Unit IV-Project Management

Syllabus
• Introduction
• Origin and use of PERT
• Origin and use of CPM
• Applications of PERT and CPM
• Framework of PERT and CPM
• Finding the critical path
• Project evaluation and review technique (PERT)

Introduction
• The management of large projects involves three phases:
• Planning
• Scheduling
• Control

Project Planning Tools
• Setting goals
• Defining the project
• Typing needs into timed project activities
• Organizing the term
Time and cost estimates
Budgets
Cash flow charts
Material availability details
Personnel data charts
Engineering diagrams

Project Scheduling Tools
• Typing resources (people, money supplies) to
specific activities
• Relating activities to each other
• Updating and revising on regular basis
CPM (Critical Path Method)
PERT (Program Evaluation and Review Technique)
Milestone charts
Cash flow schedules
Gantt charts

Project Controlling Tools
• Monitoring resources, costs, quality budgets
• Revising and changing plans
• Shifting resources to meet time, cost and quality
demands
PERT charts
Report describing
• Budgets by department
• Delayed activities
• Slack activities
• Quality of work completed

Project Planning
• A new organization form, developed to make sure existing programs
continue to run smoothly on a day-to-day basis while new projects
are successfully completed, is called project organization (PO).
• PO is an effective way to pooling the people and physical resources
needed for a limited time to complete a specific project or goal.
• It is basically a temporary organization structure designed.
• To achieve results by using specialists from throughout the firm.

PO works best when
• The 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.

Project Scheduling (PS)
• It is determining the project’s activities in the time sequence in which
they have to be performed.
• Materials and people needed at each stage of production are
computed in this phase.
• Separate schedules for personnel need by type of skill are charted.
• Charts can also be developed for scheduling materials
• Eg : Gantt chart

Purposes of PS
• It shows the relationship of each activity to others and to the whole
project.
• It identifies the precedence relationships among activities.
• It encourages the setting of realistic time and cost estimates for each
activity.
• It helps make better use of people, money, and material resources by
identifying critical bottlenecks in the project.

Project Controlling (PC)
• The control of large projects, like the control of any management
system, involves close monitoring of resources, costs, quality and
budgets.
• Control means using a feedback loop to revise the project plan.
• The ability to shift resources to where they are needed most.
• The management of big projects that consist of a large number of
activities poses complex problems in planning, scheduling and
control in a specified technological sequence.

Help of PERT and CPM in project manager
• Plan the project ahead of time and foresee possible sources of troubles and
delays in completion,
• Schedule the project activities at the appropriate times to conform with
proper job sequence so that the project is completed as soon as possible,
• Coordinate and control the projects activities so as to stay on schedule in
completing the project.
• Both PERT and CPM are aids to efficient project management.
• They differ in their approach to the problem and the solution technique.
• The nature of the project generally dictates the proper technique to be used.

Origin and use of PERT
• Developed  US in 1950’s of Polaris Fleet Ballistic Missile.
• This weapon involved the coordination of the work of thousands of
private contractors and other government agencies.
• The entire project was completed 2 years ahead of the schedule.
• Now-a-days, it is extensively used in industries and other service
organizations as well.
• Priori  The time required to complete the various activities in a
research and development project.
• PERT incorporates uncertainties in activity times in its analysis.

• It determines the probabilities of completing various stages of the project by
specified deadlines.
• An important and extremely useful by-product of PERT analysis is its
identification of various “bottlenecks” in a project.
• It identifies the activities that have high potential for causing delays in
completing the project on schedule.
• Even before the project has started, the project manager knows where he or
she can expect delays.
• The manager can then take the necessary preventive measures to reduce
possible delays so that the project schedule is maintained.
• Because of its ability to handle uncertainties in job times, PERT is mostly
used in research and development projects.

Origin and use of CPM
• Developed  independently by E.I. du Pont de Nemours Company.
• It was developed to have a better planning in controlling the overhaul
and maintenance of chemical paths.
• The major difference between the two techniques is that CPM
doesn’t incorporate uncertainties in job times.
• It assumes that activity times are proportional to the amount of
resources allocated to them.
• Changing the level of resources the activity times.
• The project completion time can be varied.

• CPM assumes prior experience with similar projects from which the
relationships between resources and job times are available.
• CPM then evaluates the trade-off between project costs and project
completion time.
• CPM is mostly used in construction projects where there is prior
experience in handling similar projects.

