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AR6012 – CONSTRUCTION PROJECT

MANAGEMENT
 Introduction to theory of probability & statistics
 PERT Networks
 Probabilistic time estimation of activities
 Analysis of PERT network
 Determination of critical path
 Calculation of SLACK
 INTRODUCTION TO THEORY OF PROBABILITY &
STATISTICS
 Quotes from you and me
 Chances of you getting a handsome job will improve if you
obtain a masters degree
 Probably, collections jump in this month
 Most probably, ERP implementation will be done by September
 Odds are greater for a better thesis review this time???
 Winning a soccer match against Manchester City in the Premier
League is not impossible but is highly improbable
 Defects from new machines are unlikely
 INTRODUCTION TO THEORY OF PROBABILITY &
STATISTICS
 Each statement involves uncertainty
 Chances = Odds = Likelihood = PROBABILITY
 Real life is usually full of uncertainty
 Almost nothing is for sure
 In such situations, we cannot “PROVE” anything
 ALL WE CAN DO IS ASSIGN A PROBABILITY TO
EACH OF THE DIFFERENT POSSIBLE OUTCOMES
 INTRODUCTION TO THEORY OF PROBABILITY &
STATISTICS
 What are your chances of getting a handsome job
after masters?
 How much you are confident about the collection
percentage rise this month?
 What are your odds that your thesis review will be
better this time?
 What is the possibility of winning a cricket match
against Manchester City in the Premier League?
 What is the probable number of times the new
machine would churn out good production?
 INTRODUCTION TO THEORY OF PROBABILITY &
STATISTICS
 PROBABILITY THEORY PROVIDES TOOLS TO
DECISION MAKERS TO QUANTIFY
UNCERTAINTIES
 HOW ABOUT IN PROJECT MANAGEMENT??
 TIME ESTIMATES TYPES
 Deterministic Approach
 Non-deterministic/Probabilistic Approach
 INTRODUCTION TO THEORY OF PROBABILITY &
STATISTICS
 Assigning Probabilities
 Classical Approach – assumes equally likely outcomes
(card games, dice games, tossing coins etc)
 Relative Frequency Approach – uses relative
frequencies of past occurrences as probabilities
(decision problems in the process of management,
delay in delivery of product)
 Subjective Approach – Guess based on past experience
or intuition (at higher level of managerial decisions
for important, specific and unique decisions)
Classical Approach
 Relative Frequency Approach
 Making use of relative experiences of the past
 Example of attrition rate in an organization every
year coz of better prospects
 Subjective Approach
 Based on personal judgments
 Uses individual’s experience and familiarity of the
facts
 Example could be the share prices fluctuation over
the past few months
 PERT PROBABILITY APPROACH
 Activity completion times are seldom known with
certainty
 PERT is a technique that treats activity completion
times as “random” variables
 Completion time estimates can be estimated using
the “Three Time Estimate Approach”
 In this approach, three time estimates are required
for each activity (PROBABILISTIC APPROACH)
a = an optimistic time to perform the activity
m = the most likely time to perform the activity
b = a pessimistic time to perform the activity
 PERT PROBABILITY APPROACH
 With three time estimates, the activity completion
time can be approximated by a “beta distribution”
 Beta distribution can come in varied shapes:
 MEAN & SD FOR ACTIVITY COMPLETION TIMES
 The best estimate for the mean is a weighted average
of the three time estimates with weights 1/6, 4/6,
1/6 respectively on a, m and b
 Since most of the area is with the range from a to b
(b-a) and since most of the area lies 3 standard
deviations on either sides of the mean, then the SD is
approximated by Range/6
 PERT ASSUMPTIONS
• Assumption 1
– A critical path can be determined by using the mean
completion times for the activities.
– The project mean completion time is determined
