Industrial Project Management

(MEng 6107)

Project Planning and Control

 Contents
Work Breakdown Structure
Project Organization
Bar Charts or Milestone Charts
Network Scheduling
Critical Path method
Program Evaluation and Review Techniques
S-curve
Project Crashing
Resource Allocation
Project Risks
 Work Breakdown Structure

A breakdown of the total project task into

components to establish:

How work will be done?

How people will be organized?
How resources will be allocated?
How progress will be monitored?
 Work Breakdown Structure (WBS)

It is a methodology for converting a

large-scale project into detailed schedules
for its thousands of activities for planning,
scheduling, and control purpose

The objective of developing a WBS is to

study the elemental components of a
project in detail
 Purposes of a WBS

To organize the work to be done

To illustrate the work to be done
To assure that all necessary work has been
identified
To divide the work into small, well defined
tasks
 Why Do a WBS?

To facilitate planning, estimating and

scheduling of the project
To identify contractual tasks and
deliverables
To provide a basis for data monitoring and
historical data collection
 Using a WBS for Estimating

To make sure that all tasks are estimated

To make sure that each element of the
estimate corresponds to a necessary task
To roll up costs of individual elements to
get total costs for sub-elements or for the
system as a whole
 Rolling Up Costs

$301K

$112K $85K $28K $45K $31K

$22K $13K $15K $38K $24K

 Using a WBS, a large project may be broken
down into smaller subprojects which may, in
turn, be further subdivided into another,
lower level of more detailed sub component
activities, and so on.
Eventually, all the tasks for every activity
are identified, commonalities are discovered,
and unnecessary duplication can be
eliminated.
Thus by applying the WBS approach, the
overall project planning and control can be
improved.
 Effective use of the WBS will graphically
outline the scope of the project and the
responsibility for each work package.
Designing the WBS requires a delicate
balance to address the different needs of
various disciplines and project occasions.
Necessarily there is no right or wrong
structure because what may be an
excellent fit for one discipline may be an
awkward burden for another.
Project Breakdown Structure
Check Points
How, when, and by whom was the work
breakdown structure (WBS) prepared?
Describe the process used in preparing the
WBS.
How was project management included in the
WBS?
Was the concept of work package used? If so,
describe what was included in a work package.
How was the work package defined?
 Project Organization

Like any organization, projects can be

managed and controlled by using different
type of organizational structure.

Before selecting an organizational

structure, the project team should assess
the nature of the job to be performed and
its requirements.
 The structure may be defined in terms of
functional specializations, departmental
proximity, standard management boundaries,
operational relationships, or product
requirements

Large and complex projects should be based

on well-designed structures that permit
effective information and decision processes.
 Formal and informal structures: The formal
organization structure represents the
officially authorized structure of a
functional area.
The informal organizations, on the other
hand, develop when people organize
themselves in an unofficial way to accomplish
an objective that is in line with the overall
project goals.
Both formal and informal organizations are
placed in every project environment.
Functional Organization
 Functional organization: This is the most
common type of formal organization,
whereby people are organized into groups
dedicated to a particular functions.
Depending on the size and the type of
auxiliary activities involved in the project,
several minor, but supporting, functional
units can be developed for a project.
The project home office or headquarters is
located in the specific functional
department.
 Pros and Cons of Functional Organization

Advantages Disadvantages
Flexibility in use of Low priority to projects
manpower Not problem oriented,
Many organizations can may overemphasize on a
share functional particular functions
expertise No direct touch with
Continuity of technical clients
expertise No single person may be
Functional dimension responsible for projects
provide normal path for
career growth
Pure Project Organization
 Product organization: Another approach to
organize a project is to use the end product
or goal of the project as the determining
factor for personnel structure.
This is often referred to as the pure
project organization or, simply, project
organization.
The project is set up as a unique entity
within the parent organization.
It has its own dedicated technical staff and
administration.
 It is linked to the rest of the system
through process reports, organizational
policies, procedures, and funding.

The interference between product-

organized projects and other elements of
organization may be strict or liberal
depending on the organization.
 This type of organization is common in
large project-oriented organizations or
organizations that have multiple product
lines.

Unlike the functional structure, the

product organization decentralizes
functions. It creates a unit consisting of
specialized skills around a given project or
product.
 Pros and Cons of Pure project Organization

Advantages Disadvantages
Complete line authority Cost prohibitive to
over project multiple projects
Strong communication Tendency to retain
Personnel demonstrate personnel on projects
loyalty to project after they are needed
Rapid reaction time Technology suffers
without strong
functional groups
 Matrix Organization
Matrix organization: the matrix organization is
a popular choice of management professionals.
A matrix organization exists where there is
multiple managerial accountability and
responsibility for a job function.

It attempts to combine the advantages of the

traditional structure and the product
organization structure.
 In pure product organization, technology
utilization and resource sharing are limited
because there is no single group
responsible for overall project planning.

In the traditional organization structure,

time and schedule efficiency are
sacrificed.
 There are usually two chains of command:
horizontal and vertical.
The horizontal line deals with the functional
line responsibility while the vertical line
deals with the project line of responsibility.
The project manager has total responsibility
and accountability for the project success.
The functional managers have the
responsibility to achieve and maintain high
technical performance of a project.
 The project that is organized under a
matrix structure may relate to specific
problems, marketing issues, product quality
improvement, and so on.

The project line in the matrix is usually of

temporary nature while the functional line
is more permanent.
Matrix Organization Structure
 Pros and Cons of Matrix Organization

Advantages
Project Manager has the
authority to handle the
project
Rapid responses are
possible to change, conflict
resolution and project
needs
Sharing person reduces
cost
Each person has a home
after the project
Disadvantages
Multidimensional work
and information flow
Dual reporting
Continuously changing
priorities
Difficulty in monitoring
and control
Check Points
How were responsibilities in the WBS
assigned to the project organization (i.e.,
how was it determined which functional
areas would be involved in the project and
which tasks they would have)?
How were individual people assigned to the
project? Describe the process.
Was a responsibility matrix used? Show an
example.
 Bar Charts or Milestone Charts

The history of project planning techniques

associated with Henry Gantt, designed
the barchart as a visual aid for planning
and controlling his projects.

