PLUTUS IAS

CPM AND PERT

INTRODUCTION
 Program Evaluation and Review Technique (PERT) and Critical Path Method
(CPM) are widely utilized methodologies in project management. The goals of project
management revolve around achieving successful project completion within the allocated
time and budget while meeting technical specifications for end-user satisfaction.
 A project, defined as a human undertaking with a clear start and finish, requires detailed
planning, scheduling, and control to ensure effective management. The project manager is
tasked with breaking down the project into activities, estimating resource and time
requirements, and defining inter-relationships between activities. Scheduling involves
determining start and completion dates for each activity, while control requires up-to-date
status information and insight into potential trade-offs during challenges.

 Common questions for project management include when the project is expected to be
completed, the impact of delays on overall completion time, how additional funds can be
optimally spent to reduce activity times, and the probability of meeting the scheduled
project completion date.

EVOLUTION
 Before the introduction of PERT and CPM, the prevalent technique for project scheduling
was the Gantt Chart, developed by Henry L. Gantt around 1900. However, Gantt
Charts have limitations in representing the inter-relationships and dependencies among
various project activities, particularly as project size increases. In response to these
limitations, PERT and CPM were proposed in the late 1950s.

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 PERT and CPM originated independently from research conducted by the U.S. Navy and
DuPont company. PERT emerged from the U.S. Navy's Polaris submarine-missile
program, while CPM was developed for planning chemical plant construction.

CRITICAL PATH METHOD (CPM)

 The Critical Path Method (CPM), also known as Critical Path Analysis (CPA), is an
algorithm employed for scheduling a set of project activities. This method determines a
critical path by identifying the longest sequence of dependent activities and measuring the
time required to complete them from start to finish. Often used in conjunction with the
Program Evaluation and Review Technique (PERT), CPM provides a valuable tool for
project planning and management.
 History
 In the late 1950s, Morgan R. Walker of DuPont and James E. Kelley Jr. of Remington
Rand are credited with developing Critical Path Method (CPM), a project-modeling
technique. Simultaneously, the term "critical path" was coined in connection with
Program Evaluation and Review Technique (PERT), which emerged around the same
period through collaboration between Booz Allen Hamilton and the U.S. Navy. The
foundational concepts of the critical path were initially established and utilized by
DuPont between 1940 and 1943, playing a significant role in the success of the
Manhattan Project.
 Application
 Critical path analysis is widely utilized across various project types, including
construction, aerospace and defense, software development, research, product
development, engineering, and plant maintenance. Any project characterized by
interdependent activities can benefit from the mathematical analysis provided by CPM.
Notably, CPM made its debut in 1966 during the construction of the World Trade Center
Twin Towers in New York City. While the original CPM program and approach are no
longer in use, the term is broadly applied to any method used for analyzing a project's
network logic diagram.
 Basic Techniques
 The Critical Path Method (CPM) involves constructing a comprehensive model of a
project, which includes the following components:
 List of Activities: Compile a detailed list of all activities necessary for completing the
project. These activities are typically categorized within a work breakdown structure.
 Duration of Activities: Specify the time required (duration) for each activity to reach
completion.
 Dependencies: Define the dependencies between activities, establishing the order in
which they need to be executed.
 Logical End Points: Identify logical end points, such as milestones or deliverable
items, which signify completion stages.
 Using this information, CPM calculates the longest path of planned activities leading to
logical end points or project completion. It also determines the earliest and latest start
and finish times for each activity without extending the project duration. This

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 process identifies critical activities (on the longest path) and activities with "total float"
(the potential for delay without increasing the project duration).
 Critical Path and Total Float
 In project management, the critical path represents the sequence of activities that
collectively have the longest overall duration, irrespective of whether they have total
float. The critical path defines the shortest time possible to complete the project. "Total
float" refers to the unused time available within the critical path.

CRITICAL PATH METHOD (CPM) STEPS:

 The Critical Path Method (CPM) is a systematic project management technique used to
plan and control projects. It involves several steps to ensure effective project scheduling
and management. Here's a detailed breakdown of the six steps in the CPM:
 Step 1: Specify Each Activity: In the first step, all the activities required to complete the
project are identified and clearly defined. Each activity is listed, and its details are
thoroughly specified. This includes a comprehensive understanding of the scope,
requirements, and objectives of each task within the project.
 Step 2: Activity Sequence Establishment: Once the activities are specified, the next
step is to establish the sequence in which these activities need to be performed. This
involves determining the dependencies between activities, i.e., understanding which
activities are dependent on the completion of others. The sequence helps in establishing
the logical flow of the project.
 Step 3: Draw the Network Diagram :With the activity sequence established, a network
diagram is drawn to visually represent the relationships and dependencies among
different activities. This diagram provides a clear overview of the project's structure,
illustrating the logical connections between tasks. The network diagram serves as a visual
guide for project managers and team members.
 Step 4: Estimate Activity Completion Time: For each identified activity, an estimate of
the time required for completion is determined. This involves assessing the duration
needed for each task, considering factors such as resources, expertise, and potential
challenges. Time estimates are typically expressed in units such as days, weeks, or
months, depending on the project's scale and complexity.
 Step 5: Identify the Critical Path: The critical path is the longest sequence of dependent
activities that determines the overall duration of the project. It represents the path that, if
delayed, would extend the project completion time. To identify the critical path,
calculations are performed based on the activity completion times, and the path with the
longest cumulative time is determined.
 Step 6: Update the Critical Path to Show the Progress: As the project progresses, it is
crucial to continually update and monitor the critical path. Any changes in activity
completion times or the addition of new tasks can impact the critical path. Regular
updates help in tracking the project's progress and ensuring that it stays on course. This
step involves adjusting the critical path to reflect the current state of the project and
making informed decisions to keep the project on schedule.

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 By following these six steps, project managers can effectively utilize the Critical Path
Method to plan, monitor, and control projects, ensuring they are completed successfully
and on time.

 Example - Critical Path Method (CPM) in Car Manufacturing

 A car manufacturing company decides to redesign its fuel pump for a new car model, and
the project involves several activities as listed below:
o Engineering department designs the fuel pump.
o Marketing department develops the marketing strategy.
o New manufacturing process is designed.
o Advertising media is selected.
o Initial production run is completed.
o The pump is released to the market.

 The critical path in the network is the longest path, and its identification is crucial as
it determines the overall project duration. Any delay in an activity on the critical path
will result in a delay for the entire project. Multiple critical paths can exist if there are ties
among the longest paths.

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 For this example, time estimates (in weeks) for each activity are provided in Table. In the
network diagram , time estimates are specified inside brackets along with each activity.

 There are three possible paths for this network, and the critical path is found by
enumerating all possible paths to completion time.

 In this example, the second path (A -> D -> G) is the critical path, requiring the longest
period of time (13 weeks) for project completion. Critical activities are those on the
critical path, and