Chapter 12 - NETWORKS

PERT, CPM,PERT/COST
Scheduling with Resource Limitations
Maximal-Flow Problem
Minimal-Spanning-Tree Problem
Shortest-Route Problem
Dynamic Programming
Objectives
>Introduce the concepts of networks and
networking technique as a solution models for
complex project-scheduling problems.
>Review in detail the concepts and use of
PERT and PERT/COST to plan and control
projects.
>Show the use of CPM in the planning and
control of projects.
>Demonstrate how to schedule projects
involving resource limitations.
Networks
- Complex projects requires a series of
activities, some of which must be performed
sequentially and others that can be
performed in parallel with other activities. This
collection of series and parallel tasks can be
modelled as a network.
PERT (Program Evaluation and Review
Technique)
- is a network model that allows for
randomness in activity completion times.
PERT was developed in the late 1950’s for
the US Navy’s Polaris project having
thousands of contractors. It has the potential
to reduce both the time and cost required to
complete a project.
Steps in the PERT Planning Process
1) Identify Activities and Milestones
- activities are the tasks required to complete
the project, milestones are the events marking the
beginning and end of one or more activities. It is
helpful to list the tasks in a table that in later steps
can be expanded to include information on
sequence and duration.
2) Determine Activity Sequence
- this step may be combined with the activity
identification step since the activity sequence is
evident for some tasks. Other tasks mat require
more analysis to determine the exact order in which
they must be performed.
3) Construct the Network Diagram
- using the activity sequence information,
a network diagram can be can be drawn
showing the sequence of the serial and parallel
activities. For the original activity-on-arc
model, the activities are depicted by arrowed
lines and milestones are depicted by circles or
“bubbles”.
4) Estimate Activity Times
- a distinguishing feature of PERT is its ability to
deal with uncertainty in activity completion times. For
each activity, the model usually includes three time
estimates:
* Optimistic time (a) – the shortest time in which the
activity can be completed. It is common practice to
specify optimistic times to be three standard deviations
from the mean so that there is approximately a 1%
chance that the activity will be completed within the
optimistic time.
* Most likely time (m)– the completion time having the
highest probability. Note that this time is different from
the expected time.
* Pessimistic time (b) – the longest time that an activity
might require. Three standard deviations from the mean
is commonly used for pessimistic time.
PERT assumes a beta probability distribution for the estimates.
For a beta distribution, the expected time for each activity can
be approximated using the following weighted average

Expected time = (optimistic + 4 x most likely +

pessimistic) / 6

t = a + 4m + b
6

Standard deviation of an activity = b – a

6
This expected time may be displayed on the network diagram.
To calculate the variance for each activity completion
time, if three standard deviation times were selected
for the optimistic and pessimistic times, then there are
six standard deviations between them, so the
variance is given by:

[ (pessimistic – optimistic) / 6 ] 2
5) Determine the Critical Path
- critical path is determined by adding the
times for the activities in each sequence and
determining the longest path in the project.
The critical path determines the total calendar
time required for the project. If activities
outside the critical path speed up or slow down
(within limits), the total project time does not
change. The amount of time that a non-critical
path activity can be delayed without delaying
the project is referred to as slack time.
If the critical path is not immediately
obvious, it maybe helpful to determine the
following four quantities for each activity:

ES – Earliest start Time

EF – Earliest Finish Time
LS – Latest Start Time
LF – Latest Finish Time
These times are calculated using the expected
time for the relevant activities.
ES/EF of each activity are determined by
working forward through the network and
determining the earliest time at which an
activity can start and finish considering its
predecessor activities.
(Immediate Predecessor – activities that must
immediately precede a given activity
LS/LF are the latest times that an activity
can start and finish without delaying the
project. Can be found by working
backward through the network. The
difference in the latest earliest time finish
of each activity is that activity’s slack. The
critical path then is the path through the
networking which none of the activities
have slack.
6) Update the Project Progress
- make adjustment in the PERT chart
as the project progress. As the project
unfolds, the estimated times can be
replaced with actual times. In cases
where there are delays, additional
resources mat be needed to stay on
schedule and the PERT chart may be
modified to reflect the new situation.
Using PERT to Plan the Introduction of a New HI-FI Speaker
Activity list involved in the promotional campaign for the New Response 1000 speaker.
Activity Symbol Activity Description Immediate
Predecesso
rs

A Develop the advertising plan (a detailed plan of projected radio,

television, and newspaper advertising)

B Develop the promotion and training materials plan (a detailed study of the
materials that will be required for training the store managers and
for the final in-store introduction)

C Develop the training plan (the design of the training program that the
store managers will undertake prior to the final in-store introduction)

D Schedule the radio, television, and newspaper advertisements that will A

appear prior to the final introduction
E Develop the advertising copy that will be required A
F A “Dummy” activity (one that takes no time) w/c lets us draw networks
using only straight lines or which establishes precedence
relationships (what activities precede each other)

G Prepare promotion materials which will be used during the in-store B

introduction
H Prepare materials which will be used in the training program for the store B
managers
I Conduct the preintroduction advertising campaign in the media D, F
J Screen and select the store managers who will undergo training C
K Conduct the training program H, J
L The final in-store introduction of the Response 1000 G, I, K
 Drawing the network
Nodes – circles represents the start and the finish of activities.
Branches – arrows represents the activities in the project.