Applications of PERT and CPM
• A partial list of applications of PERT and CPM techniques in project
management
• Construction projects (Eg : buildings, houses, etc)
• Preparation of bids and proposals for large projects
• Maintenance planning of oil refineries, ship repairs, and other large
operations.
• Development of new weapons systems and new manufactured products.
• Manufacture and assembly of large items such as airplanes, ships and
computers.
• Simple projects

Framework of PERT and CPM
• Six steps are common to both PERT and CPM.
1. Define the projects and all of its significant activities or tasks.
2. Develop the relationships among the activities. Decide which activities must
precede and which must follow others.
3. Draw the network connecting all of the activities.
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.

• Step 5: Finding the critical path, is a major part of controlling a
project.
• The activities on the critical path represent the tasks that will delay
the entire project if they are delayed.
• Managers derive flexibility by identifying non-critical activities and re-
planning, re-scheduling and re-allocating resources such as labour
and finances.
• The major difference is that PERT employs three time estimates for
each activity.
• Each estimate has an associated probability of occurrence, which in
turn, is used in computing the expected values and standard
derivations for the activity times.

• CPM makes the assumption that activity times are known the
certainly, and hence only one time factor is given for each activity.
• PERT and CPM are important because they can help answer
questions:
• When will the entire project be completed?
• What are the critical activities or tasks in the project, that is, the ones that will
delay the entire project if they are late?
• Which are the non-critical activities, that is, the ones that can run late without
delaying the whole project’s completion?
• What is the probability that the project will be completed by a specific date?
• On any particular date, is the project on schedule, behind the schedule, or
ahead of the schedule?
• On any given date, is the money spent equal to, less than, or greater that the
budgeted amount?

• Are there enough resources available to finish the project on time?
• If the project is to be finished in a shorter amount of time, what is the
best way to accomplish this at the least costs?

Finding the critical path
• After the project network plan is completed and activity times are
known.
• How long the project would take to complete and when the activities
may be scheduled.
• This can be answered by finding out the critical path of the network.
• We require an arrow diagram and the time duration of the various
activities.
• These computations involve a forward and a backward pass through
the network.

Forward Pass
• It calculations yield the earliest start and the earliest finish times for
each activity

Backward pass
• It calculations render the latest allowable start and the latest finish
times for each activity.

• Forward Pass
• Earliest Start time  E
• Earliest Finish time  TEF = ES + tij
• Backward Pass
• Latest Finish Time  L
• Latest Start Time  TLS = LF - tij
• Critical Path
• Critical activity
• Sub-critical activity
• Super critical activity

Example 15.7:
Activity: A B C D E F G H I J K L
Immediate
predecessors:
- - - A A E B B D, F C H, J G, J, K
Duration: 2 2 2 3 4 0 7 6 4 10 3 4

• How long the project will require.
• To determine the critical path of this network.
• The work described by all the paths must be done before the project
is considered complete.
• Path that requires most work, the longest path through the network;
this is called the critical path.
• If we want to reduce the time for the project and to shorten the
critical path.
• To reduce the time of one or more activities on that path – but first
we have to find it.

• When the network is larger, it is very tedious, often impossible, to find the
critical path by listing all the paths and picking the longest one.
• We need a more organized method.
• Purposes:
• Value of 0 is assigned to the initial event of the project.
• Each of the activities initiated from the starting node of the network is
assumed to start at time 0.
• The earliest finish time for each activity is obtained by adding the time
duration of the activity to its earliest start time.
• Start  Node 1 with a starting time we define as zero;
• Compute  Earliest start time and earliest finish time for each activity in the
network.

• Look at activity A with an expected time of 2 weeks.
• To find the earliest finish time for any activity.
• Earliest finish time = Earliest start time + Expected time
• EF = ES + t

3
1
Earliest finish time
Earliest start time
2
0
A
• We must find the ES time and EF time for all activities in
the network.
Earliest-start time of rules:
“Since no activity can begin until all its predecessor
activities are complete, the earliest start time for an activity
leaving any node is equal to the largest earliest finish time
of all activities entering that same node”

Look at the first few activities in the network
5
3
1
t = 2
t =3
2
A
t = 4
D
E
6
2
0
5
6
2

• The earliest start time for activities D and E is 2, the earliest finish
time for activity A.
• Forward pass through the network to get all the ES and EF times.
• The earliest finish time for activity L that it is going to take 19 weeks
to finish this project.
• All activities run on schedule.

3
1
t = 2
t =3
2
A
t = 4
D
E
6
5
2
0
5
6
7
2
4 8 9
2
0
0
2 2
2
2
2
12
8
12
6
6
10
15
15
6
9
F
t = 0
I
t = 4
19
t = 2
t = 2
t = 10
t = 4
t = 3
t = 6
t = 7
C
B
J
H K
G L
Figure 1

Backward Pass
• Second step is finding the critical path is to compute a latest start
time and latest finish time for each activity.
• At the completion point, node 9 – using a latest finish time of 19
weeks for that activity and compute the latest finish time and latest
start time for every activity.

