5.

3 CRITICAL PATH METHOD (CPM) and PROGRAM EVALUATION &

REVIEW TECHNIQUE (PERT)

CRITICAL PATH METHOD (CPM)

While analyzing a network of activities, it is often necessary to estimate the total

project time. The total project time is the maximum of the lapsed times among all paths

originating from the initial event and terminating at the terminal event, indicating

completion of the project.

Therefore critical path is that sequence of activities which determines the total

project time in a project network, there may be a number of paths starting from the initial

event and ending in terminal event these paths connect activities. Among these paths

that which is longest on the basis of that during is called the critical path.

Critical Activity

An activity whose float is zero is called critical activity so any delay in the start of

critical activity will cause a further delay in the completion of entire project. Activities

lying on theoretical path are critical activities.

Critical Path Method

The critical path method, known s CPM, is a network technique. It was originally

discovered for applications to industrial situations like construction, manufacturing,

maintenance etc. since then it was found wide acceptance by construction industry with

application to bridges, dams, tunnels, building, highways, power polants.etc.

CPM is a network technique which consists of planning the sequence of activities

to be performed in a network, scheduling the time and resources to various operations

and controlling the performances so that they are not deviating from the plans.

CPM is generally used for repetitive type of projects or for those projects for

which fairly accurate estimate of time for completion of activity can be made and for

which cost estimation can be made with fair degree of accuracy. The critical path

method can be used effectively in production planning, road systems and traffic

schedules, and communication network.

 CPM emphasizes the relationship between applying more resources to shorten

the duration of given jobs in a project and increased cost of these additional resources.

Steps in Critical Path Method

1. List all the activities and draw a network diagram

2. Find the earliest event time and latest event time of each event and show in the

network diagram.

3. Calculate earliest start time, earliest finish time, latest start time and latest finish time

for each activity.

4. Determine the float for each activity

5. Identify the critical activities, having zero floats.

6. Draw double lines in the network diagram passing through critical activities. The

double lines show the critical path.

7. Calculate the total project duration which is the sum of duration of critical activities.

Alternatively, critical path may be identified, easily, as per fooling method.

1. Draw the network

2. Start from the tail event, to the head event identify different paths through the diagram

3. Calculate the total time taken through different paths.

4. Select that path with the longest duration, as the critical path.

5. The activities on the critical path with be critical activities.

CPM Analysis

CPM is a deterministic model. It assumes that both the time to complete each

activity and the cost of doing so is known with certainty. This is known as CPM as it

focuses directly on critical path and critical activities.

Scheduling of activities is done in such a way that critical activities causes no

delay to project, rather time requirement to these activities is reduced by inducing

resources to complete the project before normal times.

CPM was developed in 1957 by J.E. Walker of Du-Pont, to help schedule

maintenance of chemical plant. The fundamental departure of CPM from PERT is that

CPM brings more prominently into the planning and control process, the concept of cost
where the time can be estimated very accurately in advance. Similarly cost can be

calculated accurately in advance.

CPM may be superior to PERT. But when there is extreme degree of uncertainty

and when control over time out weight control over cost, PERT will be a better choice.

Time estimate in CPM

A CPM network is drawn like a PERT network. For CPM only one estimate is

taken instead of three as in PERT. Besides this crash estimates is also made. Crash

time is the minimum time in which the activity can be completed in case the additional

resources are inducted.

Crash cost is the cost of completing an activity in crash time. For the purposes of

simplicity the relationship between normal time cost and crash time cost for an activity is

generally assumed to be linear.

The objective of project crash cost analysis is to reduce the total projected

completion time, while minimizing the cost of crashing. Since the project completion time

can be shortened only by crashing critical activities. It follows that not all project activities

should be crashed.

However, activities are crashed; the critical path may change, requiring further

crashing of previously non-critical activities in order to further reduce the project

completion time. In a nut shell, crashing means adding extra resources and managers

are usually interested in speeding up project at the least additional cost.

Limitations of CPM

The CPM suffers from the following limitations:

1. It operates on the assumption of a precise known time for each activity which may not

be true in real situation.

2. It does not make use of the statistical analysis in the determination of the time

estimates for each activity.

