ing

F Market E 6 8 10 8
testing

G Set up F 15 20 25 20
productio
n
1 2 4 5 6 7

A-B-E-F-G = 60
A-C-D-E-F-G = 64 (CRITICAL PATH)
 Advantages of PERT
• Expected project completion time.

• Probability of completion before a specified date.

• The critical path activities that directly impact the

completion time.

• The activities that have slack time and that can lend
resources to critical path activities.

• Activity start and end dates.

 LIMITATIONS
• The PERT Formula Requires Too Much Work.
• The network charts tend to be large and unwieldy.
• Calculating the time estimates is very complex for all the
activities.
• Updating of the project is time consuming and requires
high costs.
• Emphasis is laid only on time factors and cost factors are
neglected.
 Application
o Used for scheduling of aircrafts.
o Pert techniques used in the administration
of firms.
 Difference between CPM & PERT
CPM PERT
• CPM works with fixed • PERT works with
deterministic time probabilistic time
• CPM is useful for repetitive • PERT is useful for non
and non complex projects repetitive and complex
with a certain degree of time projects with uncertain time
estimates. estimates.
• CPM includes time-cost • PERT is restricted to time
trade off. variable.

• CPM- for construction • PERT- used for R&D

projects. programs.
 Gantt charts
Developed by HENRY GANTT in around 1910.
Graphical representation of the duration of activities
against the progression of time.

It is a useful tool for planning & scheduling projects.

It is helpful for monitoring a project’s progress.
 ADVANTAGES
 They provide an excellent presentation tool for
illustrating groups of milestones and
demonstrating individual resources scheduled to
time.

 They can be used in status reporting to show

how much of the plan has been completed by
displaying the progress of an activity in the same
or a parallel bar, or using colour.

 Many executives prefer this presentation format.

 Disadvantages
 Chart does not effectively address the
dependencies between jobs.
 It is difficult to show slack and critical path
without additional notation.
 Changes to the schedule require a redrawing of
the chart.
 Several scheduling possibilities cannot be
shown in the same chart.
 Resource assignments are not easy to illustrate.
 Questions answered
 Completion date?
 On Schedule?
 Within Budget?
 Critical Activities?
 How can the project be finished early at
the least cost?
Thank You…