Use of Network Techniques

CPM and PERT

Introduction

 In 1957, DuPont developed a project

management method designed to address
the challenge of shutting down chemical
plants for maintenance and then restarting
the plants once the maintenance had been
completed. Given the complexity of the
process, they developed the Critical Path
Method (CPM) for managing such projects.
Benefits

 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.
CPM Model

 CPM models the activities and events of a

project as a network.
 Activities are depicted as nodes on the
network and events that signify the beginning
or ending of activities are depicted as arcs or
lines between the nodes.
 The following is an example of a CPM
network diagram:
CPM Diagram
 CPM chart with 8 milestones and 9 activities.
Steps in CPM Project Planning

 Specify the individual activities.

 Determine the sequence of those activities.
 Draw a network diagram.
 Estimate the completion time for each activity.
 Identify the critical path (longest path through the
network)
 Update the CPM diagram as the project
progresses.
1. Specify the Individual Activities

 From the work breakdown structure, a listing

can be made of all the activities in the
project. This listing can be used as the basis
for adding sequence and duration information
in later steps.
2. Determine the Sequence of the
Activities

 Some activities are dependent on the

completion of others. A listing of the
immediate predecessors of each activity is
useful for constructing the CPM network
diagram.
3. Draw the Network Diagram

 Once the activities and their sequencing

have been defined, the CPM diagram can be
drawn.
4. Estimate Activity Completion Time

 The time required to complete each activity

can be estimated using past experience or
the estimates of knowledgeable persons.
CPM is a deterministic model that does not
take into account variation in the completion
time, so only one number is used for an
activity's time estimate.
5. Identify the Critical Path

 The critical path is the longest-duration path

through the network.
 The significance of the critical path is that
the activities that lie on it cannot be delayed
without delaying the project. Because of its
impact on the entire project, critical path
analysis is an important aspect of project
planning.
|Critical path can be identified by
determining the following four
parameters for each activity:

 ES - earliest start time: the earliest time at which the activity

can start given that its precedent activities must be completed
first.
 EF - earliest finish time, equal to the earliest start time for the
activity plus the time required to complete the activity.
 LF - latest finish time: the latest time at which the activity can
be completed without delaying the project.
 LS - latest start time, equal to the latest finish time minus the
time required to complete the activity.
The slack time

 The slack time for an activity is the time

between its earliest and latest start time, or
between its earliest and latest finish time.
Slack is the amount of time that an activity
can be delayed past its earliest start or
earliest finish without delaying the project.
 The critical path is the path through the
project network in which none of the activities
have slack, that is, the path for which ES=LS
and EF=LF for all activities in the path. A
delay in the critical path delays the project.
Similarly, to accelerate the project it is
necessary to reduce the total time required
for the activities in the critical path.
6. Update CPM Diagram

 As the project progresses, the actual task

completion times will be known and the
network diagram can be updated to include
this information. A new critical path may
emerge, and structural changes may be
made in the network if project requirements
change.
CPM Limitations

 CPM was developed for complex but fairly

routine projects with minimal uncertainty
in the project completion times.
 For less routine projects there is more uncertainty in
the completion times, and this uncertainty limits the
usefulness of the deterministic CPM model.
 An alternative to CPM is the PERT project planning
model, which allows a range of durations to be
specified for each activity.
PERT

 While CPM is easy to understand and use, it

does not consider the time variations that can
have a great impact on the completion time
of a complex project.
 The Program Evaluation and Review
Technique (PERT) is a network model that
allows for randomness in activity completion
times.
The Network Diagram

 In a project, an activity is a task that must be

performed and an event is a milestone marking the
completion of one or more activities. Before an
activity can begin, all of its predecessor activities
must be completed. Project network models
represent activities and milestones by arcs and
nodes. PERT originally was an activity on arc
network, in which the activities are represented on
the lines and milestones on the nodes
Example of a PERT diagram
 PERT Chart for a project with five milestones
(10 through 50) and six activities (A through
F). The project has two critical paths:
activities B and C, or A, D, and F – giving a
minimum project time of 7 months with fast
tracking. Activity E is sub-critical, and has a
float of 2 months.
 The milestones generally are numbered so
that the ending node of an activity has a
higher number than the beginning node.
 Incrementing the numbers by 10 allows for
new ones to be inserted without modifying
the numbering of the entire diagram.
 The activities in the above diagram are
labeled with letters along with the expected
time required to complete the activity.
Steps in the PERT Planning Process

 Identify the specific activities and milestones.

