Network Models

CPM & PERT

Introduction
Program Evaluation and Review Technique (PERT) and the Critical Path
Method (CPM) can be used to plan, schedule and control a wide variety
of projects:
1. Research and development of new products and processes
2. Construction of plants, buildings and highways
3. Maintenance of large and complex equipment
4. Design and installation of new system
Objective of the project managers must schedule and coordinate the
various jobs or activities so that the entire project is completed on time.
A complicating factor in carrying out this task is the interdependence of
the activities.

Introduction
Projects may have as many as several thousand activities
project managers look for procedures that will help them
answer questions such as the following:
1. What is the total time to complete the project?
2. What are the scheduled start and finished dates for each
specific activity?
3. Which activities are critical and must be completed exactly
as scheduled to keep the project on schedule?
4. How long can noncritical activities be delayed before they
cause an increase in the total project completion time?
PERT and CPM can help answer these questions.

Introduction
Many activities associated with this project had never been
attempted previously, so PERT was developed to handle
uncertain activity times.
CPM was developed primarily for industrial projects for which
activity times were known.
CPM offered the option of reducing activity times by adding
more workers and/or resources, usually at an increased cost.
A distinguishing feature of CPM was that it identified trade
offs between time and cost for various project activities.

Project Scheduling with Known Activity Time

The owner of the Western Hills Shopping Centre is planning
to modernizing and expand the current 32-business shopping
centre complex. The project is expected to provide room for
8 to 10 new businesses. Financing has been arranged through
a private investor. All that remains is for the owner of the
shopping centre to plan schedule and complete the expansion
project. Let us show how PERT/CPM can help. The list of
activities, activity description, immediate predecessor and
activity time for the Western Hill Shopping centre expansion
project is given in Table 1.

Project Scheduling with Known Activity Time

Table 1. List of activities for Western Hills Shopping Centre Project
Activity
Immediate Activity
Activity
Description
Predecessor Time
A
Prepare architectural drawings
5
B
Identify potential new tenants
6
C
Develop prospectus for tenants
A
4
D
Select contractor
A
3
E
Prepare building permits
A
1
F
Obtain approval for building permits
E
4
G
Perform construction
D, F
14
H
Finalize contracts with tenants
B, C
12
I
Tenants move in
G, H
2
Total
51

Project Scheduling with Known Activity Time

Using information from table 1, construct a graphical representation
of the project called project network.
Activities correspond to the nodes of the network and the arcs show
the precedence relationships among the activities.
Upper left hand corner of each node contains corresponding activity
letter and activity time appears immediately bellow the letter.
A path is a sequence of connected nodes that leads from the Start
node to the finish node.

Project Scheduling with Known Activity Time

All paths in the network must be traversed in order to complete
the project.
Path that requires most time is the longest path to complete the
project.
If activities on the longest path are delayed, the entire project
will be delayed.
Longest path is the critical path and activities on the critical
path are refereed to as the critical activities for the project.

Project Scheduling with Known Activity Time

ES = earliest start time for an activity

EF = earliest finish time for an activity
t = activity time
EF = ES + t
Earliest start Earliest finish
time
time
A
5

Earliest Start and Earliest Finish Time

A
5
Start

Earliest Start and Earliest Finish Time

A
5

B
6

Start

Earliest Start and Earliest Finish Time

A
5

C
4

Start

B
6

Earliest Start and Earliest Finish Time

A
5

Start

B
6

D
3

C
4

Earliest Start and Earliest Finish Time

A
5

Start

B
6

E
1

D
3

C
4

Earliest Start and Earliest Finish Time

A
5

Start

B
6

E
1

D
3

C
4

F
4

10

Earliest Start and Earliest Finish Time

A
5

Start

B
6

E
1

F
4

10

D
3

G 10 24
14

C
4

Earliest Start and Earliest Finish Time

A
5

Start

B
6

E
1

F
4

10

D
3

G 10 24
14

C
4

H 9
12

21

Earliest Start and Earliest Finish Time

A
5

Start

B
6

E
1

F
4

10

D
3

G 10 24
14

C
4

H 9
12

21

I 24 26
2

Finish

Project Scheduling with Known Activity Time

Continuing the forward pass through the network, the earliest
start times and earliest finish times for all activities in the
network is established. The project can be completed in 26
weeks.
LS = latest start time for an activity
LF = latest finish time for an activity
t = activity time
LS = LF - t
I 24 26
2 24 26
Latest start
time