The beginning and the end of each bar

represent the time of start and the time
of finish of that activity
 Once the project has started the Gantt
chart can further be used as a tool for
project control.
This is achieved by drawing a second line
under the planned schedule to indicate
activity progress.
The relative position of the progress line to
planned line indicates percentage complete
and remaining duration, while the relative
position between the progress line and Time
now indicates actual progress against
planned progress.
 Example

Draw the bar chart for "finalization of

design and work orders" for a building
project.
Activity Description Time of
Completion
A Site selection and survey4 weeks
B Design 6 weeks
C Preparation of drawings 3 weeks
D Preparation of specification
and tender document 2 weeks
E Tendering 4 weeks
F Selection of contractor 1 week
G Award of work order 1 week
Bar chart for a building Project
 The benefits of Gantt chart can be clearly
seen not only are the calculations simple
but it combines all the above information
on one page.
 Network Scheduling

The most common network scheduling

methods are Critical Path Method (CPM)
and Program Evaluation and Review
Technique (PERT).
Two approaches may be used for the
assessment of duration for activity
completion.
 The first approach is the deterministic
approach, in which we may assume that we
know enough about each job or operation, so
that a single estimate of their duration is
sufficiently accurate to give reasonable
results.
The second approach is the probabilistic
approach, in which one may only be able to
state limits with-in which it is virtually
certain that the activity duration will lie.
Between these limits we must guess what the
probability of executing the activity is.
 Both methods (CPM and PERT) are
extensively used as dynamic control tools
in the management of a large project.
They give the project manager a
comprehensive picture of the project
status at any time.
 Network Diagram

For a project plan to be effective it must

equally address the parameters of activity
time and network logic.
As project becomes larger and more
complex, the Gantt chart was found to be
lacking as a planning and control tool,
because it could not indicate the logical
relationships between activities.
 Network Diagram
A network is a flow diagram consisting of
activities and events, connected logically
and sequentially.

In A-O-A network diagram, an activity is

represented by arrows while events
represented, usually, by circles
 Project of laying a foundation

1.Excavation of foundation
2.Laying side boards
3.Concreting foundation
 In network modeling of projects, the arrow
diagram is of primary importance. Some of
the advantages of network diagram or arrow
diagram are:
It clearly shows the inter-relationship
between events.
The project is seen as integrated whole,
thus making it easier for control.
It can be used even for highly complicated
projects consisting of a large number of
activities.
It directly indicates the time required in
between two activities.
 Event : it is defined to be an instant in
time. In a project, an event, may mark the
initiation of an activity, the completion of
an activity, or the time after which an
activity may be initiated.
Design completed, pipe line laid, electricity
installed, etc are examples of events. It is

o
represented by a circle in a network
which is also known as a node or connector.
An event can be further classified into the
following categories:
Merge event: When more than one activity
come and join an event, such event is known as
merge event.
Burst event: When more than one activity
leave an event, such event is known as a burst
event.
Merge and burst event: An activity may be a
merge and burst event at the same time as
with respect to some activities it can be a
merge event and with respect to some other
activities it may be a burst event.
Different types of event formation
 Activity: Any individual operation, which
utilizes resources and has a beginning and
an end, is called activity.
A project may be divided into activities
that are time consuming tasks or
subprojects like: assembly of parts, mixing
of concrete, preparing budget, etc.
Each activity in a project must be under
the direction of a single individual. The
other criterion is that an activity must be
performed in a single shop.
 An arrow is commonly used to represent
an activity with its head indicating the
direction of progress in the project.

A
k

An arrow representing an activity A

whose estimated duration is k unit of
time. Usually an activity can be classified
into the following four categories.
 Predecessor activity: Activities that must
be completed immediately prior to the
start of another activity are called
predecessor activities.
Successor activity: Activities that cannot
be started until one or more of other
activities are completed, but immediately
succeed them are called successor
activities.
 Concurrent activities: Activities that can
be accomplished simultaneously are known
as concurrent activities. It may be noted
that an activity can be a predecessor or
successor to an event or it may be
concurrent with one or more of the other
activities.
Example
Solution
 Dummy activity: An activity which does not
consume any kind of resource but merely
depicts the technological dependence is
called a dummy activity.
 It may be noted that the dummy activity
is inserted in the network to clarify the
activity pattern in the following two ways:
one is to make the activities with common
starting and finishing points
distinguishable, and
the other one is to identify and maintain
the proper precedence relationship
between activities that are not connected
with arrows
 For example, consider a situation where A
and B are concurrent activities, C is
dependent on A, and D is dependent on A
and B both.
Such a situation can be handled by using a
dummy activity
Dummy Activities
 Another situation, consider a case where
B and C have the same job reference and
they can be started independently on
completion of A.
But, D could be started only completion
of B and C.
Dummy Activities
 An event is that particular instant of time
at which some specific part of a project
has been or is to be achieved.
While an activity is actual performance of
a task. An activity requires time and
resource for its completion.
 Rules for Drawing Network Diagram
In order to draw a network diagram, the
following general rules have to be
considered:
1. Each activity is represented by one and
only one arrow in the network:
This implies that no single activity can be
represented twice in the network.
This is to be distinguished from the case
where one activity is broken into
segments.
2. No two activities can be identified by the
same events: For example, activities a
and b have the same end events. The
procedure is to introduce a dummy activity
either between a and one of end events
or between b and one of the events.
Modified representations after introducing
a dummy activity d is shown in figure
Sequence of Activity
 As a result of using the dummy, activities a
and b can now be identified by unique end
events.