Latest finish time
• It is simply the latest time at which an activity can be completed
without extending the completion time of the network.
• In the same sense, the latest start time is the latest time at which an
activity can begin without extending the completion time on the
project.
• Latest start time = latest finish time - expected time
• LS = LF – t

• The latest finish time for activity L of _19 weeks, then
• LS = 19 – 4 = 15
• Latest finish-time rule “the latest finish time for an activity entering
any node is equal to the smallest latest start time for all activities
leaving that same node”
• The latest finish time for activity B entering the node is 6, the smallest
start time for the two activities leaving node 4.

3
1
t = 2
t =3
7
A
t = 4
D
E
6
5
8
5
11
11
7
2
4 8 9
7
0
4
2 2
6
8
6
12
12
12
11
11
15
15
15
11
15
F
t = 0
I
t = 4
19
t = 2
t = 2
t = 10
t = 4
t = 3
t = 6
t = 7
C
B
J
H K
G L
Figure 2

• Figure 1 – The earliest finish time for activity L that is going to take 19
weeks to finish this project, and that is only if all the activities run on
the schedule.
• Figure 2 – LS and LF times for all the activities in the network.

Comparing the earliest start time with the latest start time for any activity
• How much free time, or slack, that activity has.
• Slack is the length of time we can delay an activity without interfering
with the project completion.
• Slack for any activity by comparing its earliest finish time with its
latest finish time.
• Activity A on the network in Figure 1 and 2
• LF – EF for activity A = 7-2=5
• LS – ES for activity A = 5-0=5
• The formal statement of these two methods is
• Slack = LF - EF or LS - ES

LF, EF, LS, ES, and slack for all activities in the network
Activity Earliest
Start (ES)
Previous t
Previous t +
Previous t
Latest
Start (LS)
LF - t
Earliest
Finish (EF)
ES + t
Latest Finish
(LF)
LS + t
Slack (LS-ES) Activity on critical
path
A 0 5 2 7 5
B 0 4 2 6 4
C 0 0 2 2 0 YES
D 2 8 5 11 6
E 2 7 6 11 5
F Dummy activity
G 2 8 9 15 6
H 2 6 8 12 4
I 6 11 10 15 5
J 2 2 12 12 0 YES
K 12 12 15 15 0 YES
L 15 15 19 19 0 YES

• Those activities without any slack are C, J, K, and L.
• It can be delayed without delaying the whole project.
• The critical path for the project is C-J-K-L.
• Delays in other activities will not affect on-time project completion
(19 weeks) unless the delay is greater than the slack time an activity
has.
• Example: All right for activity G to fall 6 weeks behind the schedule
because it has 6 weeks of slack; but if it falls more than 6 weeks
behind the schedule, it will delay completion of the project.
• It can be observed that there may be more than one critical path in
a given network. In case of multiple critical paths, all activities on
these paths would be critical.

• ES time would be given by the earliest time of it and the LS time by
the latest time of it.
• In the forward pass, a 0 would be taken as the earliest time for the
initial event of the project.
• For each subsequent event, the earliest time would be taken as the
latest of the EF times of the activities concluding on that event.

3
1
t = 2
t =3
[2,7]
A
t = 4
D
E
6
5
[0,0]
7
2
4 8 9
[2,2]
6
8
[2,6]
[12,12]
12
[6,11]
[15,15]
15
F
t = 0
I
t = 4
[19,19]
t = 2
t = 2
t = 10
t = 4
t = 3
t = 6
t = 7
C
B
J
H K
G L
Figure 3
[ES, LS] entries

• Similarly, the terminal event of the project would be assigned the latest
time equal to its earliest time.
• Rolling back, events are assigned the latest times.
• If only one activity starts from the node representing a given event.
• The latest time for the event is taken to be the difference between the
latest time of the head event of this activity and duration time.
• One activity starts from this node, then the minimum of such
differences and taken as the latest time for the event.
• This method is to facilitate us in finding the critical path by calculating
the slack at a node by directly computing LS minus ES.
• Each circle representing an event is divided into three parts:
• Containing the event number
• Earliest start time
• Latest start time

Example 15.8:
0
2
5
4
3
1
4
D
2
B
1
1 3
2
E
C
A F
Figure 4
Assume the following network in above diagram has been drawn and the activity times estimated in days

• The ES times for the activities can be inserted.
• ES of a head event is obtained by adding onto the ES of the tail event
the linking activity duration starting from event 0, time 0 and working
forward the network in figure 5.
• Where two or more routes arrive at an event, the longest route time
must be taken in activity F depends on completion of D and E.
• E is completed by day 5 and D is not complete until day 7.
• Therefore, F can’t start before day 7.
• The ES in finish event No. 5 is the project duration and is the shortest
time in which the whole project can be completed.

