Project Management

Introduction to project management

Critical path method (CPM)
Crashing
Uncertain activity durations
Reading: Page 760 794

Project
Project:
A special type of process / transformation
A series of related jobs directed toward some
major output
Require time and resources
Examples
MS Windows 2000, Fund raising, Preparation for a
private party, Building a new airport

The Campus Wedding

Reserve
Church
(1)

Decorate
Church
(3)

Choose
Cake (2)

Get Gifts
(1)

Start
Preparatio
ns

Church
Notice
(17)

Jacks
Catering
(10)
Rehearsal
Dinner (1)
Wedding
(April 22)

Choose
Pattern
(3)

Travel
from
Guatemala
(10)
Receive
Lace (8)

Choose
Invitation
s (3)

7
Prepare
Guest List
(4)

Invitation
s (12)

Fit Dress
(2)

Sew
Dress (11)

Address
Inv. (4)

Clean &
Press (2)

6
Inv. To
Post
Office (1)

Invitation
Lead Time
(10)

Project Management
Project management
Planning, directing, and controlling resources (people,
equipment, material) to meet the technical, cost, and time
constraints of the project.

Different aspects of PM
Team work
Leadership
We focus on technical aspect

Project Manager
Responsible for:
Work
Human Resources
Communications

Quality
Time
Costs

Project Management
Statement of work (SOW)
Objectives, work to be done, a proposed
schedule, performance measures (cost, time,
quality)

Work breakdown structure

Break project down into manageable
pieces

Work Breakdown Structure

Level 1

Level 2

Level 3

Level 4

Project

Questions about a Project

How long does it take to complete a project?
When should each activity start?
Which activities might delay the project? In other
words, which activities should the project
manager pay particular attention to?
How to expedite the completion of a project?
Time-cost trade off
9

Example 1:
Clear Ocean Bay
Motion Pictures Ltd
Activity

Immediately
Predecessor

Durations
(weeks)

A Hire actors, actresses

B Hire film directors

11

C Hire crew members

D Cast announcement

A,C

E Stage setting

F Music Recording

7.5

D,E,F

G Film shooting

Question
How long will it take to complete the
project?
When should each activity start?

If we wish to reduce the completion

time, which activities should be
crashed (expedited)?
Answer: Critical path method (CPM)

Basic Four Steps

Step

1: Construct the Network Diagram

2: Compute the Earliest Start time &
Earliest Finish time
(determine the earliest project
completion time)
3: Compute the Latest Start time &
Latest Finish time
(determine the Slack time)
4: Determine the Critical Activities and the
Critical Paths.
12

Critical Path Method

Step 1. Construct the Network Diagram.
AON: Activity-on-node
Each node represents an activity.
Arrows indicate sequencing
requirements.
A

Example: A immediately precedes D.

13

Another Representation
AOA: Activity-on-arrow
Activity A immediately precedes D.
In our class, we use AON more frequently

D
1

The Network Diagram

D,9
A,6
Start

C,8

E,8

B,11
F,7.5
A path is a sequence from Start to Finish.
The Start and finish nodes may be omitted.

G,7

Finish

Critical Path Method

Step 2: Compute the Earliest Start time ES and
Earliest finish time EF for each activity.
ES = The earliest start time of an activity
EF = The earliest finish time of an activity
An activity may start when all its predecessors are finished:
ES(an activity) = maximum(EFs of all its predecessors)
EF = ES + activity duration
16

Compute ESs and EFs

ES EF

A,6

19 28
0 6

D,9
A,6

Start
0 11

B,11

11 19

19 27

28 35

C,8

E,8

G,7

19 26.5

F,7.5

The project can be completed in 35 weeks.

Question
How long will it take to complete
the project?
When should each activity start?

If we wish to reduce the

completion time, which activities
should be crashed (expedited)?

Slack Time and Critical Path

Slack time of an activity: the amount of time by
which the activity may be delayed without
delaying the project, given that all other activities
remain unchanged.
Critical activity: an activity with zero slack time.
Critical path: a sequence of activities with zero
slack time. It is the longest path from Start to
Finish.
There can be more than one critical path.

