1. Unit-II-III Introduction to CPM-PERT Mr. Rahul Mohare Faculty Datta Meghe Institute of Management Studies Atrey Layout, Nagpur

2. Overview Project Management What is CPM? Procedure Examples Analysis What is PERT? Procedures Examples Analysis 10/22/2015 2Rahul Mohare-DMIMS

3. Project Management 1.A project is a one-off undertaking, with a clear beginning and end, usually aimed at creating some useful change or adding value -- typically to build a new plant or create a new product. 2.Projects bring together resources such as people, money and material 3.These must be organized and managed to produce a defined result. 4.The hard part is to bring the project to completion within a specified time, at no more than a specified cost. 5.Various tools have been created to help project managers pull off this invariably challenging feat. 10/22/2015 3Rahul Mohare-DMIMS

4. Project Management (Contd.) There are three main points that are most important to a successful project: A Project must meet customer requirements. A Project must be under budget. A Project must be completed on time. 10/22/2015 4Rahul Mohare-DMIMS

5. Characteristics of Project The duration of a project lasts weeks, months, or even years. During such a long period, many changes may occur, most of which are difficult to predict. Such changes may have a significant impact on project costs technology, and resources. The longer the duration of the project, uncertain are the execution times and costs. A project is complex in nature, involving many interrelated activities and participants from both within the organization and outside it (e.g., suppliers, subcontractors). Delays in completion time may be very costly. Penalties for delays may amount to thousands of dollars per day. Completing projects late may result in lost opportunities and ill will as well. Project activities are sequential. Some activities cannot start until others are completed. Projects are typically a unique undertaking, something that has not been encountered previously. 10/22/2015 5Rahul Mohare-DMIMS

6. Activities can occur at the same time (concurrently). A dummy activity shows a precedence relationship but reflects no passage of time. Two or more activities cannot share the same start and end nodes. The Project Network Concurrent Activities Expanded Network for Building a House Showing Concurrent Activities 10/22/2015 6Rahul Mohare-DMIMS

7. Introduction- CPM There are some formal tools to aid project management. Two of the best known tools that fill this need are PERT (Program Evaluation Review Technique) and CPM (Critical Path Method). CPM provides the following benefits: Provides a graphical view of the project. Predicts the time required to complete the project. Shows which activities are critical to maintaining the schedule and which are not. 10/22/2015 7Rahul Mohare-DMIMS

8. Introduction (Contd.) The essential technique for using CPM is to construct a model of the project that includes the following: A list of all activities required to complete the project (typically categorized within a work breakdown structure The time (duration) that each activity will take to completion, The dependencies between the activities Using these values, CPM calculates the longest path of planned activities to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. This process determines which activities are "critical" (i.e., on the longest path) and which have "total float" (i.e., can be delayed without making the project longer). In project management, a critical path is the sequence of project network activities which add up to the longest overall duration. This determines the shortest time possible to complete the project. Any delay of an activity on the critical path directly impacts the planned project completion date (i.e. there is no float on the critical path). 10/22/2015 8Rahul Mohare-DMIMS

9. Usefulness CPM/PERT have been useful in planning costs, scheduling manpower and machine time. CPM/PERT can answer the following important questions: What will be the project duration? What are the risks/ dependencies/ assumptions involved? What are the critical activities which could delay the entire project if they were not completed on time? What is the current status of the project i.e. Is the project on schedule, behind schedule or ahead of schedule? If the project has to be finished earlier than planned, what is the best way to do this at the least cost? 10/22/2015 9Rahul Mohare-DMIMS

10. Terminologies used in CPM/PERT In order to explain the purpose, structure and operation of PERT and CPM, it is helpful to define the following terms: Activity: An activity is an effort that requires resources and takes a certain amount of time for completion. Examples of activities are: studying for an examination, designing a part, connecting bridge girders, or training an employee. Dummy Activity: An activity, which is used to maintain the pre-defined precedence relationship only during the construction of the project network, is called a dummy activity. Dummy activity is represented by a dotted arrow and does not consume any time and resource Critical activity: A critical activity is an activity that, if even slightly de-layed, will hold up the scheduled completion date of the entire project. Path: A path is a series of adjacent activities leading from one event to another. Critical path: A critical path is the sequence of critical activities that forms a continuous path between the start of a project and its completion. 10/22/2015 10Rahul Mohare-DMIMS

11. Event: An event is a specific accomplishment at a recognizable point in time; a milestone, a checkpoint; for example, passing a course at a university, submission of engineering drafts, completion of a span on a bridge, or the arrival of a new machine. Events do not have a time duration per se. To reach an event, all the activities that precede it must be completed. An event can be viewed as a goal attained, while the activities leading to it can be viewed as the means of achieving it. Event is indicated by circle in network diagram Network: A network is a logical and chronological set of activities and events, graphically illustrating relationships among the various activities and events of the project. 10/22/2015 11Rahul Mohare-DMIMS

