Telcom Engineer Content Project Management - Santosh Sir

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Project is a one which starts from scratch with a definite mission,

generates activity involving a verity of human, non-human resources
all directed towards fulfillment of the mission and stop once the
mission is fulfilled.” - S. Chaudhary
“A project can be defined as a unique task (however large or small)

with defined goal, limited in cost and time and giving some benefits to
the users when the task is completed.” S.K.Bhattacharjee
1.1 Characteristics of project
A project has the following characteristics:
1. A defined (specific) goal or objectives

2. Temporary
3. Constraints
4. Unique
5. Specific task, not routinely performed
6. Team Work
7. Rapid Expenditure
8. Resource being consumed
9. Risk and Uncertainties
10. Planning and Control
11. Defined deliverables
12. Contracting and subcontracting
13. Progressive elaboration:
1.2 Setting Project Objective and Goal
Objectives are the ends towards which the activities of a project are
directed. A project has clearly defined (specific objectives). It is
focused on end result. Project exists when the objectives have been
achieved. Hence the first step in any project is to define the objective.
We define the project objective in order to:
Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

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1. Make sure that we have identified the right target.

2. Create team commitment and involve all interested parties in
achieving the successful project outcome.
Goals are purpose and mission for initiating a project which is set at
the start of project. It is the specification of what is hoped to be
achieved at the end of the project which allows stakeholders to
specify the target then work towards their own objectives. Goal
should clearly state what the project will deliver. Goal setting takes
time, energy and dialogue.
When we set out to define project objectives there is useful acronym

to remember SMART which means
S = Specific (Clear and well defined)
M = Measurable so that project outcome can be measured

and compared (Evaluated)
A = Achievable and Agreed by all the members of the team
R = Realistic, possible under limited set of resources
T = Time framed, if there is not pressure to complete the

project it will never get completed
1.3 Project life cycle& phases
Project is a temporary job. It cannot continue endlessly. A project

depending upon its nature, size and type, undergoes through different
well defined phases right from its inception to successful completion.
Collectively, the project phases are known as project life cycle
phases. The breakdown and terminology of these phases differs
depending upon the nature of the project or organization. The

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following important five phases contribute to develop a project from

an idea to reality.
a. Initiation Phase
b. Planning Phase
c. Engineering and Design Phase
d. Implementation Phase
e. Termination Phase
Resources /Risk
Resources
Risk
Start End
Initiation Planning Engineering and Implement Termination
design ation
Project Management Concept
 All work is a process and processes combine to create a phase

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 Various phases with well defined milestone make up a

project.
 Uncertainty is inevitable in each phase.
 Inability to measure and manage uncertainty is worst enemy.
 By using specific tools and systematic application, project
can be effectively managed.
 Concept of Project Planning
 Project planning is concerned with development a project for
investment. It identifies and addresses the tasks required for
accomplishment of project objectives. It acts as a roadmap for
managing the project. It determines how the project
objectives will be accomplished. It involves detailed design,
budgeting, scheduling and allocation of resources.
The tasks involved in project planning are:
1. Feasibility study: It determines the implementability of the

project.
2. Appraisal: it is the evaluation of the projects ability to
succeed and done after feasibility.
3. Design: It is concerned with the preparation of detailed
engineering design, drawing and specifications as well as
detailed engineering plans such as work schedule, cost
estimate and resource allocation. It decides about
 What activities need to be done in the project?

 How the activities will be carried?
 When the activities will be done?
 Who will do the activities?
2.3.1 Gantt chart/Bar chart
The oldest formal planning tool is the bar chart. It is developed as a

production control tool in 1917 by Henry L. Gantt, an American

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mechanical engineer, hence also called Gantt chart in his respect.

Frequently used in project management, a Gantt chart provides a
graphical illustration of a schedule that helps to plan, coordinate, and
track specific tasks in a project.
Fig: 2.1is the simple example that might have been used around the
time Gantt charts were invented
A Gantt chart is constructed with a horizontal axis representing the

total time span of the project, broken down into increments (for
example, days, weeks, or months) and a vertical axis representing the
tasks that make up the project (for example, if the project is outfitting
your computer with new software, the major tasks involved might be:
conduct research, choose software, install software).
Fig: 2.1 Basic Gantt chart
Horizontal bars of varying lengths represent the sequences, timing,

and time span for each task. Using the same example, you would put
"conduct research" at the top of the vertical axis and draw a bar on the
graph that represents the amount of time you expect to spend on the
research, and then enter the other tasks below the first one and

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representative bars at the points in time when you expect to undertake

them. The bar spans may overlap, as, for example, you may conduct
research and choose software during the same time span. As the
project progresses, secondary bars, arrowheads, or darkened bars may
be added to indicate completed tasks, or the portions of tasks that
have been completed. A vertical line is used to represent the report
date.
Steps in Preparing Bar Chart:
The following are the important steps in developing a bar chart.
1. Identify different activities within the work: Prepare Work

Breakdown Structure i.e. breakdown the project into its
various activities or jobs or operations, each representing
manageable units for planning and control.
2. Estimate time required to complete each activity: Based on
resource availability, historical data, experience and expert
opinions, estimate the time required to complete each
activity.
3. Develop logical sequence between activities: Activities
should be performed or completed in a definite sequence. So,
decide the sequence in which the activities are to be
performed.
4. Develop a bar chart. Represent the above information in the
Bar chart, indicating the relative positions of each activity.
Advantages of Bar chart:
The advantages of Bar chart are:
1. It is simple to understand: Even a person with little education

can understand the concept quite easily. This may be the
reason that bar chart is popular in every sector.

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2. It is easy to prepare, consume less resources and economical.