 Determine the proper sequence of the activities.
 Construct a network diagram.
 Estimate the time required for each activity.
 Determine the critical path.
 Update the PERT chart as the project progresses.
1.  Identify Activities and Milestones

 The activities are the tasks required to

complete the project. The milestones are the
events marking the beginning and end of one
or more activities.
 It is helpful to list the tasks in a table that in
later steps can be expanded to include
information on sequence and duration.
2.  Determine Activity Sequence

 This step may be combined with the activity

identification step since the activity sequence
is evident for some tasks.
 Other tasks may require more analysis to
determine the exact order in which they must
be performed.
3.  Construct the Network Diagram

 Using the activity sequence information, a network

diagram can be drawn showing the sequence of the
serial and parallel activities.
 For the original activity-on-arc model, the activities
are depicted by arrowed lines and milestones are
depicted by circles or "bubbles".
 If done manually, several drafts may be required to
correctly portray the relationships among activities.
 Software packages simplify this step by
automatically converting tabular activity information
into a network diagram.
4.  Estimate Activity Times

 Weeks are a commonly used unit of time for

activity completion, but any consistent unit of
time can be used.
 A distinguishing feature of PERT is its ability
to deal with uncertainty in activity completion
times.
For each activity, the model usually
includes three time estimates

 Optimistic time - generally the shortest time in which the activity

can be completed. It is common practice to specify optimistic
times to be three standard deviations from the mean so that
there is approximately a 1% chance that the activity will be
completed within the optimistic time.
 Most likely time - the completion time having the highest
probability. Note that this time is different from the expected
time.
 Pessimistic time - the longest time that an activity might require.
Three standard deviations from the mean is commonly used for
the pessimistic time.
 PERT assumes a beta probability distribution for the time
estimates. For a beta distribution, the expected time for each
activity can be approximated using the following weighted
average:
 Expected time = ( Optimistic + 4 x Most likely + Pessimistic ) / 6
 This expected time may be displayed on the network diagram.
 To calculate the variance for each activity completion time, if
three standard deviation times were selected for the optimistic
and pessimistic times, then there are six standard deviations
between them, so the variance is given by:
 [ ( Pessimistic  -  Optimistic ) / 6 ]2
5.  Determine the Critical Path

 The critical path is determined by adding the times

for the activities in each sequence and determining
the longest path in the project.
 The critical path determines the total calendar time
required for the project. If activities outside the
critical path speed up or slow down (within limits),
the total project time does not change.
 The amount of time that a non-critical path activity
can be delayed without delaying the project is
referred to as slack time.
 If the critical path is not immediately obvious,
it may be helpful to determine the following
four quantities for each activity:
 ES - Earliest Start time
 EF - Earliest Finish time
 LS - Latest Start time
 LF - Latest Finish time
 These times are calculated using the expected time for the
relevant activities. The earliest start and finish times of each
activity are determined by working forward through the network
and determining the earliest time at which an activity can start
and finish considering its predecessor activities. The latest start
and finish times are the latest times that an activity can start
and finish without delaying the project. LS and LF are found by
working backward through the network. The difference in the
latest and earliest finish of each activity is that activity's slack.
The critical path then is the path through the network in which
none of the activities have slack.
 The variance in the project completion time can be
calculated by summing the variances in the
completion times of the activities in the critical path.
Given this variance, one can calculate the probability
that the project will be completed by a certain date
assuming a normal probability distribution for the
critical path. The normal distribution assumption
holds if the number of activities in the path is large
enough for the central limit theorem to be applied.
 Since the critical path determines the
completion date of the project, the project
can be accelerated by adding the resources
required to decrease the time for the
activities in the critical path. Such a
shortening of the project sometimes is
referred to as project crashing.
6.  Update as Project Progresses

 Make adjustments in the PERT chart as the

project progresses. As the project unfolds,
the estimated times can be replaced with
actual times. In cases where there are
delays, additional resources may be needed
to stay on schedule and the PERT chart may
be modified to reflect the new situation.
Benefits of PERT

 PERT is useful because it provides the following

information:
 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 activity time estimates are somewhat subjective and

depend on judgement. In cases where there is little experience
in performing an activity, the numbers may be only a guess. In
other cases, if the person or group performing the activity
estimates the time there may be bias in the estimate.
 Even if the activity times are well-estimated, PERT assumes a
beta distribution for these time estimates, but the actual
distribution may be different.
 Even if the beta distribution assumption holds, PERT assumes
that the probability distribution of the project completion time is
the same as the that of the critical path. Because other paths
can become the critical path if their associated activities are
delayed, PERT consistently underestimates the expected
project completion time.
 The underestimation of the project
completion time due to alternate paths
becoming critical is perhaps the most serious
of these issues. To overcome this limitation,
Monte Carlo simulations can be performed
on the network to eliminate this optimistic
bias in the expected project completion time.