0
2
5
4
3
1
4
D
2
B
1
1 3
2
E
C
A F
Figure 5
ES
3
4 7
0 1
9

• The LS times are inserted.
• Starting at the finish event No. 5, insert the LS and work backwards
through the network, deducing each activity duration from the
previously calculated LS.
• Where the tails of activities B and C joins event No. 1,
• LS for C is day 3 and LS for B is day 1.
• The lowest number is taken as LS for event No. 1 because if event
No.1 occurred at day 3 then activities B and D couldn’t be completed
by day 7 as required.
• The project would be delayed.

0
2
5
4
3
1
4
D
2
B
1
1 3
2
E
C
A F
Figure 6
LS
3
4 7
0 1
9
3
0 1 7 9
0 1 7 9
6

• Figure 6 shows that one path through the network (A, B, D, F) has ES’s
and LS’s which are identical.
• This chain of activities, which has the longest duration, is the required
critical path.
• The critical path can be indicated on the network either by a heavy
line or different color or by two small transverse lines across the
arrows along the path.

0
2
5
4
3
1
4
D
2
B
1
1 3
2
E
C
A F
Figure 7
LS
3
4 7
0 1
9
3
0 1 7 9
0 1 7 9
6

Critical path implications
• The activities along the critical path are vital ones which must be
completed by their ES/LS, otherwise the project will be delayed.
• The non-critical activities have spare time or float available,
• C and/or E could take up to an additional 2 days in total without
delaying the project duration.
• IF it is required to reduce the overall project duration, then time of
one or more of the activities on the critical path must be reduced.

Floats
• Floats or spare time can only be associated with activities which are
non-critical.
• Definition – Activities on the critical path can’t have float.
• Types of float, part of a network will be used together with a bar
diagram of the timings.
• Types
• Total float  TF = (L – E) (maximum available time – duration) + tij  TLS - tij
• Free float FF = TF – Slack TF – (L – E)
• Independent float IF = FF – (L – E)

5
10 20
6
40 50
N
K
J
10
Other parts of the network
Figure 8

Figure 9
Day 10 20 30 40 50
Maximum time available
Maximum time available
Total float
Free float
Independent
float

Total float
• This is the amount of time a path of activities could be delayed
without affecting the overall project duration.
• Total float = Latest finish time – Earliest start time – Activity duration
• Total float = 50 – 10 - 10 = 30 days

Free float
• This is the amount of time an activity can be delayed without
affecting the commencement of a subsequent activity at its earliest
start time, but may affect float of a previous activity.
• Free float = Earliest finish time – Earliest start time – Activity duration
• Free float = 40 – 10 - 10 = 20 days

Independent float
• This is the amount of time an activity can be delayed when all
preceding activities are completed as late as possible and all
succeeding activities completed as early as possible.
• It doesn’t affect the float of either preceding or subsequent activities.
• Independent float = Earliest finish time – Latest start time – Activity
duration
• Independent float = 40 – 20 - 10 = 10 days

Notes
• The most important type of float is total float because it is involved
with the overall project duration.
• The term “float” is used without qualification and such cases assume
that total float is required.
• It can be calculated separately for each activity, but it is often useful
to find the total float over paths of non-critical activities between
critical events.
• Figure 9 of only non-critical path of activities is C, E.

Non-critical path Time required Time available Total float over path
C, E 3 + 1 = 4 days 7 – 1 = 6 days = 2 days
If some of the “path float” is used up on one of the activities in a path, it reduces the lee way
available to other activities in the path.

Example 15.9: Activity Preceding activity Duration
A - 9
B - 3
C A 8
D A 2
E A 3
F C 2
G C 6
H C 1
J B, D 4
K F, J 1
L E, H, G, K 2
M E, H 3
N L, M 4
A simple network example

4
1
N
E
3
5
0
6 7 8
M
C
B J
H
K
G L
Figure 10
2
F
D
A

• A dummy (4-6) was necessary because of the preceding activity
requirements of activity L.
• If activities E, H had not been specified as preceding activity L, the
dummy wouldn’t have been necessary.

N
E
M
C
B J
H
K
G L
Figure 11
F
D
A
4
18 22
3
17
17
1
9
9
0
0
0
2
18
11
6
23
23 2 25
25
5
22
19
8
29
29
0
3 4
9
8
2
2 1
6
7
4
3
3 1

• The network in figure 11 in the normal manner from which it will be
seen that the critical path is: A – C – G – L – N with a duration of 29
days.