No sophisticated tools and Special knowledge is not required
to prepare the bar chart hence it is easy and economical.
3. It can be used to show progress. Simple "fill in the bar"
method is used to show how much of the project was
complete. It can also be shown by the planned bar alongside
the progress bar like.
4. It can be used for resource planning such as manpower
planning, budgeting etc.
5. It gives clear pictorial model of the project.
Figure 2.2: Progress shown in bar chart
Disadvantages /Limitation of Bar chart
The Bar chart suffers from some disadvantages which limits its
usefulness:
1. There may be physical limit to the size of the bar chart, which
may limit the size of the project that can be planned with this
technique or only major activities are shown. Hence, it is not
useful for large and complex projects.
2. There are some activities of a project which are taken up
concurrently, while there are others which can be taken up

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only after completion of some other activities. Similarly some

activities can be started few days after the other activity
starts. The activities whose start and end depend on other
activities are shown serially. In a project, there may be large
number of activities which can start with certain degree of
concurrency. By merely depicting them parallel,
interrelationship between them cannot be clearly depicted.
3. Each activity receives equal importance due to the lack of
special indication in the chart. Thus in bar chart, long
duration activity may appear most important ones, which may
not be true. In building construction, plastering work, may
take long time but concreting may be completed in a single
day and concreting is more important activity.
4. It cannot be used as control device for large projects.
5. It is difficult to show critical path, critical activities and floats
available.
6. Data is hard to manipulate i.e. it cannot easily cope with
frequent changes or updating. The bar chart is a static
representation of the planned activities and does not respond
to the dynamic happening on the construction site of the
complex project.
Example 2.1
A project consist of 8 activities A,B,C,D,E,F,G,H with their time of

completion as follows.
Activity Duration
(weeks)
A 2
B 4
C 2
D 4
E 6
F 4

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G 5
H 4
 Activity A and B can be performed in parallel

 Activity C and D cannot start until Activity A is complete.
 Activity E cannot start until the half the work of Activity C is
complete.
 Activity F can start only after Activity D is complete.
 Activity G succeeds Activity C
 H is the last activity which should succeed activity E.
Draw the bar chart and find out the completion time of the project.
Solution
Activity/week 1 2 3 4 5 6 7 8 9 10 11 12 13
A
B
C
D
E
F
G
H
Here the project completion time is 13 week.
To overcome some of the limitations of Bar chart, Milestone Chart

and Linked bar charts are developed.

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2.4 Network Technique
Network technique is one of the modern tools of Project management.

For a project involving large number of activities, the project
scheduling becomes very complex and the use of conventional
method of scheduling like bar charts will not be effective. Complex
projects, if not correctly scheduled, will most probably result in either
under estimation or over estimation of the project implementation
period, both of which will have serious consequences. If the project
completion time is underestimated, the actual implementation period
will be more than the estimated period of time resulting in ‘time
overrun’ and ultimately leads to cost overrun of the project. If the
additional cost due to cost overrun is not made available in time, the
project completion will suffer a setback. Network based scheduling of
projects come handy in solving complex projects scheduling
problems. There are two popular network based scheduling
techniques.
a) Critical Path Method – CPM developed in the year 1957 by

Morgan R. Walker of DU Pont and James E. Kelly of
Remington Rand for preparing shutdown schedule of a
chemical plant.
b) Program Evaluation and Review Technique – PERT,
developed by US Navy in 1958 for scheduling Polaris Missile
Project
Though the two methods are conceptually similar except for certain
minor differences, they were developed independently in USA.
For understanding as to how a network for a project is drawn, we

should get ourselves familiarized with the following terminologies.
1. Activity (Task): An activity is any identifiable job which requires

time, manpower, material, and other resources to complete. It means
the performance of the specific task of project. Arrow in a network

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diagram represents activity. The following are the examples of

activity for a building construction project.
 Layout
 Excavation of foundation
 Construction of wall Layout
 Concreting i1 2j
 Construction of roofing
 Wiring and electrification
 Plastering and paining work
Relationship between activities:
A project is a collection of various activities and those activities are

interrelated among themselves. There are three possible relationships
between different activities:
Concurrent (Parallel) Activities: Those activities which can be

performed simultaneously and independently to each other are known
as concurrent activities. In figure below activities A and B are
parallel. A – Fix electrical fittings
1 B – Fix sanitary fittings
Serial Activities: Those activities which are to be performed one

after the other, in succession are known as serial activities. Serial
activities cannot be performed independently. In the figure below
earthwork in excavation and construction of wall are serial
activities.
A - Earthwork in Excavation B - Construction of Wall
1 2 3
Predecessor of B Successor of A

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In the above figure, activity A i.e. Earthwork in excavation is

preceding activity (Predecessor) of activity B i.e. Construction of
wall. Or, we can say that Construction of wall (B) is succeeding
activity (Successor) of Earthwork in excavation (A). This means
activity A must be completed to start activity B.
For a given activity, the activity that occurs immediately before it is

its predecessor where as for a given activity, the activity that follows
immediately after it, is its successor.
2. Activity Duration
An activity’s duration is the amount of time estimated for its

completion. The time unit for the project can be minutes, hours, work
days, calendar days, weeks or months. Most construction schedule
commonly use durations of work days or calendar days. Fractional
time units can be used for activity durations, but integer time units are
most common. The only requirement is that the use of the time units
expressed should be consistent throughout the schedule.
Activity duration = Work quantity / Production rate
The accuracy of duration estimates depends on many factor including:

Methods of construction, Resource availability, Work quantity,
Nature or complexity of work, Labor and equipment productivity,
Quality of field management, Weather and site conditions,
Concurrent activities.
Layout
11 2
2
(4 days)

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4. Event (Node):
The beginning or end of the activity is known as event. It represents

specific point in time and does not consume time, manpower, material
and other resources.
1 22 3
Event Event Event
Two conventions can be used for developing networks are:

Activity on Arrow (AOA) and Activity on Node (AON).
Activity on Arrow (AOA): Under this convention the following

rules apply.
 Activity is represented by a straight arrow with circles at both

ends ( ). The direction of the arrow indicates the
direction of flow of the project. Unlike bar chart, length of
arrow does not represent the duration of the activity.
 Events are represented by the circle. The circle at the
beginning of the activity (event) is known as tail event/burst
event where as circle at the end of the activity (event) is
known as head event/merge event. Event is symbolically
represented by numbers or alphabets written inside the circle.
In a network, some events work as head event for an activity
and tail event of another activity. Such events are known as
Dual Role Event.
Generally, the name of the activity (Or symbol of the activity is) is
indicated above the arrow while the duration of the activity is
indicated below the arrow.
Earthwork in Excavation Construction of Wall

