MGMT 2012: Introduction to Quantitative Methods

Project Management:
PERT/CPM
Lecture 5

Lecturer : Dr. Dwayne Devonish

Learning Objectives
Students should be able to:

Identify, assess, and organise the various
elements/activities of a project,

Conduct a critical path analysis of a
project using PERT/CPM,

Compute a projects total completion time,
and
determine
the
probability
of
completion time.

Project management scenarios

PERT/CPM tools can be used for:
 Research and development of new
products or processes,
 Construction of plants, buildings, and
highways
 Designing and installation of new systems
 Maintenance of large and complex
equipment
Planning complex events such as
weddings, conferences, festivals, etc

PERT/CPM
Questions that can be addressed with
PERT/CPM include:

When will the entire project be completed?

What are the critical activities or tasks in the
project i.e. the ones that can delay the entire
project if they are late?

What are the noncritical activities in the project
i.e. the ones that can run late without delaying
the project

Is the project on schedule, behind schedule or
ahead of schedule?

Steps of PERT/CPM
1.
2.
3.
4.
5.

6.

Define the project and all of its significant

activities and tasks,
Develop the relationships among the activities
decide which activities must precede others,
Draw the network connecting all of the
activities,
Assign time estimate to each activity
Compute the longest time path through
network critical path (first network diagram
input start and finish times).
Use network to help plan, schedule, and
monitor the project

Example of Project: Devonish

Building Project
Several activities must be completed for Devonish
Construction to expand an old shopping centre to
accommodate 8 more businesses.
A list of
activities must be drawn up for this expansion
project which is Step 1 (define the tasks/activities
associated with overall project), and relationships
must be developed to highlight which activities
must precede other activities (Step 2).
An immediate predecessor (for a given activity) is
an activity that must be completed immediately
prior to the start of that given activity.
SEE TABLE NEXT SLIDE:

Activity List for Devonish Project

Activity
A

Description

Immediate
Predecessor

Prepare architectural drawings

-

Identify potential tenants

-

Select contractor

Prepare building permits

Obtain approval for permits

Perform construction

Finalise contracts with tenants

Tenants move in

C, E
B
F,G

Step 3: Draw Network Diagram

There are two network diagrams that can be used:
activity-on-node (AON) diagrams and activity-on-arrow
(AOA) diagrams.
AON diagrams are more popular and easier to
understand.
In AON diagrams, a separate activity is represented on
each node (rectangular box) in the diagram; the arcs
(arrows) show the predecessors for the activities.
For example, arrows from A leading to C and D
indicate that A is an immediate predecessor (i.e.
must be completed before) for both C and D.

Draw Network Diagram

A

C
FINISH
D

START

F
H
G

This network diagram shows activities on nodes (square

blocks). This diagram is not complete as time estimates
must be entered within various slots of each node which
are expressed in an upcoming table. The arrows show
which activities are related (i.e. must be completed after
certain activities).

Step 4 Assigning time estimates

Each activity must be assigned a time estimate

which indicates the activity completion time.
In CPM, activity times are known with certainty.
Hence, you assign a particular time estimate for
each activity.
However, in PERT (for uncertain times), a
combined average of 3 time estimates for a
given activity is computed (i.e. expected time or
T); these 3 estimates are:
1. Optimistic time (a) time an activity will take if
everything goes as well as possible
2. Pessimistic time (b) time an activity will take
assuming very unfavourable conditions.
3. Most likely time (m) most realistic time
estimate for a given activity.

Time Estimates Table (in weeks)

Activity

Optimistic
Time: a

Most Likely
Time: m

Pessimistic
Time: b

13

23

Note. Optimistic time for a given activity is always the shortest time estimate.
Pessimistic time is always the longest time estimate. Most likely time
estimate is always the one in the middle. Look at each activity above and see.

Expected Time and Variance

From this table, recall we need to obtain a combined

average which is referred to as the expected activity
time (denoted as t). We also have to compute the
variance of the activity time to determine the variation
in completion time (given the times are uncertain).
A. For expected activity time, the formula is:

T = a + 4m + b , so for Activ. A :T = 1 + 4(2) + 3 = 2
6
6
B. The variance is computed by the formula:

V = (b a)2 so for Activ. A : V = (3 1)2 = 4
( 6 )
( 6 ) 36

Time Estimate Table (2)