It must be noted that a dummy activity does

not consume any time or resource.
 Dummy activities are also useful in
establishing logical relationship in the arrow
diagram which otherwise cannot be
represented correctly.
Suppose jobs a and b in a certain
project must precede the job c, on the
other hand, the job e is preceded by the
job b only
 Shows the correct way since, though the
relationship between a, b and c are
correct, the diagram implies that the job
must be preceded by both the jobs a and
b.
The correct representation using the dummy
d is shown that indicate precedence
relationships are justified.
3. Check the precedence relationship: In
order to ensure the correct precedence
relationship in the arrow diagram, the
following questions must be checked
whenever any activity is added to the
network.
What activity must be completed immediately
before this activity can start?
What activities must follow this activity?
What activities must occur simultaneously with
this activity?
 Apart from this, a few important
suggestions for drawing good networks are:
Try to avoid arrows which cross each
other.
Use straight arrows.
Do not attempt to represent duration
of activity by arrow length.
 Use arrows from left to right (or right
to left). Avoid mixing two directions,
vertical and standing arrows may be
used if necessary.
Use dummies freely in rough draft but
final network should not have any
redundant dummies.
The network has only one entry point-
called the start event and one point of
emergence-called the end event.
 In many situations, all these may not be
compatible with each activity and some of
them are violated.
The idea of having a simple network is to
facilitate easy reading for all those who
are involved in the project.
 Common Errors in Drawing Networks
Three types of errors are most commonly
observed while drawing network diagrams.
Dangling: To disconnect an activity before
the completion of all activities in a
network diagram is known as dangling.
As shown in the figure below, activities (b
- c) and (d - e) are not the last activities
in the network. So the diagram is wrong
and indicates the error of dangling.
Drawing error diagram
 Looping (or Cycling): Looping errors is also
known as cycling errors in a network
diagram.
Drawing an endless loop in a network is
known as an error of looping as shown in
the following figure.
Looping or cycling error diagram
 Redundancy: Unnecessarily inserting the
dummy activity in a network diagram is
known as the error of redundancy as
shown in the following diagram.
Redundancy Error
 Example

Separate out activities and events from the

following list

1. Prepare budget
2. Design completed
3. Lay railway track
4. Cure concrete cubes
5. Commence testing cubes
6. Material received at site
7.Distribution invitation cards
8.Service reservoir filled
9.Test pipe line
1o. Payment made
11.Asssemble pars of the machine
12.Prepare estimate
13,Survey the site
14.Collect data and prepare check list
15.Show room inaugurated
16.Install pump
17.Drive piles for right pier of bridge
18.Specification prepared
 Example: Draw the network diagram

A project consist of six activities (jobs) designated

from A to F, with the following relationships

1. A is the first job to be performed

2. B and C can be done concurrently and must follow A
3. B must Precede D
4. E must succeed C, but it cannot start until B is
complete
5. The last operation F is dependent on the completion
of both
Example: Construct network diagram
1. A is the first operation
2. B and C can be performed in parallel are
immediate successor to A
3. D,E and F follows B
4. G follows E
5. H follows D, but it cannot start until E is
complete
6. I and J succeed G
7. F and J precede K
8. H and I precede L
9. M succeeds L and K
10.The last operation N succeeds M and C
 Critical Path Method (CPM)
The Critical Path Method (CPM) was developed in
1957 by Remington Rand Univac as a management
tool to improve the planning and control of a
construction project

CPM was initially set-up to address the time cost

trade-off dilemma often presented to project
managers, where there is a complex relationship
between project time to complete and cost to
complete.
 CPM enables the planner to model the
effect various project time cycles have on
direct costs.

Shortening the project duration will

reduce indirect costs, but may increase
the direct costs.

This technique is often called Project

crashing or acceleration
 Time Estimate and Critical Path in
Network Analysis
Once the network of a project is
constructed, the time analysis of the
network becomes essential for planning
various activities of the project.
An activity-time is a forecast of the time
an activity is expected to take from its
starting point to its completion under
normal conditions.
The main objective of the time analysis is to prepare
a planning schedule of the project, which should
include the following factors:
Total completion time for the project.
Earliest time when each activity can start.
Latest time when each activity can be started
without delay of the total project.
Float for each activity, i.e., the amount of
time by which the completion of an activity can
be delayed without delaying the total project
completion.
Identification of critical activities and critical
path.
 The following notations are used for the basic
scheduling computation techniques:
(i, j ) = Activity (i, j) with tail event i and head event j.

= Earliest occurrence time of event i.

TE or Ei

TL or L j = Latest allowable occurrence time of event j.

Dij = Estimated completion time of activity (i , j)

( E S ) ij = Earliest starting time of activity (i , j)

( E f ) ij = Earliest finish time of activity (i , j)

( LS ) ij = Latest starting time of activity (i , j)

( L f ) ij = Latest finish time of activity (i , j)

 Thus the basic scheduling computation can be put
under the following three categories.

i)Forward Pass Computations: Before starting

computations, the occurrence time of initial
network event is fixed. Then, the forward pass
computation yields the earliest start and earliest
finish time for each activity (i, j), and indirectly
the earliest expected occurrence time for each
event. This is mainly done by using the following
steps:
Step 1. The computations begin from the start node
and move towards the end node.
Step 2. a) Earliest starting time of activity (i, j) is
the earliest event time of the tail end event
i.e.,
( E S ) ij Ei
b) Earliest finish time of activity (i, j) is the
earliest starting time plus the activity time. i.e.,

( E f ) ij ( E S ) ij Dij
or

( E f ) ij Ei Dij
c) Earliest event time for event j is the maximum of
the earliest finish times of all activities ending into
that event. That is,

E j max.i [(E f ) ij for all immediate predecessor of (i, j) ]or E j

max.i [E i D ij ]

The computed E values are put over the respective

circles representing each event.
ii) Backward Pass Computations
The latest event time, (L) indicates the time by
which all activities entering into that event must
be computed without delaying the computation of
the project. These can be computed by reversing
the method of calculation used for earliest event
times. This is done in the following steps:
 Step 1. For ending event assume

EL
Remember that all Es have been computed by forward
pass computations.