12. Building the Network AOA Network AON Network 10/22/2015 12Rahul Mohare-DMIMS

13. A Sample Set of Project Activities and Precedences

14. AON Network Figure 1 Stage 1 of a Sample AON Network 10/22/2015 14Rahul Mohare-DMIMS

15. AON Network Figure 2 Stage 2 of a Sample AON Network 10/22/2015 15Rahul Mohare-DMIMS

16. AON Network Figure 3 A Completed Sample AON Network 10/22/2015 16Rahul Mohare-DMIMS

17. AOA Network Figure 4 Stage 1 of a Sample AOA Network 10/22/2015 17Rahul Mohare-DMIMS

18. AOA Network Figure 5 Stage 2 of a Sample AOA Network 10/22/2015 18Rahul Mohare-DMIMS

19. AOA Network Figure 6a A Completed Sample AOA Network 10/22/2015 19Rahul Mohare-DMIMS

20. Figure 6b A Completed Sample AOA Network Showing the Use of a Dummy Task 10/22/2015 20Rahul Mohare-DMIMS

21. Situations in network diagram A B C A must finish before either B or C can start A B C both A and B must finish before C can start D C B A both A and C must finish before either of B or D can start A C B D Dummy A must finish before B can start both A and C must finish before D can start 10/22/2015 21Rahul Mohare-DMIMS

22. 10/22/2015 22Rahul Mohare-DMIMS

23. Example 1. Construct the CPM Network using the details below and determine the critical path ActivityImmediate Predecessor Duration A-1 BA4 CA2 DA2 ED3 FD3 GE2 HF,G1 IC,H3 JB2 10/22/2015 23Rahul Mohare-DMIMS

24. 12 CPM NETWORK A 10/22/2015 24Rahul Mohare-DMIMS

25. 17 4 2 3 CPM NETWORK A B D C 10/22/2015 25Rahul Mohare-DMIMS

26. 17 6 5 4 2 3 CPM NETWORK A B D F E C 10/22/2015 26Rahul Mohare-DMIMS

27. 17 6 5 4 2 3 CPM NETWORK A B D F G E C 10/22/2015 27Rahul Mohare-DMIMS

28. 17 6 5 4 2 3 CPM NETWORK A B D F G E C H 10/22/2015 28Rahul Mohare-DMIMS

29. 17 6 5 4 2 8 3 CPM NETWORK A B D F G E C I H 10/22/2015 29Rahul Mohare-DMIMS

30. 17 6 5 4 2 8 3 CPM NETWORK A J B D F G E C I H 10/22/2015 30Rahul Mohare-DMIMS

31. 17 6 5 4 2 8 3 CPM NETWORK with duration of each activity A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 10/22/2015 31Rahul Mohare-DMIMS

32. 17 6 5 4 2 8 3 To find the Critical Path A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 LFT EST 10/22/2015 32Rahul Mohare-DMIMS

33. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 1 LFT EST To find the Critical Path 10/22/2015 33Rahul Mohare-DMIMS

34. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 1 0 3 To find the Critical Path LFT EST 10/22/2015 34Rahul Mohare-DMIMS

35. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 6 0 1 0 3 To find the Critical Path LFT EST 10/22/2015 35Rahul Mohare-DMIMS

36. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 6 0 1 0 3 0 8 To find the Critical Path LFT EST 10/22/2015 36Rahul Mohare-DMIMS

37. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 0 6 0 1 0 3 0 8 To find the Critical Path LFT EST 10/22/2015 37Rahul Mohare-DMIMS

38. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 0 6 0 5 0 1 0 3 0 8 To find the Critical Path LFT EST 10/22/2015 38Rahul Mohare-DMIMS

39. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 0 12 0 6 0 5 0 1 0 3 0 8 To find the Critical Path LFT EST 10/22/2015 39Rahul Mohare-DMIMS

40. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 0 6 0 5 0 1 0 3 0 8 To find the Critical Path LFT EST 10/22/2015 40Rahul Mohare-DMIMS

41. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 0 6 0 5 0 1 0 3 0 8 To find the Critical Path LFT EST 10/22/2015 41Rahul Mohare-DMIMS

42. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 0 6 0 5 0 1 0 3 8 To find the Critical Path LFT EST 10/22/2015 42Rahul Mohare-DMIMS

43. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 66 66 0 5 0 1 0 3 8 To find the Critical Path LFT EST 10/22/2015 43Rahul Mohare-DMIMS

44. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 66 66 0 5 0 1 3 8 To find the Critical Path LFT EST 10/22/2015 44Rahul Mohare-DMIMS

45. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 66 66 0 5 1 3 8 To find the Critical Path LFT EST 10/22/2015 45Rahul Mohare-DMIMS

46. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 66 66 10 5 1 3 8 To find the Critical Path LFT EST 10/22/2015 46Rahul Mohare-DMIMS

