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Project Management

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LESSON 28
NETWORK SCHEDULING TECHNIQUES
BROAD CONTENTS
Introduction
Benefits and Advantages of Scheduling
Historical Evolution of Network Scheduling
Network Fundamentals and Terminology
Pert/CPM and their Difference
Graphical Evaluation and Review Techniques (GERT)
Dependencies or Interrelationship
Slack Time
28.1
Introduction:
In today's highly competitive environment, management is continually seeking new and better
control techniques to cope with the complexities, masses of data, and tight deadlines that are
characteristic of many industries.
In addition, management is seeking better methods for presenting technical and cost data to
customers.
Since World War II, scheduling techniques have taken on paramount importance. The most
common of these techniques are shown below:
Gantt or bar charts
Milestone charts
Line of balance
Networks
o  Program Evaluation and Review Technique (PERT)
o  Arrow Diagram Method (ADM) [Sometimes called the Critical Path Method (CPM)]
o  Precedence Diagram Method (PDM)
o  Graphical Evaluation and Review Technique (GERT)
28.2
Benefits and Advantages of Scheduling:
The Program Evaluation and Review Technique (PERT) perhaps is the best known of all the
relatively new techniques. PERT has several distinguishing characteristics:
It forms the basis for all planning and predicting and provides management with the ability
to plan.
It enables management for best possible use of resources to achieve a given goal within
time and cost limitations.
It provides visibility and enables management to control ''one-of-a-kind" programs as
opposed to repetitive situations.
It helps management to handle uncertainties involved by answering the following questions
that provides management with a means for evaluating alternatives:
a) How time delays in certain elements influence program completion?
b) Where slack exists between elements?
c) What elements are crucial to meet the completion date?
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It provides a basis for obtaining the necessary facts for decision making.
It utilizes a time network analysis as the basic method to determine manpower, material,
and capital requirements as well as providing a means for checking progress.
It provides the basic structure for reporting information.
It reveals interdependencies of activities.
It facilitates "what if" exercises.
It identifies the longest path or critical paths.
It allows us to perform scheduling risk analysis.
The above-mentioned benefits apply to all network scheduling techniques, not just PERT.
28.3
Historical Evolution of Networks:
Before going further with the details, let us have an insight into the historical evolution of
networks. PERT was originally developed in 1958 and 1959 to meet the needs of the "age of
massive engineering" where the techniques of Taylor and Gantt were inapplicable. The Special
Projects Office of the U.S. Navy, concerned with performance trends on large military
development programs, introduced PERT on its Polaris Weapon System in 1958, after the
technique had been developed with the aid of the management consulting firm of Booz, Allen,
and Hamilton. Since that time, PERT has spread rapidly throughout almost all industries. At
about the same time the Navy was developing PERT, the DuPont Company initiated a similar
technique known as the Critical Path Method (CPM), which also has spread widely, and is
particularly concentrated in the construction and process industries.
The basic requirements of PERT/time as established by the Navy, in the early 1960s, were as
follows:
All of the individual tasks to complete a given program must be visualized in a manner
clear enough to be put down in a network, which comprises events and activities; that is,
follow the work breakdown structure.
Events and activities must be sequenced on the network under a highly logical set of ground
rules that allow the determination of important critical and sub-critical paths. Networks can
have up to one hundred or more events, but not less than ten or twenty.
Time estimates must be made for each activity of the network on a three-way basis.
Optimistic, most likely, and pessimistic elapsed-time figures are estimated by the person(s)
most familiar with the activity involved.
Critical path and slack times are computed. The critical path is that sequence of activities
and events whose accomplishment will require the greatest expected time.
28.3.1 Advantages of PERT:
1.
Firstly, a major advantage of PERT is the kind of planning required to a major
network.  Network  development  and  critical  path  analysis  reveal
interdependencies and problem areas that are neither obvious nor well defined
by other planning methods. The technique therefore determines where the
greatest effort should be made for a project to stay on schedule.
2.
By using PERT one can determine the probability of meeting specified
deadlines by development of alternative plans. If the decision maker is
statistically sophisticated, he can examine the standard deviations and the
probability of accomplishment data. If there exists a minimum of uncertainty,
one may use the single-time approach, of course, while retaining the advantage
of network analysis.
3.
A third advantage is the ability to evaluate the effect of changes in the program.
For example, PERT can evaluate the effect of a contemplated shift of resources
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from the less critical activities to the activities identified as probable
bottlenecks. Other resources and performance trade-offs may also be evaluated.
4.
PERT can also evaluate the effect of a deviation in the actual time required for
an activity from what had been predicted.
5.
Lastly, PERT allows a large amount of sophisticated data to be presented in a
well-organized diagram from which both contractor and customer can make
joint decisions.