Step 2. Latest finish time of activity (i, j) is equal to

the latest event time of event j. i.e.,

( L f ) ij L j
Step 3. Latest starting time of activity (i , j) = the
latest completion time of activity (i , j) the activity
time, or

( LS ) ij ( L f ) ij Dij
or

( LS ) ij L j Dij

Step 4. Latest event time for event i is the minimum

of the latest start time of all activities originating
from the event, i.e.,
L i min. j [(LS ) ij for all immediate successors of (i, j)] min.j[(Lf )ij - D ij ]
min.j[ L j Dij ]

The computed L values are put over the respective

circles representing each event.
iii) Determination of Floats and Slack Times
When the network diagram is completely drawn,
properly labelled, and earliest (E) and latest (L)
event times are computed as discussed so far,
the next objective is to determine the float and
slack times of a project.
 There are mainly five kinds of floats.

Total float: The amount of time by which the

completion of an activity could be delayed beyond
the earliest expected completion time without
affecting the overall project duration time.

Mathematically, the total float of an activity (i ,

j) is the difference between the latest start time
and the earliest start time of that activity.
Hence the total float for an activity (i , j),
denoted by
(T f ) ij can be calculated by the formula:

(T f ) ij ( Latest start Earliest start )

for activity (i - j)
(T f ) ij ( LS ) ij ( E S ) ij

or

( T f )ij ( L j Dij ) Ei
 Free float: The time by which the
completion of an activity can be delayed
beyond the earliest finish time without
affecting the earliest start of a
subsequent (succeeding) activity.
 Mathematically, the free float for activity (i, j), denoted by

( F f ) ij can be calculated by the formula :

( F f ) ij ( E j Ei ) Dij

In other words,

Free float for (i, j )

(Earliest time for event j Earliest time for event i) Activity time for (i, j )

This float is concerned with the commencement of subsequent

activity.
 Independent float: The amount of time by
which the start of an activity can be
delayed without affecting the earliest
start time of any immediately following
activities, assuming that the preceding
activity has finished at its latest finish
time.
 Mathematically, independent float of an activity (i, j), denoted by

( I F ) ij
, can be calculated by the formula :

( I F ) ij ( E j Li ) Dij
The negative independent float is always taken zero.
This float is concerned with prior and subsequent activities.
 Interfering float: Utilization of float of
an activity may affect the float time of
the other activity in the network.
Interfering float is that part of total
float which causes a reduction in the float
of successor activities.

It is the difference between the latest

finish time of activity in question and the
earliest starting time of the following
activity or zero whichever is larger.
 Event slacks: For any given event, the
event slack is defined as the difference
between the latest event and earliest
event times. Mathematically, for a given
activity (i, j),
 Head event slack L j E j

Tail event slack Li Ei

All the floats defined earlier can be represented in
times of head and tail event slacks also.

Total float L j Ei Dij

 Free float E j Ei Dij ( L j Ei Dij ) ( L j E j )

Total float - Head event slack

Independent float E j Li Dij ( E j Ei Dij ) ( Li Ei )

Free float - Tail event slack

 iv) Time Scale Representation of Floats
and Slacks
The various floats and slacks for an
activity (i, j) can be represented by the
following time scale figure
Time scale representation of float and slacks
Value of total float
 Determination of the Critical Path
i) Critical event: Since the slack of an event is the
difference between the latest and earliest event times.
i.e.,

Slack (i ) Li Ei
the events with zero slack times are called critical
events. In other words, the event i is said to be
critical if

Ei Li
ii) Critical activity: Since the difference between
the latest start time and earliest start time of
an activity is usually called as total float, the
activities with zero total float are known as
critical activities.
 Obviously, a non-critical activity is such
that the time between its earliest start
and its latest completion dates (as allowed
by the project) is longer than its actual
duration. In this case, non-critical activity
is said to have a slack or float time.
iii) Critical path: The sequence of critical activities
in a network is called the critical path. The
critical path is the longest path in the network
from the starting event to ending event and
defines the minimum time required to complete
the project. By the term path we mean a
sequence of activities such that it begins at the
starting event and end at the final event. The
length of the path is the sum of the individual
times of the activities lying on the path.
 If the activities on a critical path are
delayed by a day, the project would also
be delayed by a day unless the times of
the future critical activities are reduced
by a day by different means.

The critical path is denoted by double or

darker lines to make distinction from the
other non-critical paths.
 Thus the critical path has two features:
If the project has to be shortened, then some of
the activities on that path must also be
shortened. The application of additional resources
on other activities will not give the desired result
unless that critical path is shortened first.
The variation in actual performance from the
expected activity duration time will be completely
reflected in one-to-one fashion in the anticipated
completion of the whole project.
 The critical path identifies all critical
activities of the project. The method of
determining such a path is explained by
the following numerical example.
 Example
Consider the following project to
manufacture a simple mobile stone
crasher. The list of each activities, their
relationship, and the time required to
complete them are given in the following
table. We are interested to find the time
it will take to complete this project. What
jobs are critical to the completion of the
project in time, etc?
List of Activities
Activity Symbol Duration Restriction
(weeks)
Preliminary design A 3 A < B, Cl
Engineering analysis B 1 B < Dl, F, H
Prepare layout I Cl 2 Cl < C2, Dl
prepare layout II C2 2 C2 < E
Prepare material request Dl 1 Dl < D2
Receive requested material D2 1 D2 < E

Fabricate Parts E 4 E < J

Requisition Parts F 1 F < G
Receive Parts G 2 G < J
Place subcontracts H 1 H < I
Receive subcontracted parts I 5 I < J
Assemble J 2 J < K
Inspect and test K 1
 Solution

First the network diagram is constructed

 Then, it is necessary to find out the
earliest and latest completion time of for
each activity in the network.
The earliest and the latest times are re-
calculated by using forward pass and
backward pass computations, respectively.
The solution now starts by the forward
pass computation.
 Step1. Determination of Earliest Time
(E j )
Forward Pass Computation
The purpose of the forward pass computation is to find out
earliest start times for all the activities.
For this, it is necessary to assign some initial value to the
starting node 10.
Usually this value is taken to be zero so that the subsequent
earliest time could be interpreted as the project duration up to
that point in question.
Rules for the computation are as follows:
Rule 1. Initial event is supposed to occur at time
equal to zero, that is,

E10 0
Rule 2.Any activity can start immediately when all
preceding activities are completed.

for node j is
Ej given by

E j Max.[ Ei Dij ]
 Rule 3.Repeat step2 for the next eligible activity
until the end node is reached.