1 2 3
7 days 12 days
7 days
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Event 1 is the tail event of Activity – Earthwork in excavation
Event 2 is the head event of activity – Earthwork in excavation as

well as tail event of activity – construction of wall. Hence event 2 is
dual role event.
Event 3 is the head event of activity – construction of wall
11 2 3
Tail/ Burst event Head/ Merge event Dual Role event
5. Dummy activity
A dummy activity is an imaginary (hypothetical) activity included in

a network. Since it is not a real activity, it does not consume time,
manpower, material and other resources. It is included in a network to
maintain the relationship between activities appropriately. It is
represented by dotted arrow.
Uses of dummies: Dummies serve two purposes in a network:
a) Grammatical purpose and b) Logical purpose
1. Grammatical purpose: It is used to prevent two arrows having

common beginning and end nodes for two or more activities.
For example, consider the arrows of activities A and B; both
starts from node 1 and end at node 2. Due to this an
inconvenience results when the network is used for

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computation, i.e., uniqueness in the identification is lost. This

inconvenience frequently leads to mistake.
A 2
Dummy
1
B 3
2. Logical purpose: Dummies are also used to give logical clear

representation in a network having an activity common to two
sets of operations running parallel to each other.
A B
4 5 8
Dummy
D
C
6 7 9
A – Wait delivery of new machine
B – Install new machine
C – Remove existing machine
D – Dispose of existing machine

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Set 1 activity A and B are to be performed serially while Set 2

activities C and D are to be performed serially. Both the sets are
performed simultaneously. However, for practical considerations, we
find that activity D of set 2 cannot be performed unless activity A of
set 1 is completed. Hence a dummy is used joining node 2 and 5
indicating that activity D cannot be started unless activity A is
completed.
(Note: Unnecessary dummies makes network messy and creates

confusion)
6. EST (Earliest Start Time): It is the earliest possible time an

activity or operation can be started. It is equal to earliest
occurrence time of tail event of that activity.
7. EFT (Earliest Finish Time): It is the earliest possible time
for completion of an activity or operation without delaying
the project completion time. It can be computed by adding
activity duration by EST.
i
ti-j j
EFT (i-j) = EST (i-j) + ti-j

8. LFT (Latest Finish Time): It is the latest time the activity or
operation must be completed so that scheduled completion
date of the work can be achieved. It is equal to latest
occurrence time of head event.
9. LST (Latest Start Time): It is the latest possible time; an
activity can be started without delaying the project. (LFT-D)
i ti-j j
LST (i-j) = LFT (i-j) - ti-j

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Rules of Drawing Network diagram
The following network rules are noteworthy
1. All activities shall be represented by way of straight arrows

pointing towards the right. This means flow of network shall
be from the left to the right.
2. There must be only single initial node as well as ending node
in a network. Initial node has only outgoing arrow where as
ending node has incoming arrows.
3. An event cannot occur twice, i.e. there cannot be any network
path looping back to previously occurred event. No event
depends, for its occurrence upon the occurrence of a
succeeding event. Thus network shown in figure below is
incorrect.
2
4 5
1
4. There shall not be any criss-crossing of arrows. Fig

below shows a network in which two arrows cross each
other, which is not permitted.
3
F
B
A 2 5
1
D E G
4
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The network following the same logic can be drawn as below.
A C 5
F
1 2 B
3
G
D E
4
5. There should be only one arrow for an activity, i.e. number of
arrows should be equal to number of activities.
6. There shall not be unnecessary dummy activities in the
network. Dummy activity shall be introduced only when it is
absolutely necessary and without which the network diagram
cannot be completed.
Numbering the events:
It is essential to number the events or node points correctly. The

activities joining the nodes can better be identified on the network by
the event numbers at the tail and head of the activity. The event
numbering should be scientifically done so that they reflect their
logical sequence. In a big network, the problem of numbering can be
simplified if the rules devised by D.R. Fulkerson are followed. The

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sequential numbering to the events may be assigned in the following

steps:
1. Number the initial event as 1

2. Neglect all the arrows emerging out of the initial event
numbered 1.
3. Doing so will apparently provide one or more new initial
events. Number these apparently produced new initial events
as 2, 3, 4 etc.
4. Again neglect all emerging arrows from these numbered
events; will create few more initial events.
5. Follow step 3 such that tail event have lower number than the
head event.
6. Continue this operation until the last event, which has no
emerging arrows, is numbered.
Skip numbering:
In large projects all the activities cannot be correctly foreseen and

included in the network. It may need modification in the form of
addition and/or deletion of activities during execution. Tedious task
of renumbering the events after modification can be avoided by
numbering the events in the multiple of 10s (like 10, 20, 30, 40, etc)
instead of as 1, 2, 3, 4 etc. This method of numbering of events is
called skip numbering.
Example 2.2:
Draw a network with the following details. Number the events using
Fulkerson’s rule
SN Activity Predecessor Successor

1 A - B, C
2 B A D
3 C A E, F

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4 D B G
5 E C G
6 F C -
7 G D, E -
Solution: D
B 3 5
G
A 2 E
1
C
F
6
4
Example 2.3
Draw a network with the following details. Number the events

using Fulkerson’s rule.
SN Activity Predecessor Successor

1 A - B, C
2 B A D
3 C A D E, F
4 D B F
5 E C -
6 F C, D -
Solution
B 3
5
A Dummy F
1 2 C
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E
4 6
Activity on Node (AON):
It uses circle to represent the project activities, with arrows linking

them together to show the sequence in which they are to be
performed. The main advantages of AON techniques are that it does
not require dummy activity and show EST and LST directly in the
network. In AOA there can be only one type of relationship between
activities i.e. Finish to Start however in AON it is possible to
establish four types of relationship as mentioned in Linked bar chart.
2.5 Critical Path Method / Critical Path Analysis
A network represents the logical sequence of activities contained in

the project. The activities are represented by arrows and arrows flow
from left to right. In a network, there may be many paths starting
from the initial event and leading to the last event. If the duration of
all the activities that lie on particular paths is added, it gives the
duration of the path. Each path in a network will have a different
duration. The path that has the longest duration is called the critical
path and the activities lying on the critical path are critical activities.
It is the critical path that sets the overall duration of the project. In a
following network, there are seven activities and from event 1 to
event 6 there are three paths.
D (3)
B (2)
3 5
G (4)
E (6)
A (4)
1 2 C (5)
F (1)
6
4
Path Description Duration Remarks