solely by the completion time of the activities on the
critical path.
 Assumption 2
 There are enough activities on the critical path so that
the distribution of the overall project completion time
can be approximated by the normal distribution.
• Assumption 3
– The time to complete one activity is independent of
the completion time of any other activity.
 PERT TIME ESTIMATES
 Taking uncertainties into account…
 Optimistic Time Estimate
 Shortest possible time in which an activity can be completed,
under IDEAL CONDITIONS
 Represents the time in which we could complete the activity if
everything went along perfectly with no problems or adverse
conditions
 Better than normal conditions are assumed to prevail
 Represented by to or a
 PERT TIME ESTIMATES
 Taking uncertainties into account…
 Pessimistic Time Estimate
 Best guess of the max time that would be required to complete
the activity
 Represents the time it might take to complete a particular
activity if everything went wrong and abnormal situations
prevail
 Does not include possible effects of highly unusual
catastrophes such as EQ, floods, fires etc.
 Represented by tp or b
 PERT TIME ESTIMATES
 Taking uncertainties into account…
 Most Likely Time Estimate
 Also the most probable time – the time in the mind of the
estimator, representing the time the activity would most often
required if normal conditions prevail
 Lies between the optimistic and pessimistic time estimates
 Reflects a situation where conditions are normal, things are as
usual and there is nothing exciting
 Represented by tm or m
 FREQUENCY DISTRIBUTION
 Time estimates are difficult to ascertain – needs some
guidance based on experience or past/available
information
 Plot a graph with the three time estimates
 The way in which the time estimates behave!!!
 What we get is a “unimodal curve” which is
symmetrical
 Also called “normal curve”
 Not necessary that all the times it may be “normal”
 Some may have to “skew” due to which it is not
symmetrical
 FREQUENCY DISTRIBUTION
 FREQUENCY DISTRIBUTION
 FREQUENCY DISTRIBUTION
 So, what do we infer???
“…A WIDE RANGE IN TIME ESTIMATES REPRESENTS
GREATER UNCERTAINTY AND HENCE LESS
CONFIDENCE IN OUR ABILITY TO CORRECTLY
ANTICIPATE THE ACTUAL TIME THAT THE ACTIVITY
WILL REQUIRE…”
 MEAN, VARIANCE & STANDARD DEVIATION
 Whatever be the form of the curve, the
following aspects of the characteristics of the
distribution are important:
 Mean time or average time
 Deviation
 Variance
 Standard Deviation
 MEAN, VARIANCE & STANDARD DEVIATION
 Mean: defined by the algebraic sum of time
durations taken by various jobs divided by the
number of jobs
 Deviation: difference between the time under
consideration and the mean time. Difference
may be either positive or negative
 MEAN, VARIANCE & STANDARD DEVIATION
 Variance: is the mean of squared deviation.
Expressed by σ2
 Variance is calculated in the following steps:
 Obtain the mean of the distribution
 Determine the deviation of each time from the mean
 Find square of these individual deviations
 Find the mean of the squared deviations
 To note: deviations may be negative but their squares will
always be positive. Hence, VARIATION WILL ALWAYS BE
POSITIVE. Cannot have zero value unless each individual
deviation is zero
 Variance is commonly used in statistics as a measure of
variability of distribution
 MEAN, VARIANCE & STANDARD DEVIATION
 Standard Deviation: the square root of the
variance. SD is denoted by σ
 PROBABILITY DISTRIBUTION
 BETA Probability Distribution
 PERT ANALYSIS
 SLACK
 The difference between the two times (TL & TE =
Expected time)of an activity indicates the range between
which the occurrence time of an event can vary
 Slack may be simply defined as the difference
between the latest allowable time and the earliest
expected time of an event
 S = TL - TE
 PERT ANALYSIS TE=15