E10 0
and

E 20 Max.[ E i Di 20 ]

For node 20, node 10 is the only predecessor and hence

i 10
contains only one element. Therefore,
 E j Max.[ Ei Dij ]

E 20 E10 D10, 20 0 3 3
,

E 21 E 20 D20, 21 3 2 5
,
E30 E 20 D20,30 3 1 4

E50 E30 D30,50 4 1 5

E 60 E30 D30, 60 4 1 5
,
Consider node 31, where there are two
emerging activities, i.e.
E 31 Max.[ E i Di ,31 ]
The collection i consists of node 21 and 30 that are
preceding node 31, Therefore,

E31 Max.[ E 21 D21,31 5 0 5, E30 D30,31 4 0 4] 5

and values of E32 can be computed as:

E32 E31 D31,32 5 1 6

Once again, for node 40 and 70;

 E 40 Max.[ E 21 D21, 40 5 2 7, E32 D32, 40 6 1 7] 7

E 70 Max.[ E 40 D40,70 7 4 11, E50 D50, 70 5 2 7, E 60 D60,70 5 5 10] 11

and values of E80 , and E90 can be computed as:

E80 E 70 D70,80 11 2 13

E90 E80 D80,90 13 1 14

 From this computation, it can be inferred that this job will
take 14 days to finish as this the longest path of the network.
Activities along this longest path are: 10 20 21 40 70
80 90. This longest path is called the critical path. In any
network, it is not possible that there can be only one critical
path.
For example, if in the above network, let

E30 5
days, then 10 20 30 60 70 80 90 can be also
critical, in that case two critical paths exist having the
same duration for completion of the project.
 Step2.Determination of Latest Time
( Li )
Backward Pass Computation
In forward pass computation, the earliest time when
a particular activity will be completed is known.
It is also seen that some activities are not critical to
the completion of the job.
The question a manager would like to ask is: Can
their starting time be delayed so that the total
completion time is still the same?
Such a question may arise while scheduling the
resources such as manpower, equipment, finance and
so on.
 If delay is allowable, then what can be the maximum delay? For

this, the latest time for various activities desired.

The backward pass computation procedure is used to
calculate the latest time for various activities.

In forward pass computation, assignment of was arbitrary,

likewise for the backward pass computation, it is possible
to assign the project terminal event the date on which the
project should be over.
If no such date is prescribed, then the convention is of
setting latest allowable time determined in forward pass
computation.
 Rule 1. Set
Li Ei or TS

Where TS is the scheduled date for completion and

Ei is the earliest terminal time.

Rule 2. Li Min. j [ L j - Dij ]

i.e. the latest time for activities is the minimum of

the latest time of all succeeding activities reducing
their activity time.

Rule 3.Repeat rule 2 until starting activity reached.

Latest times for activities of the network are calculated below:
By rule1, set

L90 14
.Applying rule 2, it is to determine

L80 L40
L70
L32
L60
L31
L50
L80 Min. j {L j - D80, j } 14 1 13 for j 90

L 70 Min. j{L j - D 70, j} L80 - D 70,80 13 2 11

(j contains only one node 80)

L60 Min. j {L j - D60, j } L70 - D60,70 11 5 6

(j contains node 70)

L50 Min. j {L j - D50, j } L50 - D50,70 11 2 9

(j contains node 70)
L40 Min. j {L j - D40, j } L40 - D40,70 11 4 7
(j contains node 70)

L32 Min. j {L j - D32, j } L32 - D32,40 7 1 6

(j contains node 40)

L31 Min. j {L j - D31, j } L31 - D32,32 6 1 5

(j contains node 32)

Now consider node21, for this node, there are
two succeeding activities, namely 21 40, and 21
31. Hence,
 L40 D21, 40 7 2 5
L21 Min. j (31,40) {L j - D21, j } Min. Min. 5
L31 D21,31 5 0 5

Similarly, for node 20, and 30,

L21 D20, 21 5 2 3
L20 Min. j (21,30) {L j - D21, j } Min. Min. 3
L30 D20,30 4 1 3

L31 D30,31 5 0 5

L30 Min. j (31,50,60) {L j - D30, j } Min. L31 D50,31 Min.5 1 4 4
L D 5 1 4
31 60, 31
 and like the other one, for
node 10,

L10 Min. j {L j - D10, j } L20 - D10,20 3 3 0

The minimum value of L10 0

is no surprising result. Since, started with Li Ei

, it is always possible to have L10 0

If this is not so, it means that some error is made in calculations

of forward pass or backward pass values.
Network diagram with critical path
Recall that path 10 20 21 40 70 80
90 was defined as the critical path of this
network. Along this path, it is observed that
the latest and earliest times are the same
implying that any activity along this path
cannot be delayed without affecting the
duration of the project.
 Step 3. Computation of Float (L f )

By definition, for activity 60 70, the float is one day

L60 E 60 6 5 1
This float represents the amount by which this particular activity
can be delayed without affecting the total time of the project.
 Also, by definition, free float, if any will exist
only on the activities merge points.
To illustrate the concept of free float, consider
path 10 20 30 50 70, total float on
activity 50 - 70 is four days and since this is
the last activity prior to merging two activities,
this float is free float also.
Similarly, consider the activity 30-50 which has
a total float of 4 days but has zero free float
because 4 day of free float is due to the activity
50-70.
 If activity 30-50 is delayed up to four
days, the early start time of no activity
in the network will be affected.
Therefore, the concept of free float
clearly states that the use of free float
time will not influence any succeeding
activity float time.
 Step 4. To Identify Critical Path