Float calculation
Activity ES LS EF LF D Total float
(LS – ES – D)
Free float
(EF – ES – D)
Independent float
(EF – LS – D)
A 0 0 9 9 9 - - -
B 0 0 11 18 3 15 8 8
C 9 9 17 17 8 - - -
D 9 9 11 18 2 7 - -
E 9 9 18 22 3 10 6 6
F 17 17 19 22 2 3 - -
G 17 17 23 23 6 - - -
H 17 17 18 22 1 4 - -
J 11 18 19 22 4 7 4 -
K 19 22 23 23 1 3 1 --
L 23 23 25 25 2 - - -
M 18 22 25 25 3 4 4
N 25 25 29 29 4 - - -

Non – critical path Time required Time available Total float over path
B, J, K 8 23 15
D, J, K 7 14 7
F, K 3 6 3
E, M 6 16 10
H, M 4 8 4
E, dummy 3 14 9
H, dummy 1 6 5
Total float on the non-critical paths can also be calculated.

Example 15.10:
Activity Immediate predecessor (s) Duration (months)
A - 2
B - 6
C - 4
D B 3
E A 6
F A 8
G B 3
H C, D 7
I C, D 2
J E 5
K F, G ,H 4
L F, G, H 3
M I 13
N J, K 7
Figure 12
Consider the table summarizing the
details of a project involving 14 activities

2
1
C(4)
5
0
7
4
3 9
G(3)
A(2)
B(6)
I(2)
Figure 12
6
M(13)
8
H(7)
F(8)
E(6) J(5)
L(3)
N(7)
K(4)
D(3)

• Let Dij be the duration of the activity be earliest start times of all the
activities which are emanating from node j.
• Lfj be the latest finish times of all activities which are ending at node j.
• Determination of earliest start times (ESj): During forward pass, use
the formula to compute earliest start times for all nodes.
• ESj = max (ESi + Dij)
i
• Determination of latest finish times (LFi): During backward pass, use
the formula to compute latest finish times for all nodes.
• LFi = min (LFi - Dij)
j

• Node 1: For node 1, ESi = 0
• Node 2: ES2 = ES1 + D1,2 = 0 + 2 =2
• Node 3: ES2 = ES1 + D1,3 = 0 + 6 = 6
• Node 4: max (ESj + Di,4)
• i=1,2
• = max (ES1 + D1,4, ES3 + D3,4)
• = max (0 + 4, 6+ 3) = 9
• Node 5: ES5 = ES2 + D2,5 = 2 + 6 = 8
• Node 6: max (ESj + Di,6)
i=2,3,4
• = max (ES2 + D2,6, ES3 + D3,6, ES4 + D4,6)
• = max (2 + 8, 6+ 3,9 + 7)
• = max (10, 9 , 16) = 16

2
1
C(4)
5
[9,9] 7
4
3 9
G(3)
A(2)
B(6)
I(2)
Figure 13
6
M(13)
8
H(7)
F(8)
E(6) J(5)
L(3)
N(7)
K(4)
D(3)
[0,0]
[2,8]
[6,6]
[20,20]
[8,15]
[11,14]
[27,27]
[16,16]

• Node 9: LF9 = ES9 = 27
• Node 8: LF8 = LF9 – D8,9 = 27 - 7 = 20
• Node 7: LF7 = LF9 – D7,9 = 27 - 13 = 14
• Node 6: LF6 = min(LFj - D6.j)
• j=8,9
• = min (LF8 – D6,8, LF9 – D6,9)
• = min (20 – 4, 27 – 3) = 16
• Node 5: LF5 = LF8- D5,8 = 20 - 5 = 15
• Node 4: min (LFj – D4,j)
• j=6,7
• = min (LF6 - D4,6, LF7 – D4,7)
• = min (16 -7,14 -2) = 9

• An activity (i , j) is said to be critical if all conditions are satisfied.
• ESi = LFi, ESj = LFj, ESj – ESi = LFj – LFi = Dij
• Figure 13, the critical activities are identified with thick lines on them.
• The corresponding critical path is 1-3-4-6-8-9 (B-D-H-K-N).
• The project completion time is 27 months.