 SLACK
30

TL=15 tE=4
tE=10
tE=7
TE=0 TE=5 TE=22 TE=27

10 20 50 60
tE=5 tE=12 tE=5
TL=0 TL=5 TL=22 TL=27

tE=8
TE=13 tE=8

40

TL=19
 PERT ANALYSIS
 SLACK

Event No TE TL S = TL-TE
10 0 0 0
20 5 5 0
30 15 15 0
40 13 19 6
50 22 22 0
60 27 27 0
 PERT ANALYSIS TE=15

 SLACK
30

TL=15 tE=4
tE=10
tE=7
TE=0 TE=5 TE=22 TE=27

10 20 50 60
tE=5 tE=12 tE=5
TL=0 TL=5 TL=22 TL=27

tE=8
TE=13 tE=8

40

TL=19
 PERT ANALYSIS
 SLACK
 Positive Slack – when TL is more than TE for an event.
An indication that the event is ahead of schedule
 Negative Slack – when the scheduled time Ts (and
hence TL is less than TE and its an indication that the
event is behind the schedule
 Zero Slack – is obtained when TL = TE for an event. It
is an indication that it is an on schedule condition
 PERT ANALYSIS
 Exercise 1
 Determine the CP for the network:

20
tE=23.7
tE=9.8 tE=0

10 tE=12.3 30 tE=18 50 tE=3.5 70 tE=8.2 80

tE=9 tE=10.8 tE=18


tE=11.7

40 tE=10.2 60
 PERT ANALYSIS

TE=9.8

20
TL=12.3 tE=23.7
tE=9.8 tE=0
TE=0 TE=12.3 TE=30.3 TE=33.8 TE=42

10 tE=12.3 30 tE=18 50 tE=3.5 70 tE=8.2 80


TL=33.8
TL=0 TL=12.3 TL=30.3 TL=42
tE=9 tE=10.8 tE=18
tE=11.7 TE=11.7 TE=21.9

40 tE=10.2 60
TL=12.8
TL=23
 PERT ANALYSIS

Event No TE TL S = TL-TE
10 0 0 0
20 9.8 12.3 2.5
30 12.3 12.3 0
40 11.7 12.8 1.1
50 30.3 30.3 0
60 21.9 23.0 1.1
70 33.8 33.8 0
80 42.0 42.0 0
 PERT ANALYSIS
 Exercise 2
 The expected time of completion (in days) for each activity of a
network is shown in. Determine the CP. It is given that the
scheduled completion time is 21 days.

2 6

1 5 7 9

3 4 8
 PERT ANALYSIS

TE=4 TE=10

2 tE=6
6
TL=10
TL=4
tE=3
TE=0 tE=4 TE=14 TE=22
TE=11
1 5 tE=3
7 tE=6
9
tE=6 TL=10 TL=13
TL=-1 tE=2 tE=3 TL=21
TE=5
tE=5
TE=8 TE=17 tE=5
3 tE=3
4 tE=6
8
TL=16
TL=8
TL=4
Event Earliest Event Time Latest Event Time Slack
No

Pred Tij TjE TE Succ tij TiL TL S=TL - TE


Event (i) (T E + tij)
j Event (j) (T L – tij)
i

1 - - 0 0 2 4 0 -1 -1
3 5 -1
2 1 4 4 4 6 6 4 4 0

3 1 5 5 5 4 3 5 4 -1
5 6 4
4 3 3 8 8 5 2 8 8 0
8 6 10
5 3 6 11 11 7 3 10 10 -1
4 2 10
6 2 6 10 10 7 3 10 10 0

7 5 3 14 14 8 3 13 13 -1
6 3 13 9 6 15
8 4 6 14 17 9 5 16 16 -1
7 3 17
9 7 6 20 20 - - 21 21 -1
8 5
 PROBABILITY OF MEETING SCHEDULED DATE
 After calculating TL, TE and critical path???
 An unanswered question!!!
 WHAT IS THE PROBABILITY OF MEETING THE
SCHEDULED TIME???
 Apply probability theory to the network analysis
 Things to discuss:
 CP – time wise, the longest path along a number of activities
 Three time estimates
 Time estimates having beta distribution
 Computation of tE assuming beta distribution
 tE is such that there is a 50-50 completion chance
 PROBABILITY OF MEETING SCHEDULED DATE
 Summation of ΣtE of all activities along the CP is
equal to TE of the last event
 tE of individual activities has random probability
distribution (β) and the variation of TE for the
project, as a whole has a ND for practical purposes
 CENTRAL LIMIT THEOREM
 This theorem states that if there are n activities, each
having its own β – distribution with means µ1, µ2, µ3….., µn
and SD σ1, σ2, σ3,….., σn respectively, then the distribution
of time for the project as a whole will be approximately be a
ND curve. ND curve will have a mean µ and variance σ2 given
by
 µ = µ1+µ2+µ3+…..+µn
 σ2 = σ21+σ22+σ23+…..+σ2n
 PROBABILITY OF MEETING SCHEDULED DATE
 Procedure
 Properties of ND curve and the % probability
distribution table can be used only if the random
curve obtained from a particular network is reduced
to normalized form
 Obtained by making TE value for the end event
coincide with the modal value of the ND curve
 Following procedure is adopted for determining the
probability of meeting the scheduled completion
time:
 PROBABILITY OF MEETING SCHEDULED DATE
 Procedure
 Determine the SD (σ) appropriate to the CP for the
network, using the relations
 σ = √Sum of variances along the CP (or)
 σ = √Σσ2ij, where σ2ij = variance for activity i-j along the CP
 = (tijp – tijo/6)2
 Knowing the scheduled completion time (ts) and EET
of completion (TE), find the time distance TS- TE and
express it in terms of probability factor Z by the
relation:
 Z = (TS - TE)/σ or Z = (TS - TE )/ √Σσ2ij
 PROBABILITY OF MEETING SCHEDULED DATE
 Procedure