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1 1–2–3–5-6 4+2+3+4 =13 days

2 1–2–4–5-6 4+5+6+4 =19 days Longest/Critical
path
3 1–2–4-6 4+5+1 =10 days
Thus Activities A, C, E and G are critical activities and Project

duration is 19 days.
Characteristics of Critical Path:
1. Critical path is the longest path (time wise) connecting the

initial and final events.
2. Critical activity may run through dummy activity/activities
also.
3. The number of activities lying on critical path may be less
than the number of activities in other non critical activities.
4. It is possible that a network may have more than one critical
path i.e. if two or more paths have the same time duration
which is maximum, then all such paths will be critical paths.
Finding Critical Path in Large network:
The method of finding out the number of paths available in a given

network connecting the initial and final events, finding the time
duration of all the available paths and identifying the critical paths is
suitable for small networks. If the network is relatively larger in size,
there will be larger number of paths available connecting the initial
and final events. In such cases, it would be cumbersome to find out all
the possible paths. Hence in the case of large networks, a more
systematic procedure is followed to identify the critical path. The

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method uses two series of computations viz., Forward pass

computation and Backward pass computation.
Forward pass computation:
 In the forward pass calculation, all activities in the network

are assumed to start as early as possible.
 The calculation begins from the left to the right side of the
network.
 When two or more activities merge into an event, the largest
value is taken as an earliest occurrence time of that event.
 Forward pass calculation gives the EST and EFT of each
activity.
Backward pass computation:
 In the backward pass calculation, all activities in the network

are assumed to start as late as possible.
 The calculation begins from the right to the left side of the
network.
 When two or more activity merges at a node, the smallest
value is taken as a latest occurrence time of that event.
 Backward pass calculation gives the LST and LFT of each
activity.
In the following network D (3)

B (2)
5
3
A (4) 2 E (6)
1 G (4)
C (5)
4 6
F (1)

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Event 1 2 3 4 5 6
No.
Early 0 0+4 = 4 4+2 = 6 4+5= 9 6+3= 9 15 + 4 =19
Event
time 9+6 = 15 9+1 = 10
Late 4-4=0 12-2=10 15-3=12 19-1=18 19-4=15 19
Event
Time 9-5=4 15-6=9
Thus in the above network, Events 1, 2, 4, 5 & 6 have both the times
(early event time and late event times) are equal.
What does the critical path signify?
In the above network, Activities A, C, E and G are critical activities.

Since the two time estimates of all the critical activities are same, it
means that succeeding activity in a critical path shall commence
immediately after preceding activity is completed so that project will
be completed in time (19 days). Activity G shall start immediately
after activity E is completed; activity E shall start immediately after
activity C is completed; Activity C shall start immediately after
activity A is completed. If there is any delay in either starting a
critical activity or if time taken to complete the critical activity
exceeds the estimated time, project implementation period will get
extended. Thus it is obvious that only the critical activities get more
attention from the management. Any delay in critical activities lead to
time overrun of the project which ultimately results in cost overrun.
All paths in the network other than critical path are called non critical
path. A non critical path may have only non critical activities or a
combination of both critical and non critical activities.
Activity Float Analysis:
A detailed study of non-critical activities with regard to the ‘free

time’ available is worth doing since it will help in better control of the

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project implementation and better allocation of resources. This study

is known as activity float analysis.
The free time available for the activity is called ‘Float’ or ‘Slack’. An
activity has four types of floats.
1. Total Float 2. Free Float and

3. Independent Float 4. Interfering Float
1. Total Float (TF): Total Float represents the maximum time by

which the completion of the activity can be delayed without
affecting the project completion time. If an activity is delayed by
a time equal to its total float, that activity and all other subsequent
activities in that path become critical.
2. Free Float (FF): It is the delay that can be permitted in an
activity so that succeeding activities in the path are not affected.
If the succeeding activities are to remain un-affected by the delay
in a particular activity the earliest start Time of the head event of
that activity shall not be exceeded.
3. Independent Float (IF): It is the spare time available for the
activity, if preceding activity is started as late as possible and
succeeding activities are finished as early as possible.
4. Interfering Float (IF): It is the name given to head event slack.
It is the difference between total float and free float.
All the floats are equal to zero for critical activities. Critical path is
that path connecting activities having Total Float Equal to Zero.
A
i j
D
E-I L-I E-J L-J
In the above figure, A is the activity which requires D duration to

complete. E-I is the early event time of event I and L-I is the late

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event time of event I. Similarly, E-J is the early event time of event J
and L-J is the late event time of event J.
Total Float (TF) = (L-J) – (E-I) – D or LFT – EFT or LST – EST
Free Float (FF) = (E-J) – (E-I) – D < TF
Independent Float (IF) = (E-J) – (L-I) – D < FF or FF – tail event

slack
Interfering float = TF (I-J) – FF (I-J)