Total float
• It is amount of time that the completion time of an activity can be
delayed without affecting the project completion time.
• TFij = LFj – ESi – Dij = LFj – (ESi + Dij) = LFj – EFij
• EFij is earliest finish of activity (i,j) is
• TFij = LSij – ESi
• LSij is latest start of activity (i,j) is
• LSij = LFj – Dij

Free float
• It is the amount of time that the activity completion time can be
delayed without affecting the earliest start time of immediate
activities in the network.
• FFij = ESj – ESi – Dij = ESj – (ESi + Dij) = ESj – EFij

Activity (i,j) Duration (Dij) Total float (TFij) Free float (FFij)
1-2 2 6 0
1-3 6 0 0
1-4 4 5 5
2-5 6 7 0
2-6 8 6 6
3-4 3 0 0
3-6 3 7 7
4-6 7 0 0
4-7 2 3 0
5-8 5 7 7
6-8 4 0 0
6-9 3 8 8
7-9 13 3 3
8-9 7 0 0
• The calculations of total floats
and free floats of the activities.
• Any critical activity will have
zero total float and zero free
float.
• Based on this property also, one
can determine the critical
activities.
• Check total floats and free floats
for activities (1, 3), (3, 4), (4, 6),
(6, 8) and (8 ,9) are zero they are
critical activities.
• The corresponding critical path
is 1-3-4-6-8-9 (B-D-H-K-N).

Project Evaluation and Review Technique
(PERT)
• In our analysis the probability considerations in the management of a
project weren’t included.
• CPM assumed that the job times are known but can be varied by
changing the level of resources.
• All the research and development projects, many activities are
performed only once.
• Hence, no prior experience with similar activities is available.
• The management of such projects is done by PERT, which takes into
account uncertainties in the completion times of the various
activities.

• PERT assumes three times estimates on its completion time
1. A most probable time denoted by m
2. An optimistic time denoted by a
3. A pessimistic time denoted by b
• Range of variation in job time  optimistic and pessimistic times.
• Optimistic estimate is a good guess on the minimum time required
when everything goes according to the plan.
• Pessimistic estimate is a guess on the maximum time required under
adverse conditions such as mechanical breakdowns, minor labour
troubles or shortage of or delays in delivery of material.
• It should be remarked here that the pessimistic estimate doesn’t take
into consideration unusual and prolonged delays or other
catastrophes.

• Because both these estimates are only qualified guesses, the actual
time for an activity could lie outside this range.
• Most PERT analysis assumes a Beta distribution for the job times
• where 𝜇 represents the average length of the job duration.
• The value of 𝜇 depends on how close the values of a and b are
relative to m.
a m 𝜇 b
Figure 14

• The expected time to complete an activity is approximated as
• 𝜇 =
𝑎+4𝑚+𝑏
6
___________ (1)
• Since actual time may vary from its mean value, we need the variance
of the job time.
• For most unimodal distributions (single peak values), the end values
lie within three standard deviations from the mean value.
• Thus, the spread of the distribution is equal to six times the standard
deviation value (𝜎).
• 6 𝜎 = b – a or 𝜎 =
𝑏 −𝑎
6
• The variance of the job time equals.
• 𝜎2 =
𝑏 −𝑎
6
2 ___________ (2)

• With three time estimates on all the jobs, PERT calculates the average
time and the variance of each job using Equation (1) and (2).
• Treating the average times as the actual job times, the critical path is
found.
• The duration of the project (T) is given by the sum of all job times in
the critical path.
• But the job times are random variables.
• Project duration T is also random variable, and the average length of
the project and its variance.
• The expected length of the project is the sum of all the average times
of the jobs in the critical path.
• The variance of the project duration is the sum of all the variances of
the jobs in the critical path, assuming that all the job times are
independent.

Example 15.11:
• Assume that a simple project has the network. The activity times are
in weeks and three estimates have been given for each activity in the
order a, m, b. The scheduled date for completion is week 19.
1 3
0 2 4
2 – 3.5 - 4
0.5 – 1 – 1.5
5.6 – 7 – 15
3 – 4.5 – 5.4
5 – 6 – 8
4 – 5 – 6
B
C
A D
E
F
Figure 15
First one is optimistic time (a)
Second one is most likely time (m)
Third one is pessimistic time (b)

• The expected durations can be found using what is know and PERT
formula.
•
𝑂𝑝𝑡𝑖𝑚𝑖𝑠𝑡𝑖𝑐 𝑡𝑖𝑚𝑒 + 𝑃𝑒𝑠𝑠𝑖𝑚𝑖𝑠𝑡𝑖𝑐 𝑡𝑖𝑚𝑒 +4 𝑥 𝑀𝑜𝑠𝑡 𝑙𝑖𝑘𝑒𝑙𝑦 𝑡𝑖𝑚𝑒
6
• Critical path (B, D, F) expected duration
• B =
4+6+4(5)
6
=
10+20
6
=
30
6
= 5 weeks
• D =
5.6+15+4(7)
6
=
20.6+28
6
=
48.6
6
= 8.1 weeks
• F =
3+5.4+4(4.5)
6
=
8.4+18
6
=
26.4
6
= 4.4 weeks
• As these durations span the scheduled date of week 19, some
estimate of the probability of achieving the schedule date must be
calculated.