 Theprobability factor (Z) is the same as


normal deviate of table
 When Z is positive (TS to the right of TE) the chances of
completing the project on time are more than 50%
 When Z is zero (TS coinciding with TE), the chances of
completing the project on time is 50-50
 When Z is negative (TS to the left of TE), the chances
of completing the project on time is less than 50%
STANDARD NORMAL DISTRIBUTION FUNCTION
 EXERCISES
 A Project is expected to take 15 months along the CP, having a SD
of 3 months. What is the probability of completing the project
within (a) 15 months (b) 18 months and (c) 12 months?
 TE = 15 months & σ = 3 months
(a) Given, Ts = 15months
Z = (15-15)/3 = 0
From table, for Z=0, probability = 50%
(b) Given, Ts = 18months
Z = (18-15)/3 = 1
From table, for Z=1, probability = 84.13%
(c) Given, Ts = 12months
Z = (12-15)/3 = -1
From table, for Z=-1, probability = 15.87%
 EXERCISES
 PERT calculations yield a project length of 50 weeks, with a variance of
16. Within how many weeks would you expect the project to be
completed with probability of (a) 95% (b) 75% and (c) 40%?
 SD σ = √16 = 4
 For 95% probability Z≈ 1.65, Now Z = (TS - TE)/σ
 TS = σZ + TE
 = 4x1.65 + 50 = 56.6 ≈ 57 Weeks
 For 75% probability Z≈ 0.69
 Ts = σZ + TE
= 4x0.69 + 50 = 52.76 ≈ 53 Weeks
 For 40% probability Z≈ - 0.25
 Ts = σZ + TE

 = 4x (-0.25) + 50 = 49 Weeks
 Linear Interpolation

FIND THE VALUE OF ‘Y’


AT ‘X’
 EXERCISES
 For the network shown, the time estimates (in
days) each for activity are mentioned.
Determine the probability of completing the
project in 35 days.
2

4-10-22
1 4 5

3
 Solution
 Determine the expected time of completion (tE) an variance σ2
for each activity using the relations

 tE = (to + 4tL + tp)/6


Activity to tL tp tE σ2
1-2 6 9 18 10 4
1-3 5 8 17 9 4
2-4 4 7 22 9 9
3-4 4 7 16 8 4
4-5 4 10 22 11 9
2-5 4 7 10 7 1
3-5 2 5 8 5 1
Event Earliest Event Time Latest Event Time Slack
No

Pred Tij TjE TE Succ tij TiL TL S=TL - TE


Event (i) (Tj E+t )
ij Event (j) (TiL – tij)

1 - - 0 0 2 10 0 0 0
3 9 2
2 1 10 10 10 4 9 10 10 0
5 7 23
3 1 9 9 9 4 8 11 11 2
5 5 25
4 2 9 19 19 5 11 19 19 0
3 8 17
5 2 7 17 30 - - 30 30 0
3 5 1
4 11 30

CP = 1-2-4-5 = 30 days
 Solution

TE=10

TE=0 TL=10 TE=19 TE=30

tE=11
1 4 5

TL=0 TE=9 TL=19 TL=30

TL=11
 Solution
 Now, deviation along the CP is given by σ = √Σσ2ij
 Where Σσ2ij = sum of variances along the CP
 = σ21-2 + σ22-4 +σ24-5
 = 4 + 9 + 9 = 22
 σ = √Σσ2ij = √22 = 4.69
 Z = (TS - TE)/σ, where Ts = 35 days
 = (35 – 30)/4.69 = 1.066
 From table, for Z=1.066, using linear interpolation, P≈ 85.7%