Step 3: Compute the Latest Finish and

Start Time.
LF = The latest time at which an activity may be
finished without delaying the project beyond its
earliest completion date
LS = The latest time at which an activity may start
without delaying the project beyond its earliest
completion date
LF (an activity) = minimum(LSs of all its
successors)
LS = LF activity duration

Compute LFs and LSs

ES EF
19 28

A,6

0 6

LS LF
0

A,6

13

19 28
19 27

11 19
13 19

Start
0

D,9

0 11

Critical path

C,8

B,11

11 19

28 35

E,8
20 28
19 26.5

0 11

F,7.5 1.5
Slack time = LF EF = LS ES

20.5

28

G,7
28 35

Step 4: Compute the Slack Time.

Activity

Slack Time = LF EF = LS - ES

13

1.5

Critical Path Method (CPM):

Four Steps
1. Construct the network diagram.
2. Compute the earliest start and finish times of
each activity. Determine the earliest
completion time of the project.
3. Compute the latest finish and start times of
each activity. Determine the slacks.
4. Determine critical activities and critical paths.
CPM applies if activity times are known with
certainty.

The Gantt Chart

Project Completion Time = 35 weeks
Critical Paths: B-C-D-G

A
C

D
E
F
G

11

19

28

35

Time

Gantt Chart is a useful tool for scheduling and

describing activities in a project. It can be used with or
without CPM.

Exercise 1: Writing a Term Paper

Activity

Immediately
Predecessor

Durations (days)

A Computer programming

B Implementation

C Drafting

D Proof reading

E Final write-up

B,D

How long does it take? Which activities are critical?

Critical Path and Slacks

A,7

B,3

7 + 3 + 2 = 12
E,2

Start
C,6

D,3

The Project takes 12 days.

Activities A, B and E are critical.

Problem
If we need to reduce the completion time of a
project, which activities should be crashed? by
how many units of time?
Partial crash is allowed : we can use crashing
program for any part of an activity
Partial crash is not allowed: an activity should
be carried out either with normal program, or
with crashing program, but not both.
The case when Partial crash is not allowed will
not be covered here.

Example 2: Writing a Term Paper: How

to Finish Sooner
In exercise 1, suppose the due date is 10 days from now. How
would you shorten the paper writing time? Which activities would
you crash and by how many weeks?
Activity

Normal Time

Max Crashing Time

Cost/day to expedite

$100

$150

$200

$150

$250

Idea: start from the cheapest critical activity.

Critical Path and Slacks

A,7

B,3
E,2

Start
C,6

D,3

The Project takes 12 days.

Activities A, B and E are critical.

Crashing -- Step 1
A,6

B,3
E,2

Start
C,6

D,3

Shorten A by 1 day, cost: $100.

Project completed in 11 days.
All activities are critical.

Crashing -- Step 2
A,5

B,3
E,2

Start
C,6

D,2

Shorten A and D by 1 day, cost: $250.

(Alternatively, shorten E by 1 day at the same cost).
Project completed in 10 days.

Summary: Writing a Term Paper

1. Critical path: A-B-E. A is the cheapest to crash. Crash A
for 1 day.
Now there are two critical paths: A-B-E, and C-D-E,
with completion time 11 days
2. To complete it in 10 days, you can crash 1 day in A-B-E
and 1 day in C-D-E
Option 1: crash E for 1 day, with a cost of $250
Option 2: crash B for 1 day, and D for 1 day, with a
cost of $300.
Option 3: crash B for 1 day, and C for 1 day, with a
cost of $350.
Option 1 is the best.
In summary, we should crash A for 1 day, and E for 1 day,
with a total cost of $350

Exercise 2:
Clear Ocean Bay Motion Pictures Ltd
In Example 1, we have
found that the project
takes 35 weeks.
Now for some reason, the
project needs to be
completed in 32 weeks.
Which activities would you
crash and by how many
weeks?
Idea: start from the
cheapest critical activity.

