PERT

PERT is based on the assumption that an activitys duration follows a probability distribution instead of being a single value Three time estimates are required to compute the parameters of an activitys duration distribution: pessimistic time (tp ) - the time the activity would take if things did not go well most likely time (tm ) - the consensus best estimate of the activitys duration optimistic time (to ) - the time the activity would take if things did go well Mean (expected time): te =

tp + 4 tm + t o
6
2

Variance: Vt darla/smbs/vit

=2

tp - to
6
1

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.

darla/smbs/vit

Probability computation
Determine probability that project is completed within specified time x- Z=

where = tp = project mean time

= project standard mean time x = (proposed ) specified time

darla/smbs/vit

Normal Distribution of Project Time

Probability

= tp
darla/smbs/vit

Time
4

PERT Example
Immed. Optimistic Most Likely Pessimistic Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.) A -4 6 8 B -1 4.5 5 C A 3 3 3 D A 4 5 6 E A 0.5 1 1.5 F B,C 3 4 5 G B,C 1 1.5 5 H E,F 5 6 7 I E,F 2 5 8 J D,H 2.5 2.75 4.5 5 K G,I 3 darla/smbs/vit 5 7

PERT Example PERT Network

D

C B F G I K

darla/smbs/vit

PERT Example
Activity
A B C D E F G H I J K

Expected Time
6 4 3 5 1 4 2 6 5 3 5
darla/smbs/vit

Variance
4/9 4/9 0 1/9 1/36 1/9 4/9 1/9 1 1/9 4/9
7

PERT Example
Activity ES
A B C D E F G H I J K 0 0 6 6 6 9 9 13 13 19 18

EF
6 4 9 11 7 13 11 19 18 22 23
darla/smbs/vit

LS
0 5 6 15 12 9 16 14 13 20 18

LF
6 9 9 20 13 13 18 20 18 23 23

Slack
0 *critical 5 0* 9 6 0* 7 1 0* 1 0*
8

PERT Example Vpath = VA + VC + VF + VI + VK = 4/9 + 0 + 1/9 + 1 + 4/9 = 2 path = 1.414 z = (24 - 23)/(24-23)/1.414 = .71 From the Standard Normal Distribution table: P(z < .71) = .5 + .2612 = .7612
darla/smbs/vit 9

PROJECT COST

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 activitys 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.
darla/smbs/vit 11

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

darla/smbs/vit

12

Activity crashing

Crash cost

Crashing activity Slope = crash cost per unit time Normal Activity

Normal cost

Normal time
Crash time Activity time
darla/smbs/vit 13

 Crashing costs increase as project duration decreases Indirect costs increase as project duration increases Reduce project length as long as crashing costs are less than indirect costs

Time-Cost Relationship

Time-Cost Tradeoff
Min total cost = optimal project time Total project cost Indirect cost

Direct cost
darla/smbs/vit

time

14

Project Crashing example

2 8 1
12

4
12

7 4 3 4

5 4

6 4

darla/smbs/vit

15

Time Cost data

Activity Normal time 1 12 2 8 3 4 4 12 5 4 6 4 7 4 Normal cost Rs 3000 2000 4000 50000 500 500 1500 75000 Crash time 7 5 3 9 1 1 3 Crash cost Rs 5000 3500 7000 71000 1100 1100 22000 110700 Allowable crash time 5 3 1 3 3 3 1 slope
400 500 3000 7000 200 200 7000

darla/smbs/vit

16

R500
2 8 1
12

R7000 4
12

Project duration = 36
R700 7 4 6 4 R200

From..

R400

3 4 R3000

5 4 R200

R500 2 8

R7000 4
12

R700

To.. Project duration = 31

1
7

7 4
6 4 R200
17

R400

3 4

5 4 R200

Additional cost = R2000

R3000
darla/smbs/vit

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? darla/smbs/vit 18

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
darla/smbs/vit 19

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.)

darla/smbs/vit

20

Practice Example
A social project manager is faced with a project with the following activities: Activity Description
Social work team to live in village

Duration
5w

Social research team to do survey

Analyse results of survey Establish mother & child health program

12w
5w 14w

Establish rural credit programme

Carry out immunization of under fives

15w
4w

Draw network diagram and show the critical path. Calculate project duration. darla/smbs/vit

21

Practice problem
Activity 1-2 1-3 3-4 2-4 3-5 4-5 Description Social work team to live in village Social research team to do survey Analyse results of survey Establish mother & child health program Establish rural credit programme Carry out immunization of under fives
4 5 3
darla/smbs/vit 22

Duration 5w 12w 5w 14w 15w 4w

2 1

sivaprasaddarla@vit.ac.in

darla/smbs/vit

23