Assosa University

Department of Mechanical Engineering

Industrial Management & Engineering Economy – project management

Chapter – Five
Inst. Fekadu G.
Lecture time
Lecture time
Monday_ 8:00-10:00
Monday_ 8:00-10:00
Wednesday _2:00-4:00
Wednesday _2:00-4:00 1
Objective
After learning this chapter you will be able to
- Define project
- Use techniques of project management (CPM, PERT…)

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What is project
Temporary endeavor undertaken to create a unique product,
service, or result
A project ends when its objectives have been reached, or the
project has been terminated.
Projects can be large or small and take a short or long time to
complete.

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Project management Process

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Project management Process
Planning
• Dividing the project into distinct activities
• Estimating time requirement for each activity
• Establishing precedence relationship among the activities
• construct the arrow diagram
Scheduling
• determine the start and end time of each activity
Controlling
• Uses the arrow diagram and tome chart for continuous monitoring and
progress reporting

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 Projects Vs Operations

Projects Operations
 Non-routine one time  Ongoing activities of an
activities organization

 Set of interrelated jobs  Use existing systems,

 Usually specified in terms of properties, and

cost, schedule, & capabilities

performance requirements.  Repetitive in Nature

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REPRESENTING A PROJECT AS A
NETWORK
Projects may be represented as networks with:
Arrows representing activities.
Nodes representing completion of a set of activities (milestones).
Pseudo activities may be required to satisfy precedence relationships.

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Example
• Suppose a project consists of the five activities A, B, C, D, and E that
satisfy the following precedence relationships:
1. Neither A nor B has any immediate predecessors.
2. A is an immediate predecessor of C.
3. B is an immediate predecessor of D.
4. C and D are immediate predecessors of E.
Draw the network diagram

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Solution

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Gantt Chart: Simple way of controlling
project

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Project Structure
A typical Work Break Down Structure
- defines the hierarchy of project tasks, subtasks, and work packages

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Advanced Project control techniques
CPM
• Used when activity times are known with certainty
• Offers timing estimates for the project (when to start, when to end)
• Offers float times for each activity
PERT
• Used when activity times are uncertain
• Offers the same information as CPM + probability information
Time Costing Methods
• Used when cost trade-off information is a major consideration
• Used to determine the least cost in reducing total project time

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critical path method
An analytical tool that provides a schedule that completes the
project in minimum time subject to the precedence constraints.
For example by using CPM you can answer…
1. What is the minimum time required to complete the project?
2. What are the starting and ending times for each of the activities?
3. Which activities can be delayed without delaying the project?

A path through the network is a sequence of activities from node 1 to

the final node.

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Pre-request for using CPM
A project must have:
1. well-defined jobs or tasks or activities
2. a beginning and an end of the project
3. independent activities (not from one task back to another !!)
4. A given activity-sequence

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Fundamental of CPM
• The CPM network has one starting event and one ending event!
• Each activity is bounded by two events, one at the tail (starting point)
and one at the head (ending point).

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Conventions (activity on arrow/arc)
1. activity = 1 arrow
2. Each node has:
1. min. 1 entering arrow
2. min. 1 leaving arrow(except first and last knot)
3. Between 2 nodes max.1 arrow(use dummies !!)
4. No cycles
5. Transitive relation
1. (A before B and B before C implies A before C)
6. Correct formulation(use dummies!!)
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CPM – critical path method

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AON and AOA
AON (Activity-On-Node) network graphics - AON network planning is a graphic
technique in which a node represents a job, and an arrow represents the logic
relation between two adjacent jobs.
A B C

AOA (Activity-On-Arrow) graphics - AOA network planning is a graphic technique in

which an arrow represents a job, the end of the arrow represents the beginning of
the job and the head of the arrow represents the ending of the job.
A B C
1 2 3 4
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Comparisons between AON and AOA

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Finding the Critical Path
We compute four quantities for each activity:
ESt Earliest starting time for activity i,
EFt Earliest finishing time for activity i,
LFt Latest finishing time for activity i (without delaying the project),
LSt Latest starting time for activity i (without delaying the project).
Suppose that tt represents the time required to complete activity i.
Then it is easy to see that

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 CPM involves the following steps
1. Compute the earliest times for each activity.
2. Compute the latest times for each activity.
Example

Develop a critical path diagram and determine the duration of

the critical path and slack times for all activities.
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CPM
Draw AON diagram

A D F
B C
1 2 3 4 6 7
E
G

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8

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CPM

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CPM
TF : the delay an activity can have without delaying any other activity of
the CP
FF: the delay an activity can have without influencing the ES of any
other activity in the network

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PERT: Project Evaluation and Review
Technique
PERT is a generalization of CPM to allow for uncertain activity times. For
each activity the user must specify:
a = minimum completion time (optimistic)
b = maximum completion time (pessimistic)
m = most likely completion time
The method assumes each activity time follows a beta distribution,
which can be fit precisely with specification of a, b, and m.

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Assumptions and Limitations
• Project activities can be identified as entities (There is a clear
beginning and ending point for each activity.)
•Project activity sequence relationships can be specified and
networked
•Project control should focus on the critical path
•The activity times follow the beta distribution, with the variance of the
project assumed to equal the sum of the variances along the critical
path

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 Steps in PERT Analysis
 For each activity k
 Obtain ak, mk and bk
 Compute expected activity duration (mean) dk=te
 Compute activity variance Vk= σ2
 Draw the network and determine CP of the expected duration (te)
 Compute expected project duration Te using standard CPM algorithm
 Compute Project Variance V= σ2 as sum of critical path activity
variance
 In case of multiple critical paths use the one with the largest variance
 Calculate probability of completing the project
 Assuming project duration normally distributed

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Example -1 [PERT] Probability of meeting a Target of 36 days
Time Estimates (Te) Variance
Predeces Mean
Task a m b
sor

A - 2 4 8 4.33 1
B - 4 6 10 6.33 1
C A 6 6 6 6.00 0
D A 2 8 14 8.00 4
E A 6 8 12 8.33 1
F B,C 9 3 15 6.00 1
G D,F 8 16 20 15.33 4
H D,F 4 4 4 4.00 0
I E.H 4 8 10 7.66 1
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 AOA

2 E 8.33 5
I 7.66
A D 4.33
4.33 H 4 6
1 C 6
B 6.33
F 6 G 15.33
3 4

CriticalPath=A-C-F-G
Project Duration (Mean(T)= 31.66
 Variance=6
σ=2.45

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Probability computation
Determine probability that project is completed
within specified time

D-T
Z=

where T= Critical path duration
D= (proposed ) specified time
 = project standard mean time

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 Probability Computations
• E.g Probability of meeting a Target of 36 days
• Z(Standard Normal deviate)= (36-31.66)/2.45=4.34/2.45=1.77
• Area from ‘Normal distribution table’ corresponding to
1.77=0.9616

Probability of meeting a Target of 36 days=96.16%

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