Identifying the critical path is a byproduct

of boundary time calculations. A critical
activity has no leeway in scheduling and
consequently zero total float. It is
important to note that the value of slack,
associated with an event, determines how
critical that event is. The less the slack,
the more critical an event is.
 The earlier calculation shows that the path or
paths which have zero float are called the critical
ones or in other words, a critical path is the one
which connects the events having zero total float
or a minimum slack time.
If this logic is extended further more, it would
provide a guide rule to determine the next most
critical path, and so on.
Such information will be useful for managers in the
control of project. In this example, path 10 20
30 60 70 80 - 90 happens to be next to
critical path because it has float of one day on
many of its activities.
 Boundary Times Duration for the Start and Finish of Activities
Start Finish Total Float
Activity Duration
(i - j) Earliest Latest Earliest Latest
Dij
(1) (2) (3) E i (4) (6) - (2) (5) (3) (2) (6) (7) (4) - (3)
A 3 0 0 3 3 0
B 1 3 4 4 5 1
C1 2 3 3 5 5 0
C2 2 5 5 7 7 0
D1 1 5 5 6 6 0
D2 1 6 6 7 7 0
E 4 7 7 11 11 0
F 1 4 8 5 9 4
G 2 5 9 7 11 4
H 1 4 5 5 6 1
I 5 5 6 10 11 1
J 2 11 11 13 13 0
K 1 13 13 14 14 0
 Program Evaluation and Review
Techniques (PERT)
The US Navy set up a development team
with the Lockheed Aircraft Corporation,
and a management consultant Booz ,Allen &
Hamilton, to design PERT as an integrated
planning and control system to manage their
Polaris Submarine project.
The PERT technique was developed to apply
a statistical treatment to the possible
range of activity time durations
 A three time probabilistic model was developed, this includes:

t
Optimistic time 0 limit of completion time if every thing goes all-right.

Pessimistic time t p limit of completion time if every thing goes all-

wrong (in case climatic conditions, explosions,
accidents, etc., come into effect to retard the
activity).

Most likely time t l the duration that would occur most often if
the activity was repeated many times under
the same conditions.
 The three times were imposed on a normal
distribution to calculate the activitys
expected time te as,

(t o 4t l t p )
te
6
Normal Probability distribution
 Each activity in a PERT network also has a
variance with its completion of time. This
variance measures the dispersion of possible
duration. A large variance means a wide
variation in the outside limits of estimate
and indicates less confidence in estimating:

2
t p to

2

6
99.7 % within t e 3
95.0 % " t e 2
68.0 % "
te
 Example
A contractor has received order for
constructing a cottage on a sea side resort.
The delivery of materials must be planned
and the complete job finished in 15 weeks.
The work involves and the time required to
complete each activities are given in the
table below.
Job Description Immediate Time, days
predecessors to tl tp

A Buying bricks and cement - 8 10 14

B Roof tiles buying - 20 24 30
C Repairing foundation A 12 14 16
D Erecting shell structure of C 18 20 24
building
E Laying drains C 12 14 15
F Wiring for electrical G 16 20 26
G Constructing roof D 8 8 10
H Plastering G 12 12 18
I Landscaping K 4 4 6
J Painting and cleaning B,F,I,N 10 12 14
K Laying pathway E 4 4 4
L Installing doors and G 4 4 4
fittings
M Plumbing G 20 24 30
 Question

a) construct a logical PERT diagram.

b) find the critical path and project duration.
c)determine whether the project is completed
within the planned estimated time or not?
d)What would be the probability of completing
the project within 93 days?
 Solution:

Before constructing the PERT diagram, the

expected time (te) for each of the
activities has to be calculated by using the
following formula
 (t o 4t l t p )
te
6
where
to = optimistic time

tl = most likely time

tp = pessimistictime
and also the precedence of the activities has to be determined.
Job Description Immediate Time, days te
(t o 4t l t p )

predecessors to tl t p
6

A Buying bricks and cement - 8 10 14

B Roof tiles buying - 20 24 30 24
C Repairing foundation A 12 14 16 14
D Erecting shell structure of C 18 20 24 20
building
E Laying drains C 12 14 15 14
F Wiring for electrical G 16 20 26 20
G Constructing roof B, D 8 8 10 8
H Plastering G 12 12 18 13
I Landscaping K 4 4 6 4
J Painting and cleaning F, I, N 10 12 14 12
K Laying pathway E 4 4 4 4
L Installing doors and G 4 4 4 4
fittings
M Plumbing G 20 24 30 24
Network Diagram
Activity Duration Start Finish Total Float
(i - j)
Dij
Earliest Latest Earliest Latest
(1) (2) (3) Ei (4) (6) - (2) (5) (3) (2) (6) L j (7) (4) - (3)

A 0 0 10 10 0
B 24 0 20 24 44 20
C 14 10 10 24 24 0
D 20 24 24 44 44 0
E 14 24 64 38 78 40
G 8 44 44 52 52 0
H 13 52 63 65 76 11
I 4 42 82 46 86 40
J 12 86 86 98 98 0
K 4 38 78 42 82 40
L 4 52 72 56 76 20
M 24 52 52 76 76 0
N 10 76 76 86 86 0
 Example Contd

The probability of completing the project is

0.2032 or about 20.32%
Precedence Diagram Method
(PDM)
Generalized Precedence relations
Start to start (SS)
In plastering a large piece of road, lay the
concrete first and do the plastering once
the concrete is over
Start to Finish (SF)
Phase out old system cannot be finished
until 25 days after test new system
begins
Precedence Diagram Method
(PDM)
Finish to start (FS)
Tearing down scaffolding can start no
sooner than 5 days after plaster walls
finished
Finish to Finish (FF)
Painting parking lines must be finished
within 5 days after lay asphalt has been
finished
 S Curve
S curve developed by department of
defence and NASA, USA in 1962.

The key concept used is that costs are to

be measured and controlled primarily on a
project basis rather than according to the
functional organization of a firm

The right place to control a cost is at

individual activities
 Responsibility for expenditure should
coincide with the responsibility for managing
the activities that gives rise to the
expenditure

It seems strange that one who suctions the

expenditure has nothing to do with activity
implantation and actual cost control
 Recommended Work package

Neither too small nor to big

Responsibility can be clearly identified
Manageable for planning and control
purposes
 Assumptions

It is assumed in S curve the

expenditure on a work package is
uniform throughout its duration
 Project Monitoring
Performance
Time
Cost

There must be a common reference for

purpose of measurement and comparison

This common reference is the original plan

or the budgeted cost and value curve
 S- Curve
An S curve is a graph of the cumulative value
of manhours, percentage complete, or cost,
against time.

