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INTRODUCTION
Basically, CPM (Critical Path Method) and PERT (Programme Evaluation Review
Technique) are project management techniques, which have been created out of the
need of Western industrial and military establishments to plan, schedule and control
complex projects.
The Key Concept used by CPM/PERT is that a small set of activities, which make up the
longest path through the activity network control the entire project. If these "critical"
activities could be identified and assigned to responsible persons, management
resources could be optimally used by concentrating on the few activities which determine
the fate of the entire project.
Non-critical activities can be replanned, rescheduled and resources for them can be
reallocated flexibly, without affecting the whole project.
Five useful questions to ask when preparing an activity network are:
Some activities are serially linked. The second activity can begin only after the first
activity is completed. In certain cases, the activities are concurrent, because they are
independent of each other and can start simultaneously. This is especially the case in
organisations which have supervisory resources so that work can be delegated to various
departments which will be responsible for the activities and their completion as planned.
When work is delegated like this, the need for constant feedback and co-ordination
becomes an important senior management pre-occupation.
1-3 3 0 3 1 4 1
2-4 6 4 10 5 11 1
The Earliest Start is the value in the rectangle near the tail of each activity
The Earliest Finish is = Earliest Start + Duration
The Latest Finish is the value in the diamond at the head of each activity
The Latest Start is = Latest Finish – Duration
There are two important types of Float or Slack. These are Total Float and Free Float.
TOTAL FLOAT is the spare time available when all preceding activities
occur at the earliest possible times and all succeeding activities occur
at the latest possible times.
FREE FLOAT is the spare time available when all preceding activities
occur at the earliest possible times and all succeeding activities occur
at the earliest possible times.
When an activity has zero Total float, Free float will also be zero.
There are various other types of float (Independent, Early Free, Early Interfering, Late
Free, Late Interfering), and float can also be negative. We shall not go into these
situations at present for the sake of simplicity and be concerned only with Total Float for
the time being.
Having computed the various parameters of each activity, we are now ready to go into
the scheduling phase, using a type of bar chart known as the Gantt Chart.
There are various other types of float (Independent, Early Free, Early Interfering, Late
Free, Late Interfering), and float can also be negative. We shall not go into these
situations at present for the sake of simplicity and be concerned only with Total Float for
the time being. Having computed the various parameters of each activity, we are now
ready to go into the scheduling phase, using a type of bar chart known as the Gantt
Chart.
2. Exercise
A Social Project manager is faced with a project with the following activities:
Draw the arrow diagram, using the helpful numbering of the activities, which
suggests the following logic:
Unless the Social Work team lives in the village, the Mother and Child Health
Programme cannot be started due to ignorance and superstition of the villagers
The Analysis of the survey can obviously be done only after the survey is
complete.
Until rural survey is done, the Rural Credit Programme cannot be started
Unless Mother and Child Programme is established, the Immunisation of Under
Fives cannot be started
– Calculate the Earliest and Latest Event Times
– Tabulate and Analyse the Activities
– Schedule the Project Using a Gantt Chart
1-2 2 5 14 6 0 6 5 11 5 2 4
2-4 5 14 17 13 6 19 11 24 5 2 4
3-4 2 5 8 5 12 17 19 24 7 1 1
4-5 1 4 7 4 19 23 24 28 5 1 1
5. Estimating Risk
Having calculated the s.d. and the Variance, we are ready to do some risk analysis.
Before that we should be aware of two of the most important assumptions made by
PERT.
By looking at the following extract from a standard normal table, we see that the
probability associated with a Z of -0.6 is 0.274. This means that the chance of the project
being completed within 25 weeks, instead of the expected 28 weeks is about 2 out of 7.
Not very encouraging.
On the other hand, the probability that the project will be completed within 33 weeks is
calculated as follows:
If the probability of an event is p, the odds for its occurrence are a to b, where:
Comparison Chart
BASIS FOR
PERT CPM
COMPARISON
Definition of PERT
Definition of CPM
Corporate finance
Working capital
Sections
Managerial finance
Financial accounting
Management accounting
Mergers and acquisitions
Balance sheet analysis
Business plan
Corporate action
Societal components
Financial market
Financial market participants
Corporate finance
Personal finance
Peer-to-peer lending
Public finance
Banks and banking
Financial regulation
Clawback
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Accounting
Historical cost
Constant purchasing power
Management
Tax
Major types[show]
Key concepts[show]
Selected accounts[show]
Accounting standards[show]
Financial statements[show]
Bookkeeping[show]
Auditing[show]
Development[show]
Business portal
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1. General Information
A project report must provide information about the details of the
industry to which the project belongs to. It must give information
about the past experience, present status, problems and future
prospects of the industry. It must give information about the product
to be manufactured and the reasons for selecting the product if the
proposed business is a manufacturing unit. It must spell out
the demand for the product in the local, national and the global market.
It should clearly identify the alternatives of business and should
clarify the reasons for starting the business.
2. Executive Summary
A project report must state the objectives of the business and the
methods through which the business can attain success. The overall
picture of the business with regard to capital, operations, methods of
functioning and execution of the business must be stated in the
project report. It must mention the assumptions and the risks
generally involved in the business.
3. Organization Summary
The project report should indicate the organization structure and
pattern proposed for the unit. It must state whether the ownership is
based on sole proprietorship, partnership or joint stock company. It must
provide information about the bio data of the promoters including
financial soundness. The name, address, age qualification and
experience of the proprietors or promoters of the proposed business
must be stated in the project report.
4. Project Description
A brief description of the project must be stated and must give details
about the following:
5. Marketing Plan
The project report must clearly state the total expected demand for
the product. It must state the price at which the product can be sold
in the market. It must also mention the strategies to be employed to
capture the market. If any, after sale service is provided that must
also be stated in the project. It must describe the mode of distribution
of the product from the production unit to the market. Project report
must state the following:
Type of customers,
Target markets,
Nature of market,
Market segmentation,
Future prospects of the market,
Sales objectives,
Marketing Cost of the project,
Market share of proposed venture,
Demand for the product in the local, national and the global market,
It must indicate potential users of products and distribution channels to
be used for distributing the product.
6. Capital Structure and operating cost
The project report must describe the total capital requirements of the
project. It must state the source of finance, it must also indicate the
extent of owners funds and borrowed funds. Working capital
requirements must be stated and the source of supply should also be
indicated in the project. Estimate of total project cost, must be
broken down into land, construction of buildings and civil works,
plant and machinery, miscellaneous fixed assets, preliminary and
preoperative expenses and working capital.
Proposed financial structure of venture must indicate the expected
sources and terms of equity and debt financing. This section must also
spell out the operating cost
7. Management Plan
The project report should state the following.
9. Technical Aspects
Project report provides information about the technology and
technical aspects of a project. It covers information on Technology
selected for the project, Production process, capacity of machinery,
pollution control plants etc.