Unfortunately, PERT is not without its disadvantages. The complexity of PERT adds to
the implementation problems. There exist more data requirements for a PERT -
organized MCCS reporting system than for most others. PERT, therefore, becomes an
item that is expensive to maintain and is utilized most often on large, complex
programs.
Many companies have taken a hard look at the usefulness of PERT on small projects in
recent years. The literature contains many diversified approaches toward applying
PERT to other than large and complex programs. The result has been the PERT/LOB
procedures, which, when applied properly, can do the following job:
Cut project costs and reduce time scale
Coordinate and expedite planning
Eliminate idle time
Provide better scheduling and control of subcontractor activities
Develop better troubleshooting procedures
Cut the time required for routine decisions, but allow more time for decision
making
Note that even with these advantages, many companies should ask themselves whether
they actually need PERT. Incorporation of PERT may not be easy, even if canned
software packages are available. One of the biggest problems with incorporating PERT
occurred in the 1960s when the Department of Defense requested that its customers
adopt PERT/cost for relating cost and schedules. This resulted in the expenditure of
considerable cost and effort on behalf of the contractor to overcome the numerous cost-
accounting problems. Many contractors eventually went to two sets of books; one set
was for program control (which was in compliance with standard company cost control
procedures), and a second set was created for customer reporting. Therefore, before
accepting a PERT system, management must perform a trade-off study to determine if
the results are worth the cost.
28.3.2 Criticism of PERT:
The criticism that most people discover when using PERT includes:
Time and labor intensive effort is required.
Upper-level management decision-making ability is reduced.
There exists a lack of functional ownership in estimates.
There exists a lack of historical data for time­cost estimates.
The assumption of unlimited resources may be inappropriate.
There may exist the need for too much detail.
28.4
Network Fundamentals and Terminology:
It is important to know that the major discrepancy with Gantt, milestone, or bubble charts is the
inability to show the interdependencies between events and activities. These interdependencies
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must be identified so that a master plan can be developed that provides an up-to-date picture of
operations at all times and is easily understood by all.
The interdependencies are shown through the construction of networks. Network analysis can
provide valuable information for planning, integration of plans, time studies, scheduling, and
resource management. The primary purpose of network planning is to eliminate the need for
crisis management by providing a pictorial representation of the total program.
The following management information can be obtained from such a representation:
Interdependencies of activities
Project completion time
Impact of late starts
Impact of early starts
Trade-offs between resources and time
"What if" exercises
Cost of a crash program
Slippages in planning/performance
Evaluation of performance
As we know that networks are composed of events and activities. An event is defined as the
starting or ending point for a group of activities, and an activity is the work required to proceed
from one event or point in time to another. Figure 28.1 below shows the standard nomenclature
for PERT networks. The circles represent events, and arrows represent activities. The numbers
in the circles signify the specific events or accomplishments. The number over the arrow
specifies the time needed (hours, days, months), to go from event 6 to event 3. The events need
not be numbered in any specific order. However, event 6 must take place before event 3 can be
completed (or begin).
Figure 28.1: Standard PERT Nomenclature
Figure 28.2: PERT Sources (Burst Points) and Sinks
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As depicted in Figure 28.2 (a) above, event 26 must take place prior to events 7, 18, and 31. In
Figure 28.2 (b), the opposite holds true, and events 7, 18, and 31 must take place prior to event
26. Thus, it is similar to "and gates" used in logic diagrams.
However, these charts can be used to develop the PERT network, as shown in Figure 28.3
below. The bar chart in Figure (A) below can be converted to the milestone chart in Figure (B)
below. By then defining the relationship between the events on different bars in the milestone
chart, we can construct the PERT chart in Figure (C) below.
Figure 28.3: Conversion from Bar Chart to PERT Chart
Basically PERT is a management planning and control tool. It can be considered as a road map
for a particular program or project in which all of the major elements (events) have been
completely identified together with their corresponding interrelations. PERT charts are often
constructed from back to front because, for many projects, the end date is fixed and the
contractor has front-end flexibility.
It is important to note here that one of the purposes of constructing the PERT chart is to
determine how much time is needed to complete the project. PERT, therefore, uses time as a
common denominator to analyze those elements that directly influence the success of the
project, namely, time, cost, and performance. The construction of the network requires two
inputs. First, a selection must be made as to whether the events represent the start or the
completion of an activity. Event completions are generally preferred.
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Table 28.1: Sequence of Events
The next step is to define the sequence of events, as shown in Table 28.1 above, which relates
each event to its immediate predecessor. Large projects can easily be converted into PERT
networks once the following questions are answered:
What job immediately precedes this job?
What job immediately follows this job?
What jobs can be run concurrently?