FF Int-F
E-I L-I E-J L-J
TF
Ind-F
6 15 15
In the above example: D (3)
3 5
0 B (2)
4 12
G (4)
1 A (4)
2 C (5) 9
E (6)
19
0 4 F (1)
4 6 19
S.N. Activit Duratio EST EFT LST LFT TF FF In In Remark

y n d t
1 A 4 0 4 0 4 0 0 0 0 Critical
2 B 2 4 6 10 12 6 0 0 6

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3 C 5 4 9 4 9 0 0 0 0 Critical
4 D 3 6 9 12 15 6 6 0 0
5 E 6 9 15 9 15 0 0 0 0 Critical
6 F 1 8 10 18 19 9 9 9 0
7 G 4 15 19 15 19 0 0 0 0 Critical
Use of different floats for management decisions:
1. Total float belongs to the path. If the total float is used

entirely for an activity, it would make that activity and all
other activities in that path critical. Hence it is not advisable
to use the total float completely in an activity as there will be
no cushion available if subsequent activities need additional
time for completion than originally planned.
2. Free float can be used completely for the activity since this
does not disturb the succeeding activities. However the
preceding activity should have been completed as planned.
3. Independent float of an activity does not depend on preceding
activities and it also does not disturb succeeding activities.
Hence independent float can be used without any constraint.
In view of factors explained above, floats should be judiciously used

while managing a project. If the first level supervisor is in charge of
only one activity, he can be given only independent float to maneuver
his activity completion time. His immediate supervisor can be given
the option to exercise the use of free float. Use of total float is to be
done only by the project manager who is overall in charge of the
project. As far as possible, total float should be used only very
exceptionally.
Steps in Critical Path Analysis
1. Develop a list of tasks using work breakdown structure.
2. Order and determine immediate predecessors for each task

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3. Estimate completion time for tasks.
4. Layout a project network using tasks and their predecessors.
5. Determine earliest start and finishing times using a forward pass

through the network.
Equations: forward pass EST of the activity is Early occurrence time

of tail event and EFT = EST + D
6. Determine the latest start and finish times for each task. LFT is
equal to the Latest occurrence time of the head event and LST = LFT
– D.
7. Determine slack/ float for each task using difference between latest
and earliest start times.
8. Find tasks with zero slack. These are critical tasks lying on the
critical path.
Example2.3
Draw a CPM network diagram. Find Critical path, critical activities,

project duration, EST, EFT, LST, LFT, TF, IF (both independent and
interfering).
S.N. Activity Duration (weeks) Predecessor Successor

1 A 1 - C,E
2 B 6 - C,D
3 C 2 A,B F
4 D 2 B H
5 E 4 A G
6 F 3 C G,H
7 G 4 B,F I
8 H 2 D,F I

29
9 I 5 G,H J
10 J 3 I -

30
Solution
19 20
3 8 E (1) 8
G (5)
2
8 12 25 33 42
A (3) J (9)
0 C (4) I (8)
F (7)
4 5 6 9 10 11
1
12 25 33
8 42
0 B (8)
3 7 H (6)
D (2)
SN 8
Activity 8Duration EST EFT 19
LST 19
LFT TF FF Ind Inf Remark
1 A 3 0 3 5 8 3 0 5 3
2 B 8 0 8 0 8 0 0 0 0 Critical
3 C 4 8 12 8 12 0 0 0 0 Critical
4 D 2 8 10 17 19 9 9 9 0
5 E 1 3 4 19 20 16 15 16 1
6 F 7 12 19 12 19 0 0 0 0 Critical
7 G 5 19 24 20 25 1 1 0 0
8 H 6 19 25 19 25 0 0 0 0 Critical
9 I 8 25 33 25 33 0 0 0 0 Critical
10 J 9 33 42 33 42 0 0 0 0 critical
 The critical path is shown by the dark arrow line which is 1-3-4-5-6-7-9-10-11
 The critical activities are B,C,F,H,I,J
 The project duration is 42 weeks.
2.5 PERT – Program Evaluation and Review Technique.
Project manager would be interested in completing the project at the minimum possible time but it is not
entirely in his hand to do so. There are many factors, both internal and external to the organizations which
have influence on the completion time of each activity in the project. Thus, there is an element of
uncertainty in deciding upon the completion time of each activity and consequently the estimated project
completion time. It is a probabilistic approach for estimating the duration of an activity and event oriented
network diagram. PERT is used in the completely newly developed project such as Research and design,
new industries product design and there may not be record of past experiences in the particular field.

31
PERT system is preferred for those projects in which correct time determination for various activities
cannot be made.
PERT uses three time estimates for each activity with a view to overcome uncertainty in time estimates.
a) Optimistic time estimate

b) Pessimistic time estimate
c) Most likely (probable) time estimate.
a) Optimistic time estimate (to): It is the shortest possible time in which an activity can be
completed under ideal conditions. In arriving at the optimistic time estimate, it is assumed that
everything is favorable in completing the activity in the shortest possible time.
b) Pessimistic time estimate (tp): It is the maximum possible time it would take to complete an
activity under worst conditions. In arriving at the pessimistic time, it is assumed that everything is
unfavorable for completing the activity in time and every possible delay and difficult situation is
encountered.
c) Most likely time estimates (tm): It lies between optimistic and pessimistic time estimates. It is
the time in which an activity can be completed under normal conditions. In arriving at the most
likely time, it is assumed that conditions are neither favorable nor unfavorable, but normal.
The supervisor or the foreman who is in direct charge of an activity is asked to estimate the three time
estimates taking into account, favorable, unfavorable, and normal conditions. In assuming unfavorable
conditions, extremely unfavorable situations such as floods, fires, earthquakes, labour strikes etc. are
excluded.
Expected time estimate (te): PERT assumes that the optimistic time (to) and the pessimistic time (tp) are
equally likely to occur while the most likely time (tm) is four times more likely to occur than the others.
Hence for arriving at the expected time (te) we use following formula
te =
To arrive at this formula we must assume some functional form of the activity time as shown in the figure
below. It was observed that beta distribution suits well for the purpose and hence same was accepted as a
mathematical model for arriving at the mean (te). The formula is a linear approximation to +of4tbeta
m + tp
distribution whose accuracy is considered reasonably sufficient.
6
After having arrived at the expected time (te) for each activity, the critical path is found out by making
forward pass computation and backward pass computation as in CPM. Variance in activity times:
Consider the following two time estimates.
Activity to tm tp
te =
A 3 4 5 4