Latest finish
time

Latest Start and Latest Finish Time

A
5

Start

B
6

E
1

F
4

10

D
3

G 10 24
14

C
4

H 9
12

21

I 24 26
2 24 26

Finish

Latest Start and Latest Finish Time

A
5

0
0

5
5

Start

B
6

E
1

F
4

10

D
3

G 10 24
14 10 24

C
4

H 9 21
12 12 24

I 24 26
2 24 26

Finish

Latest Start and Latest Finish Time

A
5

Start

B
6

0
6

6
12

E
1

F
4

6 10
6 10

D
3

5 8
7 10

G 10 24
14 10 24

C
4

5 9
8 12

H 9 21
12 12 24

I 24 26
2 24 26

Finish

Latest Start and Latest Finish Time

A
5

0
0

5
5

Start

B
6

0
6

6
12

E
1

5
5

6
6

F
4

6 10
6 10

D
3

5 8
7 10

G 10 24
14 10 24

C
4

5 9
8 12

H 9 21
12 12 24

I 24 26
2 24 26

Finish

Project Scheduling with Known Activity Time

Slack is the length of time an activity can be delayed without
increasing the project completion time i.e. Slack = LS ES = LF EF
For example slack associated with activity C is LS ES = 8 5 = 3
weeks implies activity C can be delayed up to 3 weeks and entire
project can be still be completed in 26 weeks, so activity C is not
critical for completion of the entire project.
Similarly, slack associated with activity E is LS ES = 5 5 = 0
weeks implies activity E has no slack, so this is a critical activity can
not be delayed without increasing the completion time for the entire
project.

Table 2. Activity Schedule

Earliest Latest Earliest Latest
Start Start Finish Finish Slack
Activity (ES)
(LS) (EF)
(LF) (LS-ES)
A
0
0
5
5
0
B
0
6
6
12
6
C
5
8
9
12
3
D
5
7
8
10
2
E
5
5
6
6
0
F
6
6
10
10
0
G
10
10
24
24
0
H
9
12
21
24
3
I
24
24
26
26
0

Critical
Path
Yes

Yes
Yes
Yes
Yes

Project Scheduling with Uncertain Activity Time

The H. S. Daugherty Company has manufactured industrial
vacuum cleaning systems for many years. Recently a member of
a companys new product research team submitted a report
suggesting that the company consider manufacturing a cordless
vacuum cleaner. The new product referred to as Porta-Vac, could
contribute to Daughertys expansion into the household market.
Management hopes that it can be manufactured at a reasonable
cost and that its probability and no cord convenience will make it
extremely attractive.

Daughertys management wants study the feasibility of

manufacturing the Porta-Vac product. The feasibility study will
recommend the action to be taken.

Project Scheduling with Uncertain Activity Time

To complete this study information must be obtained from the

firms research and development (R&D) product testing
manufacturing cost estimating and market research groups.
How long will this feasibility study take? All activities that
make up the project and immediate predecessors for each
activity is given in the Table 3. Since this is a new or unique
project historical data that provide accurate activity time
estimate is not known but the probable time period for each
activity is given in the Table 4.

Project Scheduling with Uncertain Activity Time

Table 3: Activity List for the Porta-Vac Project
Activity
A
B
C
D
E
F
G
H
I
J

Description
Develop product design
Plan market research
Prepare routing (manufacturing engineering)
Build prototype model
Prepare marketing brochure
Prepare cost estimate (industrial engineering)
Do preliminary product testing
Complete market survey
Prepare pricing and forecast report
Prepare final report

Immediate
Predecessor
A
A
A
C
D
B, E
H
F, G, I

Project Scheduling with Uncertain Activity Time

Table 4: Optimistic, Most Probable and Pessimistic Activity Time
Estimates (Weeks)
Optimistic
Most Probable
Pessimistic
Activity
(a)
(m)
(b)
A
4
5
12
B
1
1.5
5
C
2
3
4
D
3
4
11
E
2
3
4
F
1.5
2
2.5
G
1.5
3
4.5
H
2.5
3.5
7.5
I
1.5
2
2.5
J
1
2
3

Project Scheduling with Uncertain Activity Time

The PERT/CPM procedure with uncertain activity times, the

expected time (t) is
a 4m b
t
6
With uncertain activity times, the variance of the activity is
2
ba
2

Using the above equations and data from Table 4, the

expected time and variance for all activities is given in the
Table 5.

Table 5. Expected Times and Variances for Activities

Activity
Expected Time (Weeks)
Variance
A
6
1.78
B
2
0.44
C
3
0.11
D
5
1.78
E
3
0.11
F
2
0.03
G
3
0.25
H
4
0.69
I
2
0.03
J
2
0.11
Total
32

Earliest Start and Earliest Finish Time

C
3
A
6

Start

B
2

F
2

11

D
5

11

G 11 14
3

J 15 17
2

E
3

H
4

I 13 15
2

13

Finish

Latest Start and Latest Finish Time

C 6 9
3 10 13
A
6

0
0

6
6

Start

B
2

0
7

F 9 11
2 13 15

D
5

6 11
7 12

G 11 14
3 12 15

J 15 17
2 15 17

E
3

6
6

H
4

I 13 15
2 13 15

2
9

9
9

9 13
9 13

Finish

Table 6. Activity Schedule

Earliest Latest
Start
Start
Activity (ES)
(LS)
A
0
0
B
0
7
C
6
10
D
6
7
E
6
6
F
9
13
G
11
12
H
9
9
I
13
13
J
15
15