• (a) Make an estimate of the standard deviation for each of the critical
activities using
• =
𝑃𝑒𝑠𝑠𝑖𝑚𝑖𝑠𝑡𝑖𝑐 𝑡𝑖𝑚𝑒 −𝑜𝑝𝑡𝑖𝑚𝑖𝑠𝑡𝑖𝑐 𝑡𝑖𝑚𝑒
6
• Standard deviation of Activity B =
6 −4
6
=
2
6
= 0.33
Activity D =
15 −5.6
6
=
9.4
6
= 1.57
Activity F =
5.4 −3
6
=
2.4
6
= 0.4

• (b) Find the standard deviation of event 4 by calculating the statistical
sum of the standard deviations of all activities on the critical path.
• Standard deviation of event 4 = 0.332 + 1.572 + 0.42
• = 0.1089 + 2.4649 + 0.16 = 2.7338 = 1.65 weeks
• (c) Find the number of event standard deviations that the scheduled
date is away form the expected duration.
•
𝑆𝑐ℎ𝑒𝑑𝑢𝑙𝑒𝑑 𝑑𝑎𝑡𝑒 19 −𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐴 𝑚𝑜𝑠𝑡 𝑙𝑖𝑘𝑒𝑙𝑦 𝑡𝑖𝑚𝑒
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑒𝑣𝑒𝑛𝑡 4
=
19 −17.5
1.65
=
1.5
1.65
= 0.91
• (d) Look up this value (0.91) in a table of areas under the normal
curve to find the probability.
• The probability of achieving the scheduled date of week 19 is 82%.

Probability interpretation
• If the management considers that the probability of 82% is not high
enough, efforts must be made to reduce the times or the spread of
time of activities on the critical path.
• It is an inefficient use of resources to try to make the probability of
reaching the scheduled date 100% or very close to 100%.
• The management may well accept the 18% chance of not achieving
the schedule date

Notes
• (a) The methods of calculating the expected duration and standard
deviation can’t taken as strictly mathematically valid but are probably
accurate enough for most purposes.
• It is considered by some experts that the standard deviation, as
calculated under estimates ‘true’ standard deviation.
• (b) When activity times have variation, the critical path will often
change as the variations occur.

Example 15.12:
• Consider a project consisting of nine jobs (A, B, ….., L) with the
following precedence relations and time estimates.
Activity Predecessors Optimistic time (a) Most probable time (m) Pessimistic time (b)
A - 2 5 8
B A 6 9 12
C A 6 7 8
D B, C 1 4 7
E A 8 8 8
F D, E 5 14 17
G C 3 12 21
H F, G 3 6 9
I H 5 8 11
Figure 16

• First we compute the average time and the variance for each job
Activity Average time Standard deviation Variance
A 5 1 1
B 9 1 1
C 7 1/3 1/9
D 4 1 1
E 8 0 0
F 13 2 4
G 12 3 9
H 6 1 1
I 8 1 1
Figure 17

1 2
3
4 5 6 7 8
Figure 18
A B D F H I
[0, 0] [5, 5] [14, 14] [18 18] [31, 31] [37, 37] [45, 45]
C
G
7 12
5 9 4 13 6 8
• Figure 18 gives the project network, where the numbers on the arcs
indicate the average job times.
• Using the average job times, the earliest and latest times of each
event are calculated.
• The critical path is found as 1245678.
• The critical jobs are A, B, D, F, H and I.

• Let T denote the project duration.
• Then the expected length of the project is
• E(T) = Sum of the expected times of jobs A, B, D, F, H and I
• = 5 + 9 + 4 + 13 + 6 + 8 = 45 days.
• The variance of the project duration is
• V(T) = Sum of the variance of jobs A, B, D, F, H and I
• = 1 + 1 + 1 + 4 + 1 + 1 = 9
• The standard deviation of the project duration is
• 𝜎 𝑇 = 𝑉 𝑇 = 9 = 3

Probabilities of completing the project
• The project length T is the sum of all jobs times in the critical path.
• PERT assumes that all job times are independent, and are identically
distributed.
Critical limit theorem:
• T has a normal distribution with mean E(T), and variance V(T).
• The following figure 19 exhibits a normal distribution with mean
𝜇 𝑎𝑛𝑑 𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒 𝜎2