In an S-curve, the vertical scale represents

manhours or cost, or the percentage of
planned manhours or budgeted cost, that is,
percentage completed and the horizontal scale
represents the total time available, or time
spent for a specific activity.
 This graph generally takes the form of an
S because most projects have a slow
start, followed by a longer period of
relatively constant activity at a higher
rate of activity, and finally a falling off
of this rate of activity to give a slow
finish.
 The S curve is a very sensitive tool for the
analysis and control of progress, whether it
could be based on manhours or cost.

The big advantage of S curves is that they

can be used to identify trends at an early
stage, because they can monitor both the
rate of progress, and also the acceleration
or deceleration of this rate.
 In manpower analysis the slope of the curve
represents the rate of expenditure of
manhours, that is the velocity, and the
rate of change of the curve represents the
rate of build up or run down of the
momentum of the work on the project, that
is, the acceleration or deceleration of the
place of work.
 In order to plot S curve for effective control
of man-hours, three elements of data are
required. These are:
The planned cumulative expenditure of manhours
against time.
The actual cumulative expenditure of manhours
against time.
The cumulative manhours equivalent of actual work
completed, that is, earned value.
 The slope of the curve at the start
represents the initial rate of work on the
project.
If the gradient of the actual manhours
curve is less than planned, then it is
obvious that there is too slow at a start.
Thereafter the first critical point is where
the curve should turn up at the bottom of
the S.
 If this critical acceleration of work on the
project does not turn upwards, the project
is going to be delayed, no matter what is
done.
Once the curve does turn up, the slope of
the curve shows the rate of progress.
 If work is not progressing as fast as
planned, the slope of the actual curve vary
quickly and obviously becomes less than that
of the planned work curve.
At the top of the curve if the work does not
decelerate as planned then there is going to
be an overshoot.
This is because it is generally not possible to
finish off a project without the slowing down
of the project of work, as is represented by
the top of the S.
 Thus these S curves and the information they
represent can be used at any time to determine
how much work is actually completed, the
efficiency of working, the rate of working and to
forecasts the time to completion and the actual
manpower required.
One of the skills a project manger must to have is the
ability to recognize trends, or deviations from plan or
budget, at an early stage.
Everyone can recognize a trend or deviation when it is
well established, but by the time in most cases it is
too late to do anything about it.
 To be able actually to influence the success
of the project, rather than be carried along
by its momentum, a project manager must be
able to recognize a trend at an early enough
stage to be able to do something about it.
This may be partly an intuitive skill, but this
can be enhanced by the intelligent use of the
analytical techniques available, of which the
S chart is one of the simplest, but one of
the most useful.
Cost/Schedule Control Systems Criteria
(C/SCSC)
(A)Budgeted Cost of Work Schedule
(BCWS)
(B)Actual Cost of Work Performed
(ACWP)
(C)Budgeted Cost of Work Performed
(BCWP) (Earned Value)
 Performance Indices
Cost Performance Index
CPI= BCWP/ACWP=C/B
Less than One - not Normal
Equal to One- Normal
Greater than One- better than Normal

Schedule performance Index

SPI=BCWP/BCWS=C/A
Less than One - not Normal
Equal to One- Normal
Greater than One- better than Normal
 Basic Scheduling
Activity Duration Total cost Cost/month
Months $ $/months
1-2 2 40 20

1-3 2 50 25

2-4 4 60 15

2-5 2 60 30

3-6 4 80 20

3-7 3 60 20

4-6 5 50 10

5-6 3 75 25

6-8 1 40 40

7-8 5 100 20
 Performance
Cumulative Data Data for Each Period Indices (per
period)
Period Budget Actual Earned Budget Actual Earned Cost Schedule
Cost Value Cost Value
1 100,000 100,000 100,000 100,000 100,000 100,000 1.00 1.00
2 200,000 200,000 200,000 100,000 100,000 100,000 1.00 1.00
3 330,000 330,000 320,000 130,000 130,000 120,000 0.92 0.92
4 500,000 520,000 480,000 170,000 190,000 160,000 0.84 0.94
5 820,000 850,000 750,000 320,000 330,000 270,000 0.82 0.84
 Project Crashing
The crash time estimate is the shortest
time that could be achieved if all effort
were made to reduce the activity time. The
use of more workers, better equipment,
overtime, etc, would generate higher direct
cost for individual activities.
The minimum possible duration of the
activity is its crash duration, when its cost
is the highest.
 For technological reasons it is not possible
to shorten duration below the crash limit
even by spending more money an resources
 Time Cost Trade-off Theory

Before discussing the time cost trade-off

concept, it is necessary to define some
terminologies used.
Normal Time: This is the normal office
hour, for example eight hour a day, and six
days a week.
Normal Cost: The cost of activity working
on normal time.
 Direct Cost: Costs attributed directly to
the project labor and materials. These costs
usually group when the activity is crashed
due to overtime, shift allowance, etc.
Indirect Cost: This is overhead cost which
can not be directly attributed to the
project, for example, office rent, and
management salaries. These costs are usually
linear with time, therefore, if the time
reduces, the indirect costs also reduce.
 Crash Time: The duration the activity can
be reduce to, by crashing the activity.
Crash Cost: The new cost of the activity
after crashing.
i) Crashing direct cost: The duration has been
reduced but the costs have increased.
These additional costs are caused by
overtime, shift work and a reduction in
productivity
Crashing Direct Costs
ii) Crashing indirect cost: The duration has been
reduced but the time and the costs have also
reduced. The benefit has come from reduced
office rental, equipment hire etc.
Unfortunately project costs are usually split
80% direct, and 20% indirect cost, so the
advantage of crashing indirect costs is usually
overwhelmed by the far greater direct costs
Crashing indirect costs
 When the direct costs and indirect costs
are combined on the same graph an optimum
position is derived.
Combined direct and indirect costs
 Time cost trade-off: The time cost trade-
off figure outline graphically four different
time costs positions.
The time cost trade-off
The total cost of the project can be calculated
by:
C total C N total m d cp
wh
ere = total sum of normal
C N totalcost
m = indirect cost
slope
d cp
= number of days in critical
path.
 Heuristic Solution procedure