32
B 2 3 10 4
For the activities A & B the expected time arrived at is the same. However as seen, the difference
between to and tp is more for activity B than for activity A. Thus, though the estimated expected time (t e)
is the same for both the activities, there is greater extent of uncertainty in the same estimate for activity B.
Thus the reliability of the expected time (te) depend upon the variability of two time estimates to and tp.
There are two measures of variability of possible activity times viz.,
1. Variance and
2. Standard deviation.
PERT uses the following simplified formula for arriving at the variance and standard deviation of
activity times.
Variance (ϑ ) =
Standard deviation (σ) =
Difference between CPM and PERT
CPM originated from construction project where as PERT is originated from R & D projects. Both CPM
and PERT share same approach for constructing the project network and for determining the critical path
of the network. However there are some basic differences between CPM and PERT.
SN CPM PERT
1 Time estimates are Time estimates are probabilistic
deterministic so use single with uncertainty in activity
time estimate for activity duration so use three time
duration. estimates
2 Activity oriented network Event oriented network diagram
diagram
3 Focused on time cost trade Focused on time only; no cost
off
4 More suitable for simple More suitable for new and
and repetitive projects like complex projects like research
construction and development.
5 Easy to maintain. Costly to maintain

33
2.6.2 Resource Leveling
It is an attempt to reduce peak resources requirement and smooth out period to period assignments within
the constraints of project duration. A project manager often comes across mismatch between the
availability of resources and the requirement of resources. This means that there are surplus resources
available on someday and there is deficit of resource on some other days. It will be uneconomical to
permanently employ personnel to satisfy peak time requirements since there will be under utilization of
personnel to many days. Hence only less number of personnel than peak time requirement during peak
time can be handled by hiring on casual basis. Since the personnel requirement varies from day to day, the
project manager should plan properly in such a way that optimum utilization of available personnel is
achieved. Thus the objective of project manager in such a situation is to level as far as possible the
demand for resources throughout the project execution time keeping in view that project completion time
does not exceeds.
Figure2.6: Resource Demand Compared to Resource Availability
Resource leveling is the process that ensures resource demand does not exceed resource availability. The
ideal scenario would be a buildup of resource usage at the beginning of the project and a reduction at the
end of the project. However, the approach to resource leveling will also depend on whether resources are
dedicated to a particular project or shared across several projects and whether there is a need to keep all
resources fully utilized. We will begin by analyzing the issues involved in resource leveling for a situation
where a bar chart has been used as the primary planning technique for a simple project. The reason for
this is that resource leveling must be considered within a time framework and bar charts are drawn to a
time scale while networks are not. Examine Figure 2.4 shown on the previous page. In this figure, the
time-scale for the activities comprising the project is shown in a bar chart, which also shows resource
requirements for one particular resource unit. An examination of the bar chart and its associated resource
chart in Figure 2.4 shows that improvements can be made to the level of resource requirements by:
 Delaying or bringing forward the start of certain activities

 Extending the duration of certain activities and so reducing the demand for resources over the
duration of the activity or by a combination of both of these adjustments

34
However, there are problems with using the simple bar chart as a tool for resource leveling. For example,
we do not have any information about the interdependency of tasks. Therefore, if we delay a task by
starting later than originally planned or by extending the duration of the task, we cannot evaluate the exact
impact this will have on the overall project. Referring to Figure 2.4 again, if we assume that the maximum
amount of resource availability is 14 units, then we have a problem in week 2 because 18 units of
resources are required in that week. In order to reduce the resource demand in week 2, we may have to
extend Activity A into week 3 (if this is possible) and spread the resource demand over three weeks, or
delay the commencement of Activity B. However, the exact impact of these changes on the overall
project duration cannot be easily determined.
Another issue is that the critical path(s) cannot be easily determined, although we may be able to deduce
which activities are critical by inspection. Clearly, if we do not wish to extend the overall duration of the
project we must avoid extending or delaying activities which are on the critical path. Finally, the
availability of slack or float is not clear. Knowing this is important because it is this attribute that can be
utilized to adjust our resource requirements.
Resource leveling can be accomplished more easily if resource requirements to complete an activity are
expressed in terms of hours or days required. The definition of resource requirements using such units of
measure can help us determine if an activity should be completed in a short time through the use of many
resources or over a longer period of time through the use of fewer resources. In practice, however, there is
a limit to the number of resources that can be deployed and, therefore, a limit to the amount by which any
activity duration can be shortened. We will now examine situations where networks are used as the
primary planning method. Generally, there are two approaches to leveling and smoothing the resources
required:
 Time-limited resource considerations: In this case emphasis will be placed on completing the
project within a specified time. This time will usually have been determined by network analysis.
Adjustments in the timing of any activity, and the resources required at a given time, must be
undertaken within the float (slack) available. Obviously there can be no adjustment of activities
which are on the critical path.
 Resource-limited resource considerations: In this case the project must be completed with the
resources available even if this means extending the project duration. If the total resource demand
exceeds the resource availability at any time then some of the activities must be delayed until
there is sufficient resource availability.
For both of the above approaches, information concerning the earliest and the latest start times and slack
will be used to level resources.

35
Monitoring
Monitoring is collecting, recording and reporting information concerning all aspects of project
performances that the project managers or others in the organization wish to know. Monitoring is primary
aimed at tracking and improving project implementation. It is a continuous process.
Evaluation
Evaluation is an objective and systematic judgmental process for determining relevance, efficiency
effectiveness and impact of project performance. It is done to improve project implementation and to
improve future project planning and decision making.
Monitoring is usually an ongoing activity throughout the life of the project whereas evaluation is periodic.
It is undertaken at certain time such as mid-term or/and termination of the project.
Controlling
Controlling is the management function of comparing the actual achievements with the planned ones at
every stage and taking necessary action, if required, to ensure the attainment of the planned goals. It
includes three step processes – measuring, evaluating and correcting - which are defined as follow.
Measuring: Determining through formal and informal reports the degree to which the progress
towards objective is being made
Evaluating: Determining cause of and possible ways to act upon significant deviations from planned
performances
Correcting: Taking control action to correct an unfavorable trends or to take advantage of an

unusually favorable trend
Thus controlling ensures that - “Right things are done in right time in right manner”.
3.2 Project Control System (PCS)
During planning stage, various resources are planned based upon the analysis made for time and cost,
such plans in most of the cases cannot be precise and correct since each project is unique on its own.
Planning of new projects cannot be considered as wholly true and infallible (never failing). In fact
planning is an intelligent guess. However if the project is left on its own, there is every chance that
estimated resources will fall short and project requirement will go on increasing as the project proceed for
implementation. Therefore appropriate control system is necessary which will detect such occurrence and
allow opportunity to take corrective actions to bring the project back on track. Project Control System is a
process or mechanism for continuing regular monitoring and controlling of a project. It serves two major
functions. They are:

36
1. Ensures regular monitoring of performances

2. Motivates project personnel to strive for achieving project objectives
3.5 Project Control Cycle
The project control cycle begins with the initial project plan.
Item1: Project plan includes a budget, schedule and other planning information such as staffing and
administrative procedures. It identifies the resources such as equipment, people and materials that are
needed at job site.
Item 2: The project plan is used to initiate the field operations. The field supervisors are responsible for
the productive utilization of resources.
Item 3: It represents the impact of external factors such as labor strike, vandalism, bad weather or other
events that are difficult to predict and affect the field operations.
The arrow between field operation and cost/schedule engineers block represents the processing of the
actual information from the field.
Item 4: The cost/schedule engineer block represents the coordination of data from the field and
comparison with the initial plan. The technical people who established the initial work plan are
responsible for recommending the adjustment to plans based on their analysis of actual field operations.
Item 5: It represents the permanent storage of information for use by the company in future job planning.
The arrow between the cost/schedule engineers and project manager block represents the distribution
(spreading) of status reports to the project team. For the reporting process to be useful, it must deliver
accurate information to the right people on time. The reports should also be sorted to indicate the more
important activities first with key variances noted.

37
Initiate plan
Adjust plan as Work
needed Plan (1)
Project
manager (6)
Use
Outside input to
External factors Field
com
(3) operation
pare
(2)
to
actu
al
data
Actual field data
Cost/Schedule
Analyze, Engineers (4)
recommend
action Historical data
base (5)
Fig3.2: Project Control Cycle

Item 6: It represents the final decision point in the control process. The goal of the project control system
is to deliver to the decision makers accurate and timely project status information so that intelligent
decisions can be made. A plan has been set and actual progress has been measured. Management must
now decide the best course of action to take. Outside input should come in the form of technical staff or
consultant support.
The arrow from the project manager back to field operation represents the completion of project control
cycle. Management has made a decision and final instructions are now being given to the field.
Adjustment may be made in a project plan, or the instruction may be continue on as originally scheduled.
For these instructions to be effective, they must be delivered soon enough to be smoothly implemented.
The project control cycle is a feedback loop providing all the participants with a measure as to the success
of their past decision.

38
3.6 FEEDBACK CONTROL SYSTEM
Feedback is the process of extracting information from the output level and then feeding it back to the
input. Hence the results of the execution process are feedback. In the perfect world, the tangible results
of the execution process i.e. output / performance can be estimated accurately.
Feedback Control System
Input Output
PROCESS
Feedback
Fig3.3: Feedback control system
Once the resources and the control strategy are fixed, the planning process will give the exact output such
as exact cost, exact time of completion etc. However, in a project there may be unpredictable events that
act on the process as disturbances i.e. in these cases the feedback control system is necessary. In
feedback control system, direct variance is obtained by subtracting plan data from implementation data to
be given a positive or negative variance. It can be used to show differences between actual progress and
planned target, the resources use against estimated quantities or budget.
In feedback control system, information about the results of the activity is fed back to the persons who are
the actors themselves. In a system control, the communication network is set up in such a way that
information about deviations is at once transmitted to the person, who can take the corrective actions such
as adjustment on resources. Hence the control process of the project can be supported by introducing
elements of feedback control theory. A perfect leader should develop a system for performance revision,
and at each revision control action is taken.
3.7 COST CONTROL
Cost control may be broadly defined as the process of controlling the expenditure in a project at all stages
from its inception through its development. Cost control means controlling changes to project budget.
Cost control is equally important to all firms, regardless of size. Small firms generally have tighter
monitory control, mainly because they have fewer project and the risks of failure of project are high.
Unlike this, larger firms usually have several projects and even if one project fails, they have the luxury to
spread project losses over several projects. So, larger firms may have less sophisticated control
techniques.

39
Figure below presents graphical presentation of Earned Value Analysis (EVA).
Graphical presentation of Earned Value Analysis (EVA) Fig3.7: Earned Value Analysis
Study point of time If a bottleneck appears at any

point in the production line, the
ACWP
affect on the cost and time of
BCWS the completed item can be
CV
identified. Any deviation from
the activity S-curve is reported
SV
BCWP
immediately acted upon.
Cost
For conducting EVA, we must first

define following terms:
Budgeted cost for work

scheduled (BCWS)/planned
value:
Time
It is the budgeted amount of cost for work scheduled to be accomplished plus the amount of level of effort
or apportioned effort scheduled to be accomplished in a given time period. In simple term, BCWS is the
value of work that should have been done at a given point of time i.e. expected expenditure at given point
of time (review date).
Budgeted cost for work performed (BCWP)/earned value:
It is the budgeted amount of cost for completed work, plus budgeted level of effort or apportioned effort.
This is sometimes referred to as "Earned Value". In simple term, BCWP is the value of work done at a
point of time.
Actual cost for work performed (ACWP)/actual value:
It is the amount reported as actually expended in completing the work accomplished within a given time
period. In simple term, ACWP is the actual cost of work done at a point of time.
These costs (BCWS, BCWP, ACWP) can be applied to any level of the work break down structure (i.e.
program, project, task, subtask, work package) for work that is completed Using these definitions, the
following variance definition can be obtained:
 Cost Variance (CV) = BCWP – ACWP
If it is 0, you are right on budget. If it is negative, you are over budget. If it is positive, you are under
budget.