47. 17 6 5 4 2 8 3 A(1) J(2) B(4) D(2) F(3) G(2) E(3) C(2) I(3) H(1) 0 9 12 6 10 5 1 3 8 Critical Path A – B – E – G – H - I Critical Path 1 - 2 - 4 – 5 – 6 – 7 - 8 10/22/2015 47Rahul Mohare-DMIMS

48. PERT PERT is a manager’s tool for defining and coordinating moves for completing a project’s objectives on time. Its use is not restricted to the business world. It can be applied to any endeavor which requires planned, controlled, and integrated work patterns. More often than not, diversified activities contribute to the difficulty in completing a project on schedule. Many uncertainties are associated with these activities. PERT is a technique that statistically presents knowledge about these uncertainties. 10/22/2015 48Rahul Mohare-DMIMS

49. A technique -- that aids the decision-maker, but does not make decisions for him. A technique -- that presents statistical information regarding the uncertainties associated with completing the different activities inherent in the project. A method -- for focusing a manager’s attention on: –latent problems that require solutions, and –procedures and adjustments of time, resources, or performance, which may improve the probability of meeting all intended project completion dates. 10/22/2015 49Rahul Mohare-DMIMS

50. Benefits of CPM/PERT Useful at many stages of project management Mathematically simple Give critical path and slack time Provide project documentation Useful in monitoring costs Pert uses probabilistic time estimates to determine the probability that a project will be done by a specific time. To reduce the length of the project (crashing), we need to know the critical path of the project and the cost of reducing individual activity times. Crashing activities that are not on the critical path typically do not reduce project completion time. The critical chain approach removes excess safety time from individual activities and creates a project buffer at the end of the critical path. 10/22/2015 50Rahul Mohare-DMIMS

51. The Advantages of PERT and CPM Detailed planning: The use of PERT and CPM forces management to plan in detail and to define what must be done to accomplish objectives on time. Commitments and communications: Management is forced to plan and make commitments regarding execution times and completion dates. The tools also provide for better communication among the various departments in an organization and between suppliers and the client. Efficient monitoring and control: The number of critical activities in a network (especially in a large one) is only a small portion of the total activities. Identification of the critical activities enables the use of an efficient monitoring system (mainly record-keeping and reports) concentrating only on the critical activities. Identifying potential problem areas: The critical activities are also more likely to become problem areas. Once identified, contingency plans may be devised. Proper use of resources: Employing PERT or CPM enables management to use resources more wisely by examination of the overall plan. Resources can he transferred to bottleneck or trouble areas from other activities. 10/22/2015 51Rahul Mohare-DMIMS

52. Rescheduling: The tools enable management to follow up and correct deviations from schedule as soon as they are detected, thus minimizing delays. Government contracts: Several government agencies require the submission of a PERT or CPM plan with bids. Easily understood: CPM and PERT can be easily understood because they provide a method for visualizing an entire project. Therefore management can explain the tools to supervisors and employees in such a way that the chances of implementation are increased. Adaptable to computers: PERT and CPM are easily adaptable to computer use. Large projects can be planned by computers in seconds is even capable of diagramming the networks. Tools for decision making: PERT and CPM allow management to check the effectiveness and efficiency of alternative ways of executing projects by examining possible trade-offs among resources (usually time and cost). Assess probability of completion (in PERT only): The probabilities of successfully meeting deadlines, finishing early, or finishing late can be assessed by the use of PERT. Cost-time trade-offs (in CPM only): CPM enables management to evaluate trade-offs between the cost of executing a job in a normal way or expediting activities (called crashing) at a higher cost so as to finish earlier. 10/22/2015 Rahul Mohare-DMIMS52

53. Limitations to CPM/PERT Clearly defined, independent and stable activities Specified precedence relationships Over emphasis on critical paths Deterministic CPM model Activity time estimates are subjective and depend on judgment PERT assumes a beta distribution for these time estimates, but the actual distribution may be different PERT consistently underestimates the expected project completion time due to alternate paths becoming critical 10/22/2015 53Rahul Mohare-DMIMS

54. Summary A project is a unique, one time event of some duration that consumes resources and is designed to achieve an objective in a given time period. Each project goes through a five-phase life cycle: concept, feasibility study, planning, execution, and termination. Two network planning techniques are PERT and CPM. Pert uses probabilistic time estimates. CPM uses deterministic time estimates. Pert and CPM determine the critical path of the project and the estimated completion time. On large projects, software programs are available to identify the critical path. 10/22/2015 54Rahul Mohare-DMIMS

55. Pert uses probabilistic time estimates to determine the probability that a project will be done by a specific time. To reduce the length of the project (crashing), we need to know the critical path of the project and the cost of reducing individual activity times. Crashing activities that are not on the critical path typically do not reduce project completion time. The critical chain approach removes excess safety time from individual activities and creates a project buffer at the end of the critical path. 10/22/2015 55Rahul Mohare-DMIMS