A typical PERT network is shown in the following figure 28.4.
Figure 28.4: Simplified PERT Network
The bold line represents the critical path, which is established by the longest time span through
the total system of events. The critical path is composed of events 1­2­3­5­6­7­8­9. The
critical path is vital for successful control of the project because it tells management two things:
1.
Because there is no slack time in any of the events on this path, any slippage will cause
a corresponding slippage in the end date of the program unless this slippage can be
recovered during any of the downstream events (on the critical path).
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2.
Because the events on this path are the most critical for the success of the project,
management must take a hard look at these events in order to improve the total
program.
Therefore, by using PERT we can now identify the earliest possible dates on which we can
expect an event to occur, or an activity to start or end. There is nothing overly mysterious about
this type of calculation, but without a network analysis the information might be hard to obtain.
PERT charts can be managed from either the events or the activities. For levels 1­3 of the Work
Breakdown Structure (WBS), the project manager's prime concerns are the milestones, and
therefore, the events are of prime importance. For levels 4­6 of the Work Breakdown Structure
(WBS), the project manager's concerns are the activities.
28.5
Differences Between PERT and CPM:
Note that the principles that we have discussed so far apply not only to PERT, but to CPM as
well. The nomenclature is the same for both, and both techniques are often referred to as arrow
diagramming methods, or activity-on-arrow networks. The differences between PERT and CPM
are as follows:
PERT uses three time estimates (optimistic, most likely, and pessimistic). From these
estimates, an expected time can be derived. CPM uses one time estimate that represents the
normal time (that is, better estimate accuracy with CPM).
PERT is probabilistic in nature, based on a beta distribution for each activity time and a
normal distribution for expected time duration. This allows us to calculate the "risk" in
completing a project. CPM is based on a single time estimate and is deterministic in nature.
Both PERT and CPM permit the use of dummy activities in order to develop the logic.
PERT is used for Research and Development projects where the risks in calculating time
durations have a high variability. CPM is used for construction projects that are resource
dependent and based on accurate time estimates.
PERT is used on those projects, such as Research and Development, where percent
complete is almost impossible to determine except at completed milestones. CPM is used
for those projects, such as construction, where percent complete can be determined with
reasonable accuracy and customer billing can be accomplished based on percent complete.
28.6
Graphical Evaluation And Review Technique (GERT):
Graphical Evaluation and Review Techniques (GERT) are similar to PERT but have the distinct
advantages of allowing for looping, branching, and multiple project end results. With PERT one
cannot easily show that if a test fails, we may have to repeat the test several more times. With
PERT, we cannot show that, based upon the results of a test, we can select one of several
different branches to continue the project. These problems are easily overcome using GERT.
28.7
Dependencies or Interrelationships:
There are three basic types of interrelationships or dependencies:
1.
Mandatory Dependencies (i.e., Hard Logic):
These are dependencies that cannot change, such as erecting the walls of a house before
putting up the roof.
2.
Discretionary Dependencies (i.e., Soft Logic):
These are dependencies that may be at the discretion of the project manager or may
simply change from project to project. As an example, one does not need to complete
the entire bill of materials prior to beginning procurement.
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3.
External Dependencies:
These are dependencies that may be beyond the control of the project manager such as
having contractors sit on your critical path.
28.7.1 Dummy Activities:
It is sometimes impossible to draw network dependencies without including dummy
activities. Dummy activities are artificial activities, represented by a dotted line, and do
not consume resources or require time. They are added into the network simply to
complete the logic.
In the Figure 28.5 below, the dummy activity is required to show that D is preceded by
A and B.
Figure 28.5: Dummy Activity
28.8
Slack Time:
It is essential to know that since there exists only one path through the network that is the
longest, the other paths must be either equal in length to or shorter than that path. Therefore,
there must exist events and activities that can be completed before the time when they are
actually needed. The time differential between the scheduled completion date and the required
date to meet critical path is referred to as the slack time. In Figure 28.4, event 4 is not on the
crucial path. To go from event 2 to event 5 on the critical path requires seven weeks taking the
route 2­3­5. If route 2­4­5 is taken, only four weeks are required. Therefore, event 4, which
requires two weeks for completion, should begin anywhere from zero to three weeks after event
2 is complete. During these three weeks, management might find another use for the resources
of people, money, equipment, and facilities required to complete event 4.
Therefore, the critical path is vital for resource scheduling and allocation because the project
manager, with coordination from the functional manager, can reschedule those events not on the
critical path for accomplishment during other time periods when maximum utilization of
resources can be achieved, provided that the critical path time is not extended. This type of
rescheduling through the use of slack times provides for a better balance of resources
throughout the company, and may possibly reduce project costs by eliminating idle or waiting
time.