Activity

A
B
C
D
E
F
G
H

Optimistic,
a

Most
Likely, m

Pessimistic Exp.
b
T
3
2

4/36

4/36

16/36

36/36

13

23

14

196/36

4/36

4/36

Var.
4/36

Step 5: Find Critical Path

Now, we have to find the critical path i.e. longest time
path through the network. This gives us the total
completion time of the project.
Firstly, for each node (i.e. activity), we compute four
important quantities:
Earliest start time: (ES): the earliest time an activity
can begin (without violating immediate predecessor
requirements)
Earliest finish time: (EF): the earliest time at which an
activity can end.
Latest start time: (LS): the latest time an activity can
begin without delaying the entire project
Latest finish time: (LF): the latest time an activity can
end without delaying the entire project

AN ACTIVITY NODES
FORMAT
ACTIVITY

EXPECTED TIME
ESTIMATE

EARLIEST START TIME

(ES)
LASTEST START TIME
(LS)

EARLIEST FINISH TIME

(EF)
LATEST FINISH TIME
(LF)

Six pieces of information must be entered with six

slots of an activity node: Activity Type, Expected
Time, ES, EF, LS, and LF.

Activity List for Devonish Project

Activity
A

Description

Immediate
Predecessor

Prepare architectural drawings

2
-

Identify potential tenants

3
-

Select contractor

Prepare building permits

Obtain approval for permits

Perform construction

Finalise contracts with tenants

Tenants move in

4
4
14
4
2

C, E
B
F,G

Computing Quantities in Network

We first begin by calculating (earliest start) ES and
(earliest finish) EF times. Activity A and Activity B
can start as soon as the project starts, so we set
the ES for these activities to zero: 0 or Week 0.
Now Activity A has a completion time of 2 weeks,
and Activity B has a completion time of 3 weeks.
Since we have the ES for both of these activities,
we need calculate the EF by adding the time (t) to
the ES. Hence, EF = ES + t. So for Activity A, the
EF is 0 + 2 = 2 (end of week 2); and for Activity B,
the EF is 0 + 3 = 3 (end of week 3).

Act
ES
LS

T
EF
LF

A
0

Network Diagram
2
2

REMEMBER THE EF times of A

and B = ES + T

START

B
0

3
3

Act
ES
LS

T
EF
LF

A
0

Network Diagram
2
2

C
2

2
4

D
2

START

B
0

Act
ES
LS

3
3

Given that A is an immediate

predecessor of
C and D; their ES times
correspond to the EF time of A (=2).
ES time of C is added to its T (=2) = EF= 4
ES time of D is added to its T (=4)=EF= 6

Now E : its ES time is the EF time of D (its

predecessor); and Es EF time = its ES + t

T
EF
LF

A
0

2
2

C
2

D
2

START

B
0

4
6

3
3

2
4

4
6

E
6

4
10

F
10

14
24

C has an EF time of 4 and E has an EF time of 10.

F must start after both of these activities are
completed; hence, the ES time for F will have to
be 10 (bigger or later of the two immediate
predecessors).

10

Act
ES
LS

B is an immediate predecessor of G; so the

ES of G is the EF of B = 3. Hence, EF of G = 7

T
EF
LF

A
0

2
2

D
2

START

B
0

E
6

4
10

G
3

F
10

14
24

4
7

H must be completed after G and F is done;

hence, its ES must 24 (i.e. after the later of
these two predecessor activities)

T
EF
LF

A
0

B
0

2
4

4
6

3
3

Act
ES
LS

START

C
2

2
2

D
2

C
2

2
4

4
6

3
3

E
6

G
3

4
10

4
7

F
10

14
24

H
24

2
26

11

Act
ES
LS

T
EF
LF

A
0

2
2

D
2

START

B
0

Now we have to work backwards to find LS

and LF times (below). Last activity (H) has
the same LS and LF as EF and ES. The LF
times of its immediate predecessors (F and
G) can be worked out: their LFs = LS of H
(=24)
C
2
2

4
6

3
3

E
6

4
10

G
3
20

F
10
10

4
7
24

14
24
24

H
24
24

2
26
26

Now the LS times of F and G are worked out

after their LFs are found as: LS = LF T. LS
of F = 24-14 = 10; LS of G = 24 -4 =20.

E and D are worked out nicely.