Schedule radio, television, and newspapers

advertisements

3 6
E D Preintroduction
advertising
Develop advertising copy F campaign

Develop the advertising 5 Dummy

plan I

Develop the promotion and training Prepare the in-store promotion Introduction of the Response
materials plan materials 1000

1 4 8 9
B G L

Prepare
training
H materials
C K Conduct
Develop the training
the training
plan
program
Screen and select participating store
managers

2 7
J
Finding the critical path (longest path)
Path – is defined as a sequence of connected activities that leads from the
beginning of the project (node 1) to the end of the project (node 9).
Activity a (most m (most likely b (most (a+4m+b)/6 (b - a)/6 (activity
optimistic time) time) pessimistic (expected time) std dev)
time)

A 1 2 3 2 .33

B 1 2 3 2 .33

C 1 2 3 2 .33

D 1 2 9 3 1.33

E 2 3 10 4 1.33

F (Dummy activity)
0 0

G 3 6 15 7 2.00

H 3 5 14 6 2.00

I 1 4 7 4 1.00

J 4 9 20 10 2.67

K 1 2 9 3 1.33

L 4 4 4 4 0
The Earliest-Start-Time-Rule (All earliest start (ES) and all earliest finish
(EF) times)
Formula : Earliest finish time = Earliest start time + Expected time
EF = ES + t
2 t=3 5

3 6 6

2 E D 6
2 t=4 6 F

5 t=0 t=4

t=2 6 I
A

10
0 0 t=2 2 2 t=7 9 15 t=4
19
1 4 8 9
B 2 G L
0
15

H t=6

t=2 C K
t=3

2 t = 10 12
2 2 7 12
J
 The-Latest-Finish-Time-Rule (All latest start (LS) and all latest finish (LF))
Formula : Latest start time = latest finish time – expected time
LS = LF - t
8 t=3 11

3 6 11

7 E D 11

7 t=4 11 F

5 t=0 t=4

t=2 11 I

15

5 4 t=2 6 8 t=7 15 t=4

15 19
1 4 8 9
B 6 G L
0
15

H t=6

t=2 C K
t=3

12

2 t = 10 12

2 2 7 12
J
Determination of critical path for Response 1000
Activity Earliest Start Latest Start Earliest Latest Finish Slack (LS–ES or Activity on
Finish LF-EF) Critical Path

A 0 5 2 7 5

B 0 4 2 6 4

C 0 0 2 2 0 Yes
D 2 8 5 11 6

E 2 7 6 11 5

F (Dummy activity)

G 2 8 9 15 6

H 2 6 8 12 4

I 6 11 10 15 5

J 2 2 12 12 0 Yes
K 12 12 15 15 0 Yes
L 15 15 19 19 0 Yes
Listed below are the useful information provided by
using PERT about the Response 1000 project :
1) The expected project completion time is 19 weeks.
2) Activities C, J, K, and L are on the critical path,
they must be watched more closely that the others,
for if they fall behind, the whole project falls behind.
3) If extra effort is needed to finish the project on time,
and if resources on one activity can possibly be
used on another to reduce time, it can be borrow
formanother activity except from th critical path.
4) Activities not on the critical path can fall behind by
varying amounts without causing the project to be
late.
CPM (Critical Path Method)
- the Critical path method of planning and
controlling projects has enjoyed the widest use
among all the systems that follow the networking
principle. The fundamental departure of CPM from
PERT is that CPM brings the concept of cost more
prominently into the planning and control process.
When time can be estimated and cost can be
calculated rather accurately in advance , CPM
maybe superior to PERT. But when there is a
extreme degree of uncertainty and when control
over time outweighs control over costs, PERT may
well be the better choice. The networking
principles used in CPM are like those in the PERT
system.
Estimating Time in CPM
1)Normal estimate of time approximates the
most likely time estimate in PERT. Normal
cost is associated with finishing the project
in the normal time.
2)Crash time estimate is the time that would be
required if no costs were spared in reducing
the project time. Crash cost is the cost
associated with doing job on a crash basis
so as to minimize completion time.
Crashing a project
- to crash a project successfully, note its
activities and compare normal costs
with crash costs for each activity. Goal
is to find those activities on the critical
path where time can be cut
substantially with minimum extra cost
spent. It’s goal is the greatest reduction
in project time for the least increase in
project cost.
PERT/Cost
- PERT and CPM were both time-oriented, that is,
they were design to allowed project planners to
produce time schedules for the planning and
monitoring of complex projects. In neither case was
cost a major consideration. Earlier users of PERT
and CPM noticed the need of this technique to
concern themselves with project cost control as
well as time control; and in the early 1960’s after
the publication of a US government manual DOD
and NASA Guide, PERT/Cost Systems Design,
most military and research contracts required the
use of PERT/cost on the part of the contractor.
Today, there are many different project cost
accounting technique
1) Costing by activities
- completion time and activities are limited.
2) Estimating project costs by activity
- managers should know the amounts of
money that are to be expected for each
activity over the planned duration of the
project; one usually assumes that
expenditures of each activity are made at a
constant rate during that activity.
Activity information of for nine activity project
network
Activity ES LS Duration (month)Total Cost ($) Cost / month ($)