1. Start with the normal project duration

2. Obtain the critical Path(s)
3. Choose the activity on the critical path which is
the cheapest to crash
4. Crash that activity till either another path
becomes critical or the activity is fully crashed
5. Determine the most economical set of activities to
be crashed or relaxed to reduce the durations all
critical paths
6.No further crashing is possible when at least one
critical path cannot be reduced
7.When two or more activities on any path are
simultaneously crashed, some previously crashed
activity on the path may be relaxed
EXAMPLE
Activity Normal Crash Cost Slope
Days $ Days $ $/day
A 4 100 3 200 100
B 7 280 5 520 120
C 3 50 2 100 50
D 5 200 3 360 80
E 2 160 2 160 infinity
F 10 230 8 350 60
G 7 200 5 480 140
H 2 100 1 200 100
 Activities
Path A B C D E F G H

ADG 100 80 140 16

AF 100 60 14

BG 120 140 14

CEG 50 X 140 12
CH 50 100 5
1 2 1 2 0 2 2 1
 Activities
Path A B C D E F G H

ADG 100 80 140 14

AF 100 60 14

BG 120 140 14

CEG 50 X 140 12
CH 50 100 5
1 2 1 0 0 2 2 1
 Activities
Path A B C D E F G H

ADG 100 80 140 13

AF 100 60 13

BG 120 140 13

CEG 50 X 140 11
CH 50 100 5
0 2 1 1 0 2 1 1
 Activities
Path A B C D E F G H

ADG 100 80 140 12

AF 100 60 12

BG 120 140 12

CEG 50 X 140 10
CH 50 100 5
0 2 1 1 0 1 0 1
 Activities
Path A B C D E F G H

ADG 100 80 140 11

AF 100 60 11

BG 120 140 11

CEG 50 X 140 10
CH 50 100 5
0 1 1 0 0 0 0 1
 Project indirect costs=$100/day

Days 16 15 14 13 12 11

Direct $1,320 $1,400 $1,480 $1,640 $1,840 $2,100

cost

Indirect $1,600 $1,500 $1,400 $1,300 $1,200 $1,100

cost

Total cost $2,920 $2,900 $2,880 $2,940 $3,040 $3,200

 Example:

The following example depicts how direct

costs increase while indirect costs reduced
during crashing. Consider the following
activity to manufacture a motor driven
hollow block machine.
When working normal time the activity will
take;
Five men working eight hours per day,
 Six days per week for five weeks =1,200 man hrs.
The activitys normal costs will be:
Labor at 5 birr per hour x 1200 man hours =6,000
Birr.
Material = 4,500 Birr
Administration and office expense Birr 1000 per
week
Birr 1000 x 5 weeks = 5000 Birr

Total=15,500 Birr
 If the client now wants to manufacture the
machine in less time, the crash cost can be
quantified in steps of one day. To reduce the
duration the men will have to work overtime,
say 10 hours per day (2 hours overtime which
is calculated with one and a half time).
Assume the additional hours do not affect the
productivity.
The total man hours will still be the same i.e.
 1200 man hours
24 days or 4 weeks
5 men 10 hours per day
The extra hours worked per day will reduce the duration from
30 working days to 24 working days.
The crashing costs will be:
Labor:

5 Birr 24 days 5 men 8 hrs = 4800 Birr (normal time)

5 Birr 24 days 5 men 2 hrs 1.5 (over time) =

1800 Birr (over time)
 Material = 5000 Birr (no change)

Adm. and Off. expense : 1000 Birr 4 weeks

4000 Birr (reduction )

___________
Total = 15,600 Birr

With this information calculate the additional

cost to crash the activity by on day, will be

Additional crash cost per day

(Difference in cost)

(15,600 - 15500) 17 Birr per day
(Difference in time) (30 - 24)
 This example clearly shows that to reduce
the project by one week or six days the
direct costs will increase while the indirect
costs reduce. The overall effect is to
increase the costs by 17 Birr per day.
The project time-cost model seeks to
shorten the length of a project to the point
where the saving in direct project costs is
offset by the increased direct expenses.
 Resource Allocation
While developing the PERT and CPM networks
we have generally assumed that sufficient
resources are available to perform the
various activities.
In every production enterprise, resources
are always limited and the management
always wants to assign these various
activities in such a manner that there is
best possible utilization of available
resources.
 A project manager frequently come across
resource constraints
There may be delay in the arrival of
building materials . The available personnel
may short of the requirements on some days
and the may be excess personnel available
on some other days
The job of the project manager is to plan
and allocate the resources for different
activities so that the resource utilization is
optimized
 Depending upon the type of constraints
the resource allocation procedure can be
categorized into two main activities:

Resource smoothing and

Resource leveling
 Resource Smoothing
There is no constraint on project completion
time
The constraint is only with regard to the
availability of other resources
The project duration can be extended to
satisfy the resource constraints
There are many different techniques
available for handling such problems
One such method that employs a huristics
(rule of Thumb) which is easy to use is
explained below
1. The resources are to be allocated serially in time i.e.
resource allocation should star on the first day ; all
possible jobs are to be scheduled for the first day
before moving the second day and so on

2. When more job compete for the same resource,

preference is to be given to the job/jobs with least
float

3. Jobs once started should be continue till they

finished i.e. breaking of jobs is not allowed

4. Whenever possible, non-critical jobs are to be

postponed so that critical jobs can be scheduled with
out increasing the job completion time
 Resource leveling

There are a situations demanding that the

project should be completed by a specified
due date
Example a school building might be required
to be completed before the school reopens
Under such situations, project completion
time is the constraint time i.e the project
can be completed at any cost by the due
date
 Thus, the objective of the project manger
in such a situation is to level as far as
possible the demand for resources through
out the project execution time, keeping in
view the constraint that the specified
completion time should not be exceeded
 To smoothen resources usage profile by
shifting slacks jobs without worsening
project duration