Act
ES
LS

T
EF
LF

A
0

START

B
0

2
2

D
2
2

C
2

2
4

4
6
6

3
3

E
6
6

G
3
20

4
10
10

4
7
24

F
10
10

14
24
24

H
24
24

2
26
26

12

Act
ES
LS

T
EF
LF

A
0

2
2

D
2
2

START

B
0
17

Act
ES
LS

3
3
20

A
0
0

B
0
17

2
8

4
10

4
6
6

E
6
6

4
10
10

G
3
20

F
10
10

4
7
24

14
24
24

H
24
24

2
26
26

If you had chosen 8 for the LF for A; this

would have delayed D as its LS (the latest
it can start) must be 2 (End of Week 2).
The delay = As latest finish time would
have been at the end of Week 8.

T
EF
LF

START

B and C are worked out nicely. WAIT: A

has two activities following it, D and C.
Now remember, the LF of A = LS of
following activity. LS of D = 2; LS of C = 8.
Choose the smaller (earlier) of these
times = 2.
C
2

2
2
2

D
2
2

C
2
8

2
4
10

4
6
6

3
3
20

E
6
6

G
3
20

4
10
10

4
7
24

F
10
10

14
24
24

H
24
24

2
26
26

13

Now we can work out critical path

Once we work out our ES, EF, LS, and LF times, we
would have come to our total completion time: i.e. 26
weeks.
We need to determine which activities are our critical
activities i.e. the critical path. We do this by
calculating slack for each activity.
Slack is the length of time an activity can be delayed
without affecting the entire project.
Hence, activities without slack are the critical
activities (i.e. these cant be delayed)
Slack is computed as: LS minus ES or LF minus EF

Critical Path??
Activity

Slack Critical
LS-ES
?

ES

EF

LS

LF

B
C
D
E
F
G
H

17

20

17

10

10

10

10

24

10

24

20

24

17

24

26

24

26

Yes

Yes
Yes
Yes
Yes

14

Critical Path Analysis Results

1.
2.

3.

Hence, the path A-D-E-F-H is the critical path.

The sum of these expected times = 26 weeks.
None of these activities can be delayed without
delaying the entire project.
We are able to answer the following questions:
How long will the project take to complete?
26 weeks
What are the scheduled start and completion times for
each activity?
Look at the ES, LS, and EF, LF times
Which activities are critical and must be completed
exactly as scheduled to keep the project on schedule?
A,D,E, F and H

Variation in Project Time

We recognise that the total project will run for 26

weeks.
Recall we calculated the variance estimates for each
activity.
In particular, the variances of the critical activities
are important as these denote the variation in the
critical activities which can affect the entire project.
To determine overall variation in the entire project,
sum the variances of the critical activities:
4/36 + 16/36 + 36/36 + 196/36 + 4/36 OR
.11 + .44 + 1 + 5.44 + .11 = 7.11
The variance for entire project is 7.11 weeks
squared we need to convert these to weeks by
determining the standard deviation.

15

Variances of critical activities

Activity

A
B
C
D
E
F
G
H

Optimistic,
a

Most
Likely, m

Pessimistic Exp.
b
T
3
2

4/36

4/36

16/36

36/36

13

23

14

196/36

4/36

4/36

Var.
4/36

Probability of Project Completion

We have to find the square root of the variance
(7.11) to obtain the standard deviation (SD) which is
a better estimate of project completion time
variation.
The SD is 2.67 weeks.
This means we are
expecting the project to be completed in 26 weeks
(plus or minus 2.67 weeks).
Now we can do more with this information: Lets say
we have a deadline for our project of 29 weeks.
We can calculate the probability of meeting this
deadline by the following formula:

Z = Due date Expected completion date

SD

16

Probability of Project Completion

So: Z = 29 26 = 1.12
2.67
The z-value of 1.12 is based on the normal
distribution, and represents the number of SDs that
the due date lies from the expected date.
Look at your normal distribution table (this is in your
text as well), look for 1.12 under z column, read the
probability - which is left of this value on the normal
curve. This value is .868.
We have about an 86.8% chance of completing the
project on or before the 29-week deadline.

SoM
Lets use QM for Windows to work out
this example.
You will see how QM software can
make our jobs easier as quantitative
analysts.
We will do some practice in tutorials.

17

Projects with known times

We were using project scheduling analysis
for a project with uncertain times (e.g. we
had to average 3 time estimates).
However, there are situations in which
task times are known (i.e. certain).
Hence, you dont have to worry about
pessimistic, optimistic or most likely time
estimates.
You can generate your
network diagram with certainty. In these
cases, variation is not considered.

A PROJECT EXAMPLE WITH KNOWN TIMES:

LETS DO THIS ONE
Activity

Immediate Predecessor

COMPLETION
TIME

10 days

4 days

A
A, B
D

3 days
2 days
1 day

A
B
C
D
E

18