40
 Schedule Variance (SV) = BCWP-BCWS
If it is 0, you are right on schedule. If it is negative, you are behind schedule. If it is positive, you are
ahead of schedule.
 Cost Variance Percent (%) (CVP) = (CV/BCWP) * 100

 Schedule Variance Percent (%) (SVP) = (SV/BCWS) * 100
Schedule performance index (SPI) = BCWP/BCWS
(Value below 1 indicates that the project is behind schedule.)
Cost performance index (CPI) = BCWP/ACWP
(Value below 1 indicates that the project is over budget.)
New Duration estimate = original time estimate / SPI
New Cost estimate = original cost estimate / CPI
Capital structure, some time known as financial plan (Capital plan or financial plan) refers to the
composition (makeup) of long-term sources of funds, such as debentures, long-term debt, preference
share capital, and equity share capital including reserve and surplus. Some companies do not plan their
capital structure and it develops as a result of the financial decision taken by the financial manager
without any formal planning. Such companies may prosper in short term, but ultimately will face
considerable difficulties in raising funds to finance their activities. With unplanned capital structure,
organization may also fail to economies the use of their funds. Consequently, it is being increasingly
realized that an organization should plan its capital structure to maximize the use of funds and to be able
to adapt more easily to the changing conditions.
4.5 Introduction to Budgetary Control
Budgetary control is a process of comparing the actual performance with budgeted performance and
taking an action to correct the budget variance. It helps in comparing the actual result with the
corresponding budget data to know the actual cause of differences. It can also be defined as: "The process
which keeps the actual standard as nearly as possible to the predetermined standards by strict
supervision". The purpose of budgetary control is to provide benchmark for controlling performance of
managers, subordinates by comparing actual performance with the budgeted performance and taking
actions to correct the budget variances.

41
4.5.1 Objectives of budgetary control
The main objectives of budgetary control are:
 To provide benchmark for controlling performance of managers and their subordinates by comparing
actual performance with the budgeted performance and taking actions to correct the budget
variances.
 To provide timely information to managers on facts related to:
 True picture of work progress

 Relationship between actual and budgeted performance
 Extent of profit and losses
 Potential problems
 To helps utilize resources in the best possible for maximizing the output
 To provides basis for revising financial policies
4.5.2 Steps in budgetary control
1. Realistic plans are prepared to provide direction to carry out business operations.
2. Actual performance for each area of responsibility is measured. Generally, the accounting system
is used to measure actual performance in financial terms.
3. Actual performance is compared with the budgeted performance to identify significant deviation.
4. Feedback mechanism is prepared to inform the management about deviations from budgets
5. Corrective action is taken to ensure the future performance is in accordance with budgets (plans).
Some corrective action may involve motivating people to implement policies, modifying certain
policies, etc.
4.5.3 Advantages of budgetary control

1. It clearly defines the goals of the business concern.
2. It helps in making plans to attain these goals.
3. It helps in determining the policies of the concern.
4. It controls expenditure.
5. It gives the advance complete information regarding amount of capital needed for the budget
period.
6. It also helps to control the financial position of the undertaking.
7. It helps management in controlling the causes of inefficiency.
8. It promotes co-operation among different executives for determining future policies and plan.
9. It acts as a tool for administration.
10. It gives the idea that where executives action are required to obtain desired results.
11. It helps in measuring the performance of each department of the concern.
12. It centralizes management control.

42
4.1 Capital Budgeting: Introduction
Capital budgeting decision is the investment decisions of a firm. It may be defined as the firms' decision
to invest its current funds most efficiently in long term activities in anticipation of an expected flow of
future benefit over a series of years. The long term activities are those activities which affects firms'
operations beyond the one year period.

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1

Project is a one which starts from scratch with a definite mission,

“A project can be defined as a unique task (however large or small)

1.1 Characteristics of project

A project has the following characteristics:

1. A defined (specific) goal or objectives

1.2 Setting Project Objective and Goal

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

1. Make sure that we have identified the right target.

When we set out to define project objectives there is useful acronym

S = Specific (Clear and well defined)

M = Measurable so that project outcome can be measured

A = Achievable and Agreed by all the members of the team

R = Realistic, possible under limited set of resources

T = Time framed, if there is not pressure to complete the

1.3 Project life cycle& phases

Project is a temporary job. It cannot continue endlessly. A project

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

following important five phases contribute to develop a project from

Project Management Concept

 All work is a process and processes combine to create a phase

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

 Various phases with well defined milestone make up a

The tasks involved in project planning are:

1. Feasibility study: It determines the implementability of the

 What activities need to be done in the project?

2.3.1 Gantt chart/Bar chart

The oldest formal planning tool is the bar chart. It is developed as a

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

mechanical engineer, hence also called Gantt chart in his respect.

A Gantt chart is constructed with a horizontal axis representing the

Fig: 2.1 Basic Gantt chart

Horizontal bars of varying lengths represent the sequences, timing,

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

representative bars at the points in time when you expect to undertake

Steps in Preparing Bar Chart:

The following are the important steps in developing a bar chart.

1. Identify different activities within the work: Prepare Work

Advantages of Bar chart:

The advantages of Bar chart are:

1. It is simple to understand: Even a person with little education

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

2. It is easy to prepare, consume less resources and economical.

Figure 2.2: Progress shown in bar chart

Disadvantages /Limitation of Bar chart

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

only after completion of some other activities. Similarly some

A project consist of 8 activities A,B,C,D,E,F,G,H with their time of

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

 Activity A and B can be performed in parallel

Here the project completion time is 13 week.

To overcome some of the limitations of Bar chart, Milestone Chart

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

2.4 Network Technique

Network technique is one of the modern tools of Project management.

a) Critical Path Method – CPM developed in the year 1957 by

For understanding as to how a network for a project is drawn, we

1. Activity (Task): An activity is any identifiable job which requires

Er. Santosh Kr.Shrestha Er. Ishwar Adhikari

diagram represents activity. The following are the examples of

Relationship between activities:

A project is a collection of various activities and those activities are

Concurrent (Parallel) Activities: Those activities which can be