-3 -2 -1 0 1 2 3
𝜇 - 3𝜎 𝜇 - 2𝜎 𝜇 - 𝜎 𝜇 𝜇 + 𝜎 𝜇 + 2𝜎 𝜇 - 3𝜎
2.14%
0.13%
0.13%
2.14%
13.59% 34.13% 34.13% 13.59%
Figure 19
Z-Scores at Standard deviation units
for the normal curve

• T is distributed normal with mean 45 and standard deviation 3.
• For any normal distribution, the probability that the random variable
lies within one standard deviation from the mean is 0.06.
• There is a 68% chance that the project duration will be between 42
and 48 days.
• There is a 99.7% chance will T will lie within three standard deviation..
• We can also calculate the probabilities of meeting specified project
deadlines.
• Example:
• The management wants to know the probability of completing the
project by 50 days.
• To compute Prob (T < 50) where T – N (45, 32).

• It can be obtained from the tables of normal distribution.
• The tables are given for a standard normal only whose means is 0 and
standard deviation is 1.
• From probability theory, the random variable Z = [T-E(T)]/ 𝜎(T) is
distributed normally with mean 0 and standard deviation 1.
• Prob (T < 50) = Prob 𝑧 ≤
50 −45
3
= Prob (Z < 1.67) = 0.95
• There is a 95% chance that the project will be completed within 50 days.
• Suppose we want to know the probability of completing the project 4
days sooner than expected.
• This means to compute
• Prob (T < 41) = Prob 𝑧 ≤
41 −45
3
= Prob (Z < -1.33) = 0.09
• Hence, there is only a small 9% chance that project will be completed in
41 days.

Notes
• When multiple critical paths exist, the variance of each critical path
may be different.
• Even though the expected values are the same.
• In such a circumstance, it is recommended that the largest variance of
T be used for probability estimates.

Example 15.13:
• Consider the details of a project involving 11 activities
Activity Predecessor (s) Duration (weeks)
a M B
A - 6 7 8
B - 1 2 9
C - 1 4 7
D A 1 2 3
E A, B 1 2 9
F C 1 5 9
G C 2 2 8
H E, F 4 4 4
I E, F 4 4 10
J D, H 2 5 14
K I, G 2 2 8

Find the expected completion of the project
• (a) What is the probability of completing the project on or before 25
weeks?
• (b) If the probability of completing the project is 0.84, find the
expected project completion time.

• The expected duration and variance of each activity below table.
• The project network and calculations of critical path based on
expected durations are summarized.
• The critical path is A-Dummy-E-H-J and the corresponding project
completion time is 20 weeks.

Activity Duration (weeks) Mean duration Variance
a M B
A 6 7 8 7 0.11
B 1 2 9 3 1.78
C 1 4 7 4 1.00
D 1 2 3 2 0.11
E 1 2 9 3 1.78
F 1 5 9 5 1.78
G 2 2 8 3 1.00
H 4 4 4 4 0.11
I 4 4 10 5 1.00
J 2 5 14 6 4.00
K 2 2 8 3 1.00

1
2
6
3 5 8
4 7
[0, 0]
D (2)
F (5)
G (3)
[4 ,5]
B (3)
C (4)
A (7)
[7, 7]
[20, 20]
K (3)
[15, 17]
I (5)
[10, 10]
E (3)
[7, 7]
Dummy
H (4)
[14 ,14]
J (6)
Figure 20

• (a) The sum of the variances of all the activities on the critical path is
• 0.11 + 1.78 + 0.00 + 4.00 = 5.89 weeks
•∴, 𝜎 = 5.89 = 2.43 weeks
• Also, P(x < 25) = P
𝑥 − 𝜇
𝜎
≤
25 −20
2.43
• = P(x < 2.06) = 0.9803
• This value is obtained from standard normal table,
• ∴, The probability of completing the project on or before 25 weeks is
0.9803.

• (b) We also have P(x < C) = 0.84
• ∴, P
𝑥 − 𝜇
𝜎
≤
𝐶 −𝜇
𝜎
= 0.84
• P 𝑍 ≤
𝐶 −20
2.43
= 0.84
• From the standard normal table, the value of z is 0.99, when the
cumulative probability is 0.84.
•
𝐶 −20
2.43
= 0.99 or C = 22.4 weeks
• The project will be completed in 22.41 weeks (approximately 23
weeks) if the probability of completing the project is 0.84.

Unit IV-Project Management

More Related Content

What's hot (20)

Similar to Unit IV-Project Management (20)

More from SSN College of Engineering, Kalavakkam (20)

Recently uploaded (20)

Unit IV-Project Management