Earliest
Finish
(EF)
6
2
9
11
9
11
14
13
15
17

Latest
Finish Slack Critical
(LF) (LS-ES) Path
6
0
Yes
9
7
13
4
12
1
9
0
Yes
15
4
15
1
13
0
Yes
15
0
Yes
17
0
Yes

 T be the total time required to complete the project

(critical path).
Expected value of T is E (T)
= TA + TE + TH + TI + TJ = 6 + 3 + 4 + 2 + 2 = 17 weeks
Variance in project completion time is 2
= 2A + 2E + 2H + 2I + 2J = 1.78 + 0.11 + 0.69 + 0.03 +
0.11 = 2.72
= 1.65
Management allotted 20 weeks to complete the project then
the probability to complete the project before deadline is
0.4656 + 0.5 = 0.9656. (z = (20-17)/1.65 = 1.82)

Considering Time Cost Trade Offs

Original developers of CPM provided the project manager with

the option of adding resources to selected activities to reduce
project completion time. Added resources (such as more
workers, overtime and so on) generally increase project costs,
so the decision to reduce activity times must take into
consideration the additional cost involved. In effect the project
manager must make a decision that involves trading reduced
activity time for additional project cost. Table 7 defines the
activities for two machine maintenance project.

Considering Time Cost Trade Offs

Table 5: Activity List for Two Machine Maintenance Project

Immediate
Expected
Activity Description
Predecessor Time (days)
A
Overhaul machine I
7
B
Adjust machine I
A
3
C
Overhaul machine II
6
D
Adjust machine II
C
3
E
Test system
B, D
2

Considering Time Cost Trade Offs

Table 6. Activity Schedule

Earliest Latest
Start
Start
Activity (ES)
(LS)
A
0
0
B
7
7
C
0
1
D
6
7
E
10
10

Earliest
Finish
(EF)
7
10
6
9
12

Latest
Finish Slack Critical
(LF) (LS-ES) Path
7
0
Yes
10
0
Yes
7
1
10
1
12
0
Yes

Considering Time Cost Trade Offs

From Table 6, the zero slack time and thus the critical path are
associated with activities A-B-E.
The length of the critical path and thus the time required to
complete the project is 12 days.
Now suppose that current production levels make completing
the maintenance project within 10 days imperative.
This shortening of activity times which usually can be achieved
by adding resources, is referred to as crashing.

Crashing Activity Time

Added resources associated with crashing activity times
usually result in added project costs.
To identify the activities that cost the least to crash and then
crash those activities only the amount necessary to meet the
desired project completion time.
To determine just where and how much to crash activity times,
we need information on how much each activity can be crashed
and how much the crashing process costs.

Crashing Activity Time

Hence we must ask for the following information:
Activity cost under the normal or expected activity time
Time to complete the activity under maximum crashing (i.e.
the shortest possible activity time)
Activity cost under maximum crashing
i = expected time for activity i
i = time under maximum crashing for activity i
Mi = maximum possible reduction in time for activity i due to
crashing
Mi = i - i

Crashing Activity Time

Next, let Ci denote the cost for activity i under the normal or
expected activity time and Ci denote the cost for activity i
under maximum crashing. Thus, per unit of time (e.g. per day),
crashing cost Ki for each activity is given by Ki = (Ci - Ci)/Mi
Normal or expected time for activity A is 7 days at a cost of C A
= $500 and time under maximum crashing is 4 days at a cost of
CA = $800.
Maximum possible reduction time for activity A is
MA = A - A = 7 4 = 3 days
Crashing cost KA = (CA - CA)/MA = (800 500) / 3 = 300 / 3 =
$100 per day

Crashing Activity Time

If we decided to crash activity A by only 1 and 1/2 days, the
added cost would be 1.5 ($100) = $150, which results in a total
activity cost of $500 + $150 = $650.
Complete normal and crash activity data for the two machine
maintenance project are given in Table 7.
The critical activities A, B and E, the activity A has the lowest
crashing cost per day of the three and crashing this activity by 2
days will reduce the A - B E path to the desired 10 days.
Crashing the current critical activities, other path may become
critical, so to check the critical path in the revised network and
perhaps either identify additional activities to crash or modify
your initial crashing decision.

Crashing Activity Time

Table 7 Normal and Crash Activity Data

Time (days)
Total Cost
Crash Cost per
Maximum
Normal Crash Reduction Time Day Ki =
(Ci')
(Mi)
(Ci - Ci) / Mi
ActivityNormal Crash (Ci)
A
7
4
500
800
3
100
B
3
2
200
350
1
150
C
6
4
500
900
2
200
D
3
1
200
500
2
150
E
2
1
300
550
1
250