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Table of Contents:
  1. INTRODUCTION TO PROJECT MANAGEMENT:Broad Contents, Functions of Management
  2. CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS:Why Projects are initiated?, Project Participants
  3. CONCEPTS OF PROJECT MANAGEMENT:THE PROJECT MANAGEMENT SYSTEM, Managerial Skills
  4. PROJECT MANAGEMENT METHODOLOGIES AND ORGANIZATIONAL STRUCTURES:Systems, Programs, and Projects
  5. PROJECT LIFE CYCLES:Conceptual Phase, Implementation Phase, Engineering Project
  6. THE PROJECT MANAGER:Team Building Skills, Conflict Resolution Skills, Organizing
  7. THE PROJECT MANAGER (CONTD.):Project Champions, Project Authority Breakdown
  8. PROJECT CONCEPTION AND PROJECT FEASIBILITY:Feasibility Analysis
  9. PROJECT FEASIBILITY (CONTD.):Scope of Feasibility Analysis, Project Impacts
  10. PROJECT FEASIBILITY (CONTD.):Operations and Production, Sales and Marketing
  11. PROJECT SELECTION:Modeling, The Operating Necessity, The Competitive Necessity
  12. PROJECT SELECTION (CONTD.):Payback Period, Internal Rate of Return (IRR)
  13. PROJECT PROPOSAL:Preparation for Future Proposal, Proposal Effort
  14. PROJECT PROPOSAL (CONTD.):Background on the Opportunity, Costs, Resources Required
  15. PROJECT PLANNING:Planning of Execution, Operations, Installation and Use
  16. PROJECT PLANNING (CONTD.):Outside Clients, Quality Control Planning
  17. PROJECT PLANNING (CONTD.):Elements of a Project Plan, Potential Problems
  18. PROJECT PLANNING (CONTD.):Sorting Out Project, Project Mission, Categories of Planning
  19. PROJECT PLANNING (CONTD.):Identifying Strategic Project Variables, Competitive Resources
  20. PROJECT PLANNING (CONTD.):Responsibilities of Key Players, Line manager will define
  21. PROJECT PLANNING (CONTD.):The Statement of Work (Sow)
  22. WORK BREAKDOWN STRUCTURE:Characteristics of Work Package
  23. WORK BREAKDOWN STRUCTURE:Why Do Plans Fail?
  24. SCHEDULES AND CHARTS:Master Production Scheduling, Program Plan
  25. TOTAL PROJECT PLANNING:Management Control, Project Fast-Tracking
  26. PROJECT SCOPE MANAGEMENT:Why is Scope Important?, Scope Management Plan
  27. PROJECT SCOPE MANAGEMENT:Project Scope Definition, Scope Change Control
  28. NETWORK SCHEDULING TECHNIQUES:Historical Evolution of Networks, Dummy Activities
  29. NETWORK SCHEDULING TECHNIQUES:Slack Time Calculation, Network Re-planning
  30. NETWORK SCHEDULING TECHNIQUES:Total PERT/CPM Planning, PERT/CPM Problem Areas
  31. PRICING AND ESTIMATION:GLOBAL PRICING STRATEGIES, TYPES OF ESTIMATES
  32. PRICING AND ESTIMATION (CONTD.):LABOR DISTRIBUTIONS, OVERHEAD RATES
  33. PRICING AND ESTIMATION (CONTD.):MATERIALS/SUPPORT COSTS, PRICING OUT THE WORK
  34. QUALITY IN PROJECT MANAGEMENT:Value-Based Perspective, Customer-Driven Quality
  35. QUALITY IN PROJECT MANAGEMENT (CONTD.):Total Quality Management
  36. PRINCIPLES OF TOTAL QUALITY:EMPOWERMENT, COST OF QUALITY
  37. CUSTOMER FOCUSED PROJECT MANAGEMENT:Threshold Attributes
  38. QUALITY IMPROVEMENT TOOLS:Data Tables, Identify the problem, Random method
  39. PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY:Messages of Productivity, Productivity Improvement
  40. COST MANAGEMENT AND CONTROL IN PROJECTS:Project benefits, Understanding Control
  41. COST MANAGEMENT AND CONTROL IN PROJECTS:Variance, Depreciation
  42. PROJECT MANAGEMENT THROUGH LEADERSHIP:The Tasks of Leadership, The Job of a Leader
  43. COMMUNICATION IN THE PROJECT MANAGEMENT:Cost of Correspondence, CHANNEL
  44. PROJECT RISK MANAGEMENT:Components of Risk, Categories of Risk, Risk Planning
  45. PROJECT PROCUREMENT, CONTRACT MANAGEMENT, AND ETHICS IN PROJECT MANAGEMENT:Procurement Cycles