PERT

Use of PERT provides Pioneer Audio management with some useful

information about the Response 1000 project:

The expected project completion time is 19 weeks.

There is a better than 60% chance of finishing before 20 weeks.
Activities C,J,K and L are on the critical path; they must watched more
closely than others, for if they fall behind, the whole project falls.
Activities not on the critical path ( A,B,D,E,G,H and I ) can fall behind
by varying amounts( their slack times) without causing the project to be
late.
The earliest starting and finishing times for all activities in the project
known from fig.1-6 and fig.1-8.
PERT / COST

 PERT/Cost is a modification of PERT that allows a manager to

plan, schedule, monitor and control cost as well as time.

 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 for each
activity are made at a constant rate during that activity.
PERT / COST - ESTIMATING PROJECT COSTS BY ACTIVITY

Fig. 2-1 The nine-activity project network

D
T=4

2 $20,000
A 4 E
3 T=
T= 0 $7 5
00 5,
00 H
0,
$40,0

0
$3 T=3
T=1

7
0

1 5 $18,000
0

B F
T=
$2 2 T=2
00 0 I
,00
1 0 0,00
0 $ 4
T= 00
0
G
4 0,
3 T=1 $2
$75,00
0
6
PERT / COST - ESTIMATING PROJECT COSTS BY ACTIVITY

TABLE 2-1 ACTIVITY INFORMATION FOR NINE-ACTIVITY PROJECT NETWORK

Activity ES LS Duration, Total Cost Cost/Month

Months

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

Total Cost $ 798,000

CPM – Crashing a Project

In many situations, it is possible to reduce the length of a project by

injecting additional resources; that is, by increasing direct expenses to
speed up the project, thereby realizing savings on indirect project cost
associated with the project, such as facilities and equipment costs,
supervision and labor and personnel costs. The process of shortening the
project is called crashing.

Steps in Project Crashing

1. Find normal critical path and identify critical activities.
2. Compute crash cost per week for all activities.
3. Select critical activity with smallest crash cost per week.
Crash this activity
4. Check to make sure critical path is still critical. If not,
find the new one. Return to step 3.
CPM -Crashing a Project

Fig. 3-1 Crash & Normal Times and Costs

Activity
Crash Cost
per week =
Crash Cost − Normal Cost
Cost
Normal time − Crash time
Crash Normal time = the expected time for the activity

Normal Cost = the cost required to achieve the

normal time

Crash time = the shortest possible activity

time
Normal Crash Cost = the cost required to achieve the
crash time

Time
Fig. 3-2 CPM -Crashing a Project

 Catch basin network with all normal times

3.0
4
7.0
C
E
2 16.0
0
6.
A
5

1
8.0
4.0
D
B

Critical Path: A-C-E

3
Table 3-1 Calculation of the cost crashing Catch Basin
Project

Time, Weeks Cost Cost to reduce

Activity Normal Crash Normal Crash per week

A 6 4 $ 10,000 $ 14,000 $ 2,000

B 4 3 5,000 8,000 3,000

C 3 2 4,000 5,000 1,000

D 8 6 9,000 12,000 1,500

E 7 4 7,000 8,000 333

Total Costs $ 35,000 $ 47,000

Fig. 3-3 CPM -Crashing a Project

 Activities E, C, D and A crashed on catch basin project

2.0
4
4.0
C
E
2 10.0
0
4.
A
5

1
6.0
3.0
D
B

3
Fig. 3-4 CPM -Crashing a Project

 Catch basin project with crash times for all activities

2.0
4
4.0
C
E
2 10.0
0
4.
A
5

1
6.0
3.0
D
B

3
Table 3-2 The network in fig. 3-2 and table 3-1 after
crashing

Project Duration Total Network Cost

Original Network 16 $ 35,000

Crash activity E to 4 weeks 13 $ 36,000
Crash activity C to 2 weeks 12 $ 37,000
Crash activity D to 6 weeks 12 $ 40,000
Crash activity A to 4 weeks 10 $ 44,000
Definition of important terms
 Activities- Project steps that consume resources and/or time.
 Activity Time Estimates- Three time estimates that are used in determining the
expected completion time and variance for an activity in a PERT network.
 Beta Probability Distribution- A probability distribution that is often used in
computing the expected activity completion times and variances in the network.
 Backward Pass- A procedure that moves from the end of the network to the
beginning of the network.
 Critical Activities - Activities on the critical path.
 Critical Path- The longest path; determines expected project duration.
 Crashing –The process of reducing the total time that it takes to complete a
project by expending additional funds.
 Events - The starting and finishing of activities designated by nodes and arrows.
 Forward Pass – A procedure that moves from the beginning of a network to the
end of a network
 Immediate Predecessor- An activity that must be completed before another
activity can be started.
 Network or precedence diagram- A diagram of project activities that shows
sequential relationship by use of arrows and nodes.
 Path – A sequence of activities that leads from the starting node to the finishing
node.
 Slack Time – the amount of time that an activity can be delayed without
delaying the whole project.