Operational Research Notes
Operational Research Notes
Operational Research Notes
LECTURE NOTES
“PROJECT MANAGEMENT”
Acknowledgements:
I would like to acknowledge Prof. W.L. Winston's "Operations Research: Applications and Algorithms“
(slides submitted by Brooks/Cole, a division of Thomson Learning, Inc.) and Prof. J.E. Beasley's
lecture notes which greatly influence these notes...
I retain responsibility for all errors and would love to hear from readers...
www.isl.itu.edu.tr/ya
PROJECT MANAGEMENT
1. CONCEPTS ............................................................................................................. 2
2. THE PROJECT NETWORK..................................................................................... 3
3. CPM/PERT............................................................................................................... 4
3.1 CPM .................................................................................................................................8
3.2 Crashing the Project....................................................................................................13
3.3 PERT .............................................................................................................................15
3.4 Probability Analysis for CP.........................................................................................17
1. CONCEPTS
Project Scheduling
1. Assigning resources to activities
2. Arranging relations between activities
3. Updating and revising on regular basis
Project Controlling
Before Project 1. Monitoring resources, costs,
quality, and budgets
During Project 2. Revising and changing plans
3. Shifting resources to meet
demands
BLOCK DIAGRAM
3. CPM/PERT
Network models can be used as an aid in the scheduling of large complex projects that
consist of many activities.
If the duration of each activity is known with certainty, the Critical Path Method (CPM)
can be used to determine the length of time required to complete a project.
• CPM can also be used to determine how long each activity in the project can be
delayed without delaying the completion of the project.
• It was developed in the late 1950s by researchers at DuPont and Sperry Rand.
If the duration of activities is not known with certainty, the Program Evaluation and
Review Technique (PERT) can be used to estimate the probability that the project will
be completed by a given deadline.
Limitations of CPM/PERT
• Project activities must be clearly defined, independent, and stable in their
relationships
• Precedence relationships must be specified and networked together
• Time activities in PERT are assumed to follow the beta probability distribution -- must
be verified
• Time estimates tend to be subjective, and are subject to fudging by managers
• There is inherent danger in too much emphasis being placed on the critical path
Utilization of CPM/PERT
To apply CPM or PERT, we need a list of activities that make up the project.
The project is considered to be completed when all activities have been completed.
For each activity there is a set of activities (called the predecessors of the activity) that
must be completed before the activity begins.
A project network (project diagram) is used to represent the precedence relationships
between activities Æ AOA representation of a project
Given a list of activities and predecessors, an AOA representation of a project can be
constructed by using the following rules.
Example 2. Widgetco
(Winston 8.4., p. 433)
Widgetco is about to introduce a new product (product 3). A list of activities and their
predecessors and of the duration of each activity is given.
Draw a project network for this project.
C:produce product 1 A, B 8
D:produce product 2 A, B 7
E:test product 2 D 10
Answer
C8 F 12
3 5 6
A6
D7 E 10
1 Dummy
Node 1 = starting node
Node 6 = finish node
B9
2 4
Example 3. ET
Suppose that for the segment of the project network given below we have already
determined
ET(3)=6, ET(4)=8, and ET(5)=10
3
8
4 4 6
3
Answer
ET(6) = max {ET(3)+8, ET(4)+4, ET(5)+3} = max {14, 12, 13} = 14
Example 5. LT
Suppose that for the segment of the project network given below we have already
determined
LT(5)=24, LT(6)=26, and LT(7)=28
5
3
4 4 6
5
TOTAL FLOAT
Before the project is begun, the duration of an activity is unknown, and the duration of
each activity is used to construct the project network is just an estimate of the activity’s
actual completion time.
The concept of total float of an activity can be used as a measure of how important it is
to keep each activity’s duration from greatly exceeding our estimate of its completion
time.
For an arbitrary arc representing activity (i,j), the total float, represented by TF(i,j), of the
activity is the amount by which the starting time of activity (i,j) could be delayed beyond
its earliest possible starting time without delaying the completion of the project
(assuming no other activities are delayed).
Equivalently, TF(i,j) is the amount by which the duration of the activity can be increased
without delaying the completion of the project.
TF(i,j) = LT(j) – ET(i) – tij
FREE FLOAT
The Free Float of the activity corresponding to arc(i,j), denoted by FF(i,j) is the amount
by which the starting time of the activity corresponding to arc(i,j) can be delayed without
delaying the start of any later activity beyond the earliest possible starting time.
FF(i,j) = ET(j) – ET(i) – tij
USING LP
LP can also be used to determine the length of the critical path.
Decision variable (xij): the time that the event corresponding to node j occurs
Note that for each activity (i,j), before node j occurs, node i must occur and activity (i,j)
must be completed Æ
xj ≥ xi + tij
Goal is to minimize the time required to complete the project: objective function Æ
min z = xn - x1
A critical path for a project network consists of a path from the start of the project to the
finish in which each arc in the path corresponds to a constraint having a dual price of -1.
For each constraint with a dual price of -1, increasing the duration of the activity
corresponding to that constraint by ∆ will increase the duration of the project by ∆.
In many situations, the project manager must complete the project in a time that is less
than the length of the critical path.
LP can often be used to determine the allocation of resources that minimizes the cost of
meeting the project deadline.
This process is called crashing a project.
D2 E7
1 0
B4
(0,0)
2 (4,4) 4 (6,6)
3.3 PERT
CPM assumes that the duration of each activity is known with certainty. For many
projects, this is clearly not applicable.
PERT is an attempt to correct this shortcoming of CPM by modeling the duration of each
activity as a random variable.
For each activity, PERT requires that the project manager estimate three quantities:
• optimistic duration (a)
• pessimistic duration (b)
• the most likely value for duration (m)
Let Tij be the duration of activity (i,j).
PERT requires the assumption that Tij follows a beta distribution.
According to this assumption, it can be shown that the mean and variance of Tij may be
approximated by :
E(Tij) = (a + 4m + b) / 6
var Tij = (b – a)2 / 36
PERT requires the assumption that the durations of all activities are independent.
In this case, the mean and variance of the time required to complete the activities on any
path are given by
∑ E (T )
( i , j )∈path
ij ∑ var T ij
( i , j )∈path
Let CP be the random variable denoting the total duration of the activities on a critical
path found by CPM.
PERT assumes that the critical path found by CPM contains enough activities to allow
us to invoke the Central Limit Theorem and conclude that the following is normally
distributed:
CP = ∑ Tij
( i , j )∈critical path
7 10
1 0
9
(0,0)
2 (9,9) 4 (16,16)