3. It requires repetition of the evaluation of the entire project each time a change is

introduced to the network. This is a very difficult and cumbersome process.

4. It cannot serve as a dynamic controlling device as it was introduced as a static

planning model.
 PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT)

PERT is a network analysis technique in which we try to exercise logical

discipline in planning and controlling projects. It is a network technique which uses a

network diagram consisting of events. The successive events are joined by arrows.

PERT analysis is preferred for those projects or operations which are of non

repetitive nature or for those projects in which precise time determination for various

activities cannot be made. In such projects, management cannot be guided by past

experience. For example, the project of launching a space craft involves the work never

done before. For such research and development projects, the time estimates made for

use may be little more than guesses. PERT system is best suited for such projects.

PERT is useful technique in project planning and control it gives the planner a

perfect idea about the consequence of activities and their times. It is a method of

minimizing delay and interruptions. It helps in coordinating various parts of the overall

job and seeing that every predecessor activity is finished in time for the following activity

to commence.

It shows the way how a project can be finished earlier that the original schedule

of this, resources may be re allocated from activities with spare time to activities that

have spare time.

The main assumption in PERT is that activity durations are independent. That,

time required of one activity has nothing to do with the time for another activity.

Time Estimate In PERT

Time is the most essential and basic variable in project management. Once

activities have been specified and the management has decided, which activity must

proceed and follow others and the network has been drawn, the next step is to assign

estimates of times required to complete each activity.

The time is usually given in units of weeks or days. The degree of success

attained in the network planning process depends upon the accuracy of time estimates

providing time estimates is not always an easy task.

 Without the solid historical data, the managers are often uncertain as to activity

times for this reason, if the time estimates are not deterministic in nature, then the usual

way of expressing this uncertainty is to employ a probability distribution based on three

time estimates for each activity. These estimates are:

1. Optimistic time (t0)

This is the shortest possible time in which activity can be completed, under ideal

conditions. This particular time estimate represents the time in which the activity or job

can be completed if every this goes well with no problems or adverse conditions.

2. Pessimistic time (tp)

It is the maximum time that would be required to complete the activity. This particular

time estimate represents the time it might take to complete a particular activity, if

everything went wrong and abnormal situations prevailed.

3. Most likely time (tm)

It is the time which the activity will take most frequently, if performed a number of

times this time estimate lies between the optimistic and pessimistic time estimates. The

time estimate reflects a situation, where conditions are normal, things are as usual and

there is nothing.

Merits of PERT
Having analyzed calculations, various merits of the PERT as a Quantitaive
Technique can be summed up as follows:
(1) It enables a manager to understand easily the relationship that exists between the
activities in a project.
(2) It enables a manger to know in advance, where the trouble may occur, where more
supervision may be needed, and where resources may be transferred to keep the
project on schedule.
(3) It completes the manager to plan carefully and study how the various activities fit in
the project.
(4) It draws attention of the management to the critical activities of the project.
(5) It suggests areas of increasing efficiency, decreasing cost and maximizing profits.
(6) It enables the use of statistical analysis.
(7) It makes possible a forward looking type of control.
(8) It compels the management for taking necessary action at the right time without any
let up.
(9) It provides up to date information through frequent reporting, data processing and
program analysis.
(10) It helps in formulating a new schedule when the existing ones cannot meet the
situation.
(11) It helps in minimizing delays and disruptions by scheduling the time and budgeting
the resources.
(12) It helps in coordinating the various part of the project and expediting the mode of
operation for completing the project in time.
(13) It permits more effective planning and control.
Demerits
(1) It does not lay any emphasis on the cost of a project except on the time only.
(2) It does not help in routine planning of the recurring events.
(3) Errors in time estimates under the PERT make the network diagram and the critical
path etc. meaningless.
(4) In the calculation of the probabilities under the PERT it is assumed that a large
number of independent activities operate on critical path and that the distribution of total
time is normal. This may not hold well in peculiar situation.
(5) For effective control, the PERT requires, frequent up-to date information and revision
in calculation which may be quite costly for the management.
(6) It does not consider the matter of resources required for various types of activities of
a project.