Project Management

CPM/PERT

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 What exactly is a project?
PM 1 – I’m in charge of the construction of a retail development in the
centre of a large town. There are 26 retail units and a super market in
the complex. My main responsibilities are to co-ordinate the work of
the various contractors to ensure that the project is completed to
specification, within budget and on time.
PM 2 – I am directing a team of research scientists. We are running
trials on a new analgesic drug on behalf of a pharmaceutical company.
It is my responsibility to design the experiments and make sure that
proper scientific and legal procedures are followed, so that our results
can be subjected to independent statistical analysis.
PM 3- The international aid agency which employs me is sending me to
New Delhi to organize the introduction of multimedia resources at a
teachers’ training college. My role is quite complex. I have to make
sure that appropriate resources are purchased- and in some cases
developed within the college. I also have to encourage the acceptance
of these resources by lecturers and students within the college. 2
PM 1 – I’m in charge of the construction of a retail development in the
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centre of a large town. There are 26 retail units le x
and a super market in
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the complex. My main responsibilitiesg are to co-ordinate the work of
s
the various contractors to ho p
ensure that the project is completed to
specification, within A
budget and on time.
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trials on a new analgesicAdrug on behalf of a pharmaceutical company.
newthe experiments and make sure that
It is my responsibility to design
drugare followed, so that our results
proper scientific and legal procedures
can be subjected to independent statistical analysis.
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d e
New Delhi to organize the introduction of multimediauresources
g s t n t s at a
o
teachers’ training college. My role f
is t e a
quite c h in
complex. I have to make
w m e th o d
A ne resources are purchased- and in some cases
sure that appropriate
developed within the college. I also have to encourage the acceptance
of these resources by lecturers and students within the college.
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Project is not defined by the type of outcome it is set up to achieve
 Project
A project is a temporary endeavour involving a connected sequence of
activities and a range of resources, which is designed to achieve a
specific and unique outcome and which operates within time, cost
and quality constraints and which is often used to introduce change.
Characteristic of a project
A unique, one-time operational activity or effort
Requires the completion of a large number of interrelated activities

Established to achieve specific objective

Resources, such as time and/or money, are limited

Typically has its own management structure

Need leadership

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 Examples
– constructing houses, factories, shopping malls,
athletic stadiums or arenas
– developing military weapons systems, aircrafts,
new ships
– launching satellite systems
– constructing oil pipelines
– developing and implementing new computer
systems
– planning concert, football games, or basketball
tournaments
– introducing new products into market

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 What is project management
• The application of a collection of tools and techniques
to direct the use of diverse resources towards the
accomplishment of a unique, complex, one time task
within time, cost and quality constraints.
• Its origins lie in World War II, when the military
authorities used the techniques of operational research
to plan the optimum use of resources.
• One of these techniques was the use of networks to
represent a system of related activities

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 Project Management Process
• Project planning
• Project scheduling
• Project control
• Project team
– made up of individuals from various areas and departments within a
company
• Matrix organization
– a team structure with members from functional areas, depending on skills
required
• Project Manager
– most important member of project team
• Scope statement
– a document that provides an understanding, justification, and expected result
of a project
• Statement of work
– written description of objectives of a project
• Organizational Breakdown Structure
– a chart that shows which organizational units are responsible for work items
• Responsibility Assignment Matrix
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– shows who is responsible for work in a project
 Work breakdown structure
• A method of breaking down a project into individual
elements ( components, subcomponents, activities and
tasks) in a hierarchical structure which can be scheduled
and cost
• It defines tasks that can be completed independently of
other tasks, facilitating resource allocation, assignment
of responsibilities and measurement and control of the
project
• It is foundation of project planning
• It is developed before identification of dependencies and
estimation of activity durations
• It can be used to identity the tasks in the CPM and PERT

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 Work Breakdown Structure for
Computer Order Processing System
Project
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 Project Planning
• Resource Availability and/or Limits
– Due date, late penalties, early completion
incentives
– Budget
• Activity Information
– Identify all required activities
– Estimate the resources required (time) to complete
each activity
– Immediate predecessor(s) to each activity needed
to create interrelationships
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Project Scheduling and Control Techniques
Gantt Chart
Critical Path Method (CPM)
Program Evaluation and Review Technique (PERT)

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 Gantt Chart
Graph or bar chart with a bar for each project activity that shows
passage of time
Provides visual display of project schedule

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 History of CPM/PERT
• Critical Path Method (CPM)
– E I Du Pont de Nemours & Co. (1957) for construction of new
chemical plant and maintenance shut-down
– Deterministic task times
– Activity-on-node network construction
– Repetitive nature of jobs
• Project Evaluation and Review Technique (PERT)
– U S Navy (1958) for the POLARIS missile program
– Multiple task time estimates (probabilistic nature)
– Activity-on-arrow network construction
– Non-repetitive jobs (R & D work)

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 CPM calculation
• Path
– A connected sequence of activities leading from
the starting event to the ending event
• Critical Path
– The longest path (time); determines the project
duration
• Critical Activities
– All of the activities that make up the critical path

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 PERT analysis
• Draw the network.
• Analyze the paths through the network and find the critical path.
• The length of the critical path is the mean of the project duration
probability distribution which is assumed to be normal
• The standard deviation of the project duration probability
distribution is computed by adding the variances of the critical
activities (all of the activities that make up the critical path) and
taking the square root of that sum
• Probability computations can now be made using the normal
distribution table.

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PROJECT COST

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 Cost consideration in project
• Project managers may have the option or requirement to crash the
project, or accelerate the completion of the project.
• This is accomplished by reducing the length of the critical path(s).
• The length of the critical path is reduced by reducing the duration
of the activities on the critical path.
• If each activity requires the expenditure of an amount of money to
reduce its duration by one unit of time, then the project manager
selects the least cost critical activity, reduces it by one time unit,
and traces that change through the remainder of the network.
• As a result of a reduction in an activity’s time, a new critical path
may be created.
• When there is more than one critical path, each of the critical paths
must be reduced.
• If the length of the project needs to be reduced further, the process
is repeated.
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 Project Crashing
• Crashing
– reducing project time by expending additional resources
• Crash time
– an amount of time an activity is reduced
• Crash cost
– cost of reducing activity time
• Goal
– reduce project duration at minimum cost

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 Benefits of CPM/PERT
• Useful at many stages of project management
• Mathematically simple
• Give critical path and slack time
• Provide project documentation
• Useful in monitoring costs

CPM/PERT can answer the following important

questions:
•How long will the entire project take to be completed? What are the
risks involved?
•Which are the critical activities or tasks in the project which could
delay the entire project if they were not completed on time?
•Is the project on schedule, behind schedule or ahead of schedule?
•If the project has to be finished earlier than planned, what is the best
way to do this at the least cost? 19
 Limitations to CPM/PERT
• Clearly defined, independent and stable activities
• Specified precedence relationships
• Over emphasis on critical paths
• Deterministic CPM model
• Activity time estimates are subjective and depend on judgment
• PERT assumes a beta distribution for these time estimates, but
the actual distribution may be different
• PERT consistently underestimates the expected project
completion time due to alternate paths becoming critical

To overcome the limitation, Monte Carlo simulations can be

performed on the network to eliminate the optimistic bias

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 Computer Software
for Project Management

• Microsoft Project (Microsoft Corp.)

• MacProject (Claris Corp.)
• PowerProject (ASTA Development Inc.)
• Primavera Project Planner (Primavera)
• Project Scheduler (Scitor Corp.)
• Project Workbench (ABT Corp.)

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