Activity

Normal
Time

Max
Crashing
Time

Cost/week
to expedite

40

11

300

200

80

60

7.5

0.5

100

500

Time-Cost Trade-Off:
To What Extent Should a Project be Crashed?
Total
cost
Expected indirect costs

Shorten

Cumulative
cost of crashing

CRASH
Shorten
Optimum

Time/Cost Tradeoff
Goal: To reduce the project duration by crashing
on selected activities as long as the benefit is
greater than the cost.
Crashing priorities:
critical activities
more economical
on more than more critical path

Example 3
Suppose a project consists of activities A,B,C,D,E
and F. The activities crashing can take place over a
wide range of reduction time. The cost per day of
reduction is as follows:
Activity Immed. Pred. Normal time (days) Cost/day to crash Low Time Limit
A
None
3
$450
1
B
None
4
$300
2
C
A
3
$200
1
D
A,B
2
$500
1
E
D
2
$100
1
F
C,E
4
$140
3

Suppose the project is due in 9 days and a penalty of

$150 per day is imposed after the 9th day. How
should we schedule the project to minimize the total
cost?

Example 3
A,3

C,3
F,4
Finish

Start

B,4

D,2

E,2

Completion time: 12 days. The project time should

be reduced if crashing cost is less than $150.

Example 3
1. Critical path: B-D-E-F. Crash E for one day,
with cost $100. --new completion time: 11
days
2. Critical path: B-D-E-F. Crashing F for one day,
with cost $140. ---- new completion time 10
days
3. Critical path: B-D-E-F. Cost for crashing one
day is at least $300, which is greater than
$150. Stop here.
Summary: Crash E and F for one day
respectively. The project will be finished in 10
days, with a crashing cost of $240.

Project Management in Practice

In practice, there are many software for
project planning. i.e., CPM-GOMS
People find that in reality, such software
always slightly underestimate the project
completion time
Why?

Uncertain Activity Durations

Because the duration of each activity is usually
stochastic, instead of deterministic; while in
those software input, we simply use mean
activity duration
Consider the following example
A
B
tA = 4 w.p. 0.5; =5 w.p. 0.5
F
S
tB = 5
C
tC = 9 w.p. 0.5; = 10 w.p. 0.5

Example
If we use mean activity duration, we have
E[tA] = 4.5
4.5
5
A
B
E[tB] = 5
F
9.5
S
E[tC] = 9.5
C

The two path (S, A, B, F), (S, C, F) are all critical

paths, those software gives us the project
completion time = max{4.5+5, 9.5}=9.5

Example
In practice, there are four possibilities: corresponding to
these cases, the project completion times are 9, 10, 10,
10 respectively
The real mean project completion time should be 9.75
4

10

9
C

10
C

Project Management in Practice

From the example, we can see that the real
critical path is stochastic, using mean activity
duration as input generates a static critical path,
thus we over-simplify the problem
In practice if we want to estimate the project
completion time precisely, we should
Estimate the activity duration distribution based on
historical data, and then run simulation to determine
the project completion time (to be discussed later)
Use some approximation, as in the following

CPM with Three Activity Time Estimates

Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28

Expected Time Calculations

ET(A)= 3+4(6)+15
Task
A
B
C
D
E
F
G
H
I

Immediate Expected
Predecesors
Time
None
7
None
5.333
A
14
A
5
C
11
D
7
B
11
E,F
4
G,H
18

6
ET(A)=42/6=7

Opt. Time + 4(Most Likely Time) + Pess. Time

Expected Time =
6

Network
Duration = 54 Days
C(14)

E(11)
H(4)

A(7)
D(5)

F(7)
I(18)

B
(5.333)

G(11)

Probability Exercise
What is the probability of finishing this project in
less than 53 days?

P(t < D)
D=53

TE = 54
Z =

D - TE

cp

Pessim. - Optim. 2
Activity variance, = (
)
6
2

Task
A
B
C
D
E
F
G
H
I

Optimistic Most Likely Pessimistic Variance

3
6
15
4
2
4
14
6
12
30
16
2
5
8
5
11
17
4
3
6
15
3
9
27
1
4
7
1
4
19
28
16

(Sum the variance along the critical path.)

= 41

P(t < D)

TE = 54
D=53

Z =

D - TE

cp

53- 54
=
= -.156
41

P(Z < -.156) = .44, or 44 % (Appendix B)

There is an approximate 44% probability that this
project will be completed in less than 53 weeks.

What is the probability that the project duration

will exceed 56 weeks?
P(t < D)

TE = 54

Z =

D - TE

cp

t
D=56

56 - 54
=
= .312
41

Approximation: P(Z >.312) = 1-0.62 = .38, or 38 %

Review Problems
Page 802 to 807, problems 1.b, 2, 5.b, 14,
15, 16, 17.