PROJECT EVALUATION REVIEW TECHNIQUE, (PERT)
In the critical path method, the time estimates are assumed to be
known with certainty. In certain projects like research and
development, new product introductions, it is difficult to estimate
the time of various activities.
Hence PERT is used in such projects with a probabilistic method using three
time estimates for an activity, rather than a single estimate, as shown in Figure
8.22.
Optimistic time tO:
It is the shortest time taken to complete
the activity. It means that if everything
goes well then there is more chance of
completing the activity within this time.
Most likely time tm:
It is the normal time taken to complete an
activity, if the activity were frequently
repeated under the same conditions.
Pessimistic time tp:
It is the longest time that an activity would
take to complete. It is the worst time
estimate that an activity would take if
unexpected problems are faced.
Taking all these time estimates into consideration, the expected
time
of an activity is arrived at.
The average or mean (ta) value
of the activity duration is given
by,
The variance of the activity
time is calculated using the
formula,
Probability for Project
Duration
The probability of completing the
project within the scheduled time (Ts) or
contracted time may be obtained by
using the standard normal deviate
where Te is the expected time of project
completion.
Probability of completing the
Example
An R & D project has a list of tasks to be performed whose time estimates
are given in the Table , as follows.
[Link] the project network.
[Link] the critical path.
c. Find the probability that the project is completed in 19 days. If
the probability is less than 20%, find the probability of
completing it in 24
days.
Time expected for each activity is
calculated using the formula (5):
Similarly, the expected time
is calculated for all the activities.
The variance of activity time is
calculated using the formula (6).
Similarly, variances of all the
activities are calculated.
Construct a network
diagram:
calculate the time earliest (TE)
and time Latest (TL) for all the
activities.
From the network diagram Figure , the critical path is
identified as 1-4, 4-6, 6-7, with a project duration of 22
days.
The probability of completing the project within 19 days is given by, P (Z<
Z0)
To find Z0
,
we know, P (Z <Z Network Model 0) = 0.5 – z (1.3416) (from normal tables, z
(1.3416) = 0.4099)
= 0.5 – 0.4099
= 0.0901 Thus, the probability of completing the R & D project in 19
9.01% days is 9.01%.
Since the probability of completing the project in 19 days is less
than 20% As in question, we find the probability of completing it in
24 days.
COST ANALYSIS
The two important components of any activity are the cost and time.
Cost is
directly proportional to time and vice versa.
For example, in constructing a shopping complex, the expected time of
completion can be calculated using the time estimates of various
activities. But if the construction has to be finished earlier, it requires
additional cost to complete the project. We need to arrive at a
time/cost trade-off between total cost of project and total time
required to complete it.
Normal time:
Normal time is the time required to
complete the activity at normal
conditions and cost.
Crash time:
Crash time is the shortest possible
activity time; crashing more than the
normal time will increase the direct
cost.
Cost Slope
Cost slope is the increase in cost per
unit of
Example
An activity takes 4 days to complete at a normal cost of Rs. 500.00. If it
is possible to complete the activity in 2 days with an additional cost
of Rs. 700.00, what is the incremental cost of the activity?
Incremental Cost or Cost Slope
It means, if one day is reduced we have to spend Rs. 100/- extra per day.
Project Crashing
Procedure for crashing
Step1: Draw the network diagram and mark the Normal time and Crash
time.
Step2: Calculate TE and TL for all the
activities. Step3: Find the critical path and
other paths.
Step 4: Find the slope for all activities and
Step 5: Establish a tabular column with required field.
Step 6: Select the lowest ranked activity; check whether it is a critical
activity. If so,crash the activity, else go to the next highest
ranked activity.
Note: The critical path must remain critical while crashing.
Step 7: Calculate the total cost of project for each crashing
Step 8: Repeat Step 6 until all the activities in the critical path are fully
crashed.
Example
The following Table
8.13 gives the
activities of a
construction
project and other
data.
If the indirect cost is Rs. 20 per day, crash the activities
to find the minimum duration of the project and the
project cost associated.
Solution
From the data provided in the table, draw the network diagram
(Figure 8.28) and find the critical path.
From the diagram,we observe
that the critical path is 1-2-5 with
project duration of 14 days
The cost slope for all activities and
their rank is calculated as shown in
Table 8.14
The available paths of the network are listed down in Table
8.15 indicating the sequence of crashing (see Figure 8.29).
The sequence of crashing
and the total cost
involved is given in Table
8.16 Initial direct cost
= sum of all normal costs
given
= Rs. 490.00
Activity Project Critical Path Direct Cost in (Rs.) Indirect Total
Duration Cost Cost in
Crashed in (Rs.)
(Rs.)
- 14 1-2-5 490 14 x 20 = 770
280
1 – 2(2) 10 1–2–5 490 + (2 x 15) + (2 x 10 x 20 = 970
2 – 5(2) 1–3–4–5 100) + (1 x 10) + (2 x 200
2 – 4(1) 1–2–4–5 20) = 770
3 – 4(2)
It is not possible to crash more than 10 days, as all the
activities in the critical path are fully crashed. Hence the
minimum project duration is 10 days with the total cost of
Rs. 970.00.
Assignme
nt
[Link] the project network diagram.
[Link] the length and variance of the critical path.
c. What is the probability that the jobs on the critical
path can be completed in 41 days?