Project Management
Chapter9
Project Design &
Network Analysis
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Project Design &
Network Analysis
The Execution of a project follows a definite path of
planning,scheduling,and controlling.
The first & foremost aspect of a project is the project
design
Network techniques help the management of an
organization in performing these functions efficiently &
effectively.
Together they stand connected with development of the
project work plan and duration time estimates &
evaluation of these in the light of the constraints of the
project situation
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Importance of
Network Analysis
A project is a temporary endeavor undertaken to
create a "unique" product or service
This definition serves to highlight some essential features
of a project
•it is temporary - it has a beginning and an end
•it is "unique" in some way
With regard to the use of the word unique I personally
prefer to use the idea of "non-repetitive" or "non-routine",
e.g. building the very first Boeing Jumbo jet was a project
- building them now is a repetitive/routine manufacturing
process, not a project.
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Importance of
Network Analysis
We can think of many projects in real-life, e.g. building
the Channel tunnel, building the London Eye, developing a
new drug, etc
Typically all projects can be broken down into:
•separate activities (tasks/jobs) - where each activity has
an associated duration or completion time (i.e. the time
from the start of the activity to its finish)
•precedence relationships - which govern the order in
which we may perform the activities, e.g. in a project
concerned with building a house the activity "erect all four
walls" must be finished before the activity "put roof on"
can start and the problem is to bring all these activities
together in a coherent
fashion to complete the project4
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Importance of
Network Analysis
™The time estimates may be made taking into view two
discrete aspects ; First projects in which previous experience
does not exist at all and time estimates would have based on
probabilities & second time estimates may be deterministic
being based on previous experience
™ Cost estimates would depend on the project time
estimates and the changes in prices of different factors of
production
™ The physical progress of the projects at various points
requires adequate notice & corrective actions in proper time.
™
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Origin of PER & CPM
™ PERT was developed to aid the US Navy in the planning
and control of its Polaris missile program .
™This was a project to build a strategic weapons system,
namely the first submarine launched intercontinental
ballistic missile, at the time of the Cold War between the
USA and Russia.
™Military doctrine at that time emphasized 'MAD mutually assured destruction', namely if the other side struck
first then sufficient nuclear weapons would remain to
obliterate their homeland.
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Origin of PER & CPM
™ That way peace was preserved. By the late 1950s the
USA believed (or more importantly believed that the
Russians believed) that American land based missiles and
nuclear bombers were vulnerable to a first strike.
™Hence there was a strategic emphasis on completing the
Polaris project as quickly as possible, cost was not an issue.
™ However no one had ever build a submarine launched
intercontinental ballistic missile before, so dealing with
uncertainty was a key issue. PERT has the ability to cope
with uncertain activity completion times (e.g. for a particular
activity the most likely completion time is 4 weeks but it
could be any time between 3 weeks and 8 weeks).
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Origin of PER & CPM
™ CPM was developed in the 1950's as a result of a joint
effort by the DuPont Company and Remington Rand
Univac.
™As these were commercial companies cost was an issue,
unlike the Polaris project mentioned above.
™In CPM the emphasis is on the trade-off between the cost
of the project and its overall completion time (e.g. for certain
activities it may be possible to decrease their completion
times by spending more money - how does this affect the
overall completion time of the project?)
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Origin of PER & CPM
™ Modern commercial software packages tend to blur the
distinction between PERT and CPM and include options for
uncertain activity completion times and project completion
time/project cost trade-off analysis. Note here that many
such packages exist for doing network analysis.
™There is no clear terminology in the literature and you will
see this area referred to by the phrases: network analysis,
PERT, CPM, PERT/CPM, critical path analysis and project
planning.
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Network Fundamentals
™A network diagram is a model that uses small
circles(nodes) connected by lines or branches (arcs) to
represent precedence relationship.
™Networks are frequently used to show precedence
relationship among the activities .
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Network Fundamentals
Commonly used Network Symbols:
Activity
Dummy Activity
Event
1
1
B
A
2
3
A
C
3
2
B
Activity A Must begin before activity B
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Activity A & B can occur concurrently
But both must finish before activity
C begins
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Network Fundamentals
D
E
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4
Activities A & D can occur Concurrently
But both must be finished before activity
E begin.Activity B can begin only when
activity A completed.C is dummy activity
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C
1
1
B
A
2
3
A
C
4
D
5
3
2
B
Activity A & B can occur concurrently
But both must finish before activity
C & D begins.
C can begin independently & vice versa
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PERT/CPM Chart
PERT or "Project Evaluation and Review
Technique":
• Another derivative of the GANTT chart
• Multiple time estimates were used for each
activity that allowed for variation in activity
times
• Activity times are assumed to be random, with
assumed probability distribution ("probabilistic")
• Activities are represented by arrowed lines
between the nodes or circles
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PERT/CPM Chart
CPM or "Critical Path Method":
• tool to analyze project and determine duration,
based on
identification of "critical path"
through an activity network.
• Knowledge of the critical path can permit
management of the project to change duration.
• A single estimate for activity time was used that
did not allow for variation in activity times
• Activity times are assumed to be known or
predictable ("deterministic")
Activities are represented as nodes or circles
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PERT/CPM Chart
PERT/CPM
•
•
Over time, CPM and PERT merged into one
technique referred to as "PERT / CPM ".
Visually
easier
to
see
precedence
relationships
Ideal for large projects with many activities
They consist of a network of branches and
nodes.
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PERT/CPM Chart
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PERT/CPM Chart
Two types:
Activity-on-node (AON) -- nodes represent
activities and arrows show precedence relationships.
Activity-on-arrow (AOA) -- arrows represent
activities and nodes are events for points in time.
Dummy
inserted into the network to show a precedence
relationship, but it does not represent any actual
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passage of time chapter9
PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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PERT/CPM Chart
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CPM Chart
Example 2: Costs and Crash Costs
This second example incorporates costs and the possibility of
spending money to speed up the project. Our objective is to
determine how quickly we should complete each activity, and
thus the how long the project as a whole should take. The
presumption is that there is some reward for getting finished
sooner. We must decide whether the reward is worth earning,
and, if so, what is the best way to earn it.
This example also shows how to use a dummy activity. A
dummy activity is an activity that you add to the original
activities list. A dummy activity takes no time, and it has no
cost. You'll learn why you sometimes need such a thing in a
CPM model.
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CPM Chart
Example 2 Step 1: List the activities
A
Required
Predecessor
(None)
Normal
Time
3 weeks
Normal
Cost
$3000
Crash
Time
2 weeks
Crash
Cost
$5000
B
(None)
4
$4000
2
$6000
C
(None)
5
$5000
3
$8000
D
A
8
$5000
6
$6000
E
A,B
3
$3000
2
$4000
F
C
5
$4000
3
$8000
Acti
vity
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CPM Chart
Example 2 Step 2: Draw the diagram
To start the network diagram, we notice that A, B, and C are the
three activities with no predecessor. They all come off of node 1.
A can go node 1 to node 2. B can go from node 1 to node 3. C also
starts at node 1. D requires A, so D starts at node 2. Here's what
we have so far:
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CPM Chart
Now for activity E. Activity E requires a special trick. The problem
is where E should start. E requires A and B. A ends at node 2 and B
ends at node 3. E is not allowed to start from both nodes 2 and 3.
Activities can have only one start node and only one end node.
What do we do about E? You might consider connecting both A and
B to node 2, but that would mess up Activity D.
If both A and B were to run from node 1 to node 2
and D came off of node 2,
that would be saying
that D requires B as well as
A. D is supposed to require
A, not also B.
Here is the solution:
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CPM Chart
The solution is to add a dummy activity that runs from
node 2 to node 3, as shown in the diagram.; Dummy
activities have 0 cost and take 0 time.; They are used to
handle complex activity relationships like this.
E starts at node 3. This means that E requires B and the
dummy activity. The dummy activity, because it starts at
node 2, requires A. This makes E require B and A. That is
what we want! Meantime, D starts at node 2, so D only
requires A. All the requirements are satisfied!
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CPM Steps Summary
™ CPM helps you identify a complex project's critical
paths. You can find how long a project will take and
which activities must be on time.
™ If you also have information about costs and crash
costs and times, CPM helps you determine how long
the project should take, and which activities should be
sped up ("crashed"). As we are doing it in this class,
the steps are:
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CPM Steps Summary
1. Have a list of the activities.
2. Draw the network diagram.
3. Put activity names, node numbers, times, and costs in
a spreadsheet.
4. Use Path find to generate code for the paths.
5. Put the path information into the spreadsheet.
6. Calculate the paths' times.
7. Identify the critical paths, and the activities in each
path.
8. Set up the formula to calculate the project's total cost.
9. Fill in the Tools | Solver... form.
10. Solve, and fix errors, if any.
11. For an economic analysis, change the maximum time
constraint and solve again. Repeat until costs,
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including penalties and bonuses, start to go up.
Project Design &
Network Analysis
End Of
Chapter 9
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