A 0 0 3 30,000 10,000

B 0 8 2 200,000 100,000

C 3 9 1 40,000 40,000

D 3 3 4 20,000 5,000

E 7 7 5 75,000 15,000

F 4 10 2 100,000 50,000

G 4 10 1 75,000 75,000

H 12 12 3 18,000 6,000

I 5 11 4 240,000 60,000

$798,000
 D

t=4

2 4
$20,000 E

A t=5

t=3 $75,000

$30,000 C

$40,000
t=1 H

t=3

1 B F 5 7
t=2 t=2 $18,000

$200,000 $100,000

3 $240,000
$75,000

t=4

t=1 I

G 6
3) Project budgeting choices
- from technological point of view, the project
director can choose when to begin each
activity in this project or he could wait to
begin until each activity until it’s latest start
time. What is the difference?
Project cost with early starts (cost in thousand $)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
A 10 10 10
B 100 100
C 40
D 5 5 5 5
E 15 15 15 15 15
F 50 50
G 75
H 6 6 6
I 60 60 60 60
Total 110 110 10 45 130 115 65 75 75 15 15 15 6 6 6

Acc 110 220 230 275 405 520 585 660 735 750 765 780 766 792 798
total
Project cost with late starts (cost in thousand
$) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
A 10 10 10
B 100 100
C 40
D 5 5 5 5
E 15 15 15 15 15
F 50 50
G 75
H 6 6 6
I 60 60 60 60
Total 10 10 10 5 5 5 5 15 115 155 140 125 66 66 66

Acc 10 20 30 35 40 45 50 65 180 335 475 600 666 732 798

total
Network Scheduling with resource
limitations
Problem: Required workers to complete the
activity for 9 weeks are 15 persons, but only
9 persons are available.
B 2wks, 3 people
D 1 wk, 2 people

E 2 wks, 6 people F 4 wks, 5 people

A 3 wks, 6 people
Begin
End t 9 wks
G 1 wk, 3 people H 2 wks, people

I 2 wks, 4 people

C 1 wk, 2 people
Method for resource levelling

(D) 2 (E) 6 (F) 5

(A) 8 (G) 3
(B) 3 (H) 4

(C) 2
(I) 4

11 9 6 15 14 9 5 5 5 Total workers
scheduled

1 2 3 4 5 6 7 8 9 Weeks
The maximal-flow problem
- in a network with one source node and
one output node, the maximal flow
problem seeks to find the maximal flow
which can enter the network at the
source node, flow through it, and exit at
the output node in a given period of
time.
The minimal-spanning tree
problem
- is concerned with finding a way
to reach all the nodes in a
network from some particular
node (a source) in such a way
that the total length of all the
branches used is minimal.
Distances between nodes for laying water lines
To node
From node 1 2 3 4 5 6 7

1 0 1100 100 300 600 1000 400

2 1100 0 M M M M 900

3 100 M 0 M 500 M M

4 300 M M 0 M 700 M

5 600 M 500 M 0 200 M

6 1000 M M 700 200 0 800

7 400 900 M M M 800 0

M – is a node which cannot be connected

The length of the minimal spanning tree is the
sum of all the circled lengths which is 2,400
feet. This will be the required length to
connect all the homes.

The shortest route problem

- in the shortest route problem, we are trying
to find the shortest route from a source to a
destination through a connecting network;
the destination maybe any node in a
network.
 B
300
250
D
200

A= warehouse 100 Toronto =F

150 100

150
400

275 E

C
THANK YOU!
GOD BLESS!

HAVE A NICE
WEEKEND!