Project Management - PERT/CPM

What is project management?

Consider building a house:

Step A: Prepare site. (5 days)

Step B: Build foundation. (8 days)
Step C: Frame walls and roof. (15 days)
Step D: Rough in Plumbing (12 days)
Step E: Rough in Electrical (10 days)
Step F: HVAC Venting (8 days)
Step G: Drywall (11 days)
Step H: Finish Electrical (5 days)
Step I: Finish Plumbing (4 days) Step M: Paint (5 days)
Step J: Finish HVAC (2 days) Step N: Landscape (5 days)
Step K: Install Kitchen (8 days)
Step L: Install Baths (14 days)
 Project Management - PERT/CPM

Let each node represent a project event/milestone (node 1 is

start of project, node 11 is end of project).

Let each arc represent a project task/job.

D,12 H,5 7 J,2 M,5

K,8
A,5 B,8 C,15 G,11 0
E,10 11
1 2 3 4 5 6 9 10
0
L,14 N,5
F,8 I,4
8
 
Each arc is identified by a job letter and duration. Note the
dummy jobs indicating precedence that jobs H and I must
complete before K or L begins.
 Project Management - PERT/CPM

What questions might project managers be interested in?

• How long will the project take?

• Can I add manpower or tools to reduce the overall project
length?
• To which tasks should I add manpower?
• What tasks are on the critical path?
• Is the project on schedule?
• When should materials and personnel be in place to begin a
task?
• Other?…
 Project Management - Examples

• University Convocation Center

• Windsor Engine Plant
• Other major construction projects
• Large defense contracts
• NASA projects (space shuttle)
• Maintenance planning of oil refineries, power plants, etc…
• other…
 Project Management – Minimum
Completion Time

A,3 C,4 E,5

1 2 4 5
0
B,1 D,2
3
LP Solution: Let ti be the time of event i.

Min Z = t5 – t1
s.t. t2 – t1 >= 3
t3 – t2 >= 0
t3 – t1 >= 1
t4 – t2 >= 4
t4 – t3 >= 2
t5 – t4 >= 5
Project Management – Critical Path

A,3 C,4 E,5

1 2 4 5
0
B,1 D,2
3

LP Solution: insert Lindo Solution here

How do you find the critical path from the Lindo solution?
 Project Management – Minimum
Completion Time and Critical Path

A,3 C,4 E,5

1 2 4 5
0
B,1 D,2
3
Solution by Network Analysis:

Let earliest time of node j, Uj, be the earliest time at which event
j can occur.
Set U1 = 0
then U2 = U1 + t12 = 0 + 3 = 3
U3 = Max{U1 + t13 , U2 + t23} = Max{1,3} = 3
U4 = Max{U3 + t34 , U2 + t24} = Max{5,7} = 7
U5 = U4 + t45 = 12
 Project Management – Minimum
Completion Time and Critical Path
A,3 C,4 E,5
1 2 4 5
0
B,1 D,2
3
Solution by Network Analysis:

Let latest time of node j, Vj, be the latest time at which event
j can occur while still completing project by minimum the
minimum completion time, Um .
Set V5 = U5 = 12
then V4 = V5 - t45 = 12 - 5 = 7
V3 = V4 - t34 = 7 – 2 = 5
V2 = Min{V4 - t24 ,V3 - 0 } = 3
V1 = Min{V2 - t12 ,V3 – t13} = 0
 Project Management – Minimum
Completion Time and Critical Path
A,3 C,4 E,5
1 2 4 5
0
B,1 D,2
3
Solution by Network Analysis:

To find the critical path, solve for slack time = Vj - Uj. All events
with slack time equal to 0, and tasks connecting these events are
on the critical path.
V5 - U5 = 12 – 12 = 0
V4 - U4 = 7 – 7 = 0
V3 - U3 = 5 – 3 = 2
V2 - U2 = 3 – 3 = 0
V1 - U1 = 0 – 0 = 0
 CPM – Critical Path Method
Can normal task times be reduced?

Is there an increase in direct costs?

• Additional manpower
• Additional machines
• Overtime, etc…

Can there be a reduction in indirect costs?

• Less overhead costs
• Less daily rental charges
• Bonus for early completion
• Avoid penalties for running late
• Avoid cost of late startup

CPM addresses these cost trade-offs.

 CPM – Critical Path Method
Example:

Normal Time Crash Time Cost of Crashing

Job Predecessors (days) (days) per Day ($)
A - 10 7 4
B - 5 4 2
C B 3 2 2
D A,C 4 3 3
E A,C 5 3 3
F D 6 3 5
G E 5 2 1
H F,G 5 4 4

Overhead cost = $5/day

 CPM – Critical Path Method
Enumerative Approach:

Reduce job H by 1 day: Total Cost improves by $5 - $4 = $1.

Reduce job A by 2 days: Total cost improves by $10 - $8 = $2.

Reduce job A by an additional day, and job B by a day? Total cost

improves by $5 - $4 - $2 = -$1. Therefore do not take this action.

Reduce job A by an additional day, and job C by a day? Total cost

improves by $5 - $4 - $2 = -$1. Therefore do not take this action.

Evaluate combinations of reducing path 3-4-6 and 3-5-6 by one day.

D & E = $5 - $3 - $3 = -$1 F & E = $5 - $5 - $3 = -$3
D & G = $5 - $3 - $1 = $1 F & G = $5 - $5 - $1 = -$1
Therefore, reduce job D & G by 1 day: TC improves by $5 - $3 -$1 = $1.

Overall improvement: $1 + $2 + $1 = $4.

 CPM – Critical Path Method
LP Approach:

Let tij – decision variable for time to complete task connecting

events i and j.
kij – normal completion time of task connecting events i and j.
lij – minimum completion time of task connecting events i and j.
Cij – incremental cost of reducing task connecting events i and j.

Model I: Given project must be complete by some time T, which tasks

should be reduced to minimize the total cost?
Z   Cij (kij  tij )
Min i j

t j  ti  tij for all jobs (i,j)

s.t.
lij  tij  kij for all jobs (i,j)
t n  t1  T
ti  0 for all i
 CPM – Critical Path Method
LP Approach:

Model II: Given an additional budget of $B for “crashing” tasks, what minimum
project completion time can be obtained while staying within your budget?

Min Z  t n  t1

s.t. t j  ti  tij for all jobs (i,j)

lij  tij  kij for all jobs (i,j)
 C
i j
ij (kij  tij )  B
for all i
ti  0