 HENCE THERE IS 85.7% PROBABILITY OF COMPLETING THE PROJECT


IN 35 DAYS
 Exercise
 Figure shows the network for a construction project with the
three time estimates of each activity marked. Determine CP,
probability of completing the project in 40 days and time
duration that will provide 95% probability of its completion time

3-5-13 2-4-6
3 7 8

2-3-10
2-5-8 4-7-16 7-10-13
1 2 4 6

5
 Solution
Activity to tL tp tE σ2
1-2 2 5 8 5 1
2-3 8 11 20 12 4
3-4 0 0 0 0 0
2-4 4 7 16 8 4
2-5 4 9 20 10 7.11
4-6 7 10 13 10 1
5-6 3 7 17 8 5.44
3-7 3 5 13 6 2.78
6-7 2 3 10 4 1.77
7-8 2 4 6 4 0.44
Event Earliest Event Time Latest Event Time Slack
No

Pred Tij TjE TE Succ tij TiL TL S=TL - TE


Event (i) (T E + tij)
j Event (j) (T L – tij)
i

1 - - 0 0 2 5 0 0 0

2 1 5 5 5 3 12 5 5 0
4 8 9
5 10 9
3 2 12 17 17 7 6 25 17 0
4 0 17
4 2 8 13 17 6 10 17 17 0
3 0 17
5 2 10 15 15 6 8 19 19 4

6 4 10 27 27 7 4 27 27 0
5 8 23
7 3 6 23 31 8 4 31 31 0
6 4 31
8 7 4 35 35 - - 35 35 0

CP = 1-2-3-4-6-7-8 = 35 days
 Solution

TE=31
TE=17 TE=35

3-5-13 2-4-6
3 7 8
TL=31

2-3-10
TL=35
TE=0 TE=5 TL=17 TE=17 TE=27
2-5-8 4-7-16 7-10-13
1 2 4 6
TL=17
TL=0 TL=5 TL=27
TE=15

TL=19
 Solution
 Now, deviation along the CP is given by σ = √Σσ2ij
 Where Σσ2ij = sum of variances along the CP
 = σ21-2 + σ22-3 +σ23-4 + σ24-6 + σ26-7 +σ27-8
 = 1+4+0+7.11+1.77+0.44 = 14.32
 σ = √Σσ2ij = √14.32 = 3.78
 Z = (TS - TE)/σ, where Ts = 40 days
 = (40 – 35)/3.78 = 1.32
 From table, for Z=1.32, using linear interpolation, P≈ 90.64%
HENCE THERE IS 90.64% PROBABILITY OF COMPLETING THE PROJECT
IN 40 DAYS
For P = 95%, we have Z≈ 1.65

Ts = σZ + TE
 = (3.78 x 1.65) + 35 = 41.2 days
 A project consists of 16 activities having their predecessor
relationship as follows:
 A is the first activity of the project
 B,C & D follow A and can be done concurrently
 E & G cannot begin until C is completed and can be performed
simultaneously
 F is the immediate successor to activities B & E
 H & K run in parallel and both succeed G
 L succeeds F & H
 I & J are immediate successor activities to activity D
 M & N are immediate successor to I & K. However, both M & N can
be performed concurrently
 Activities O & P are the last activities. Activity O is the immediate
successor to N & L. Activity P is the immediate successor to M & J
 DRAW THE NETWORK AND NUMBER THE EVENTS
 A project consists of eight activities M, N, O, P, Q, R, S & T.
Draw the network and number the events if,
 Activities M,N & Q can start concurrently
 Activities O & P are concurrent and depend on the completion of
both M & N
 Activities R & S are concurrent and depend on the completion of O
 Activity T depends upon the completion of P, Q & R
 A project consists of eight events having predecessor
relationships as under. Draw the network.
Event Predecessor Event Predecessor
1 - 5 3,4
2 1 6 3,5
3 1 7 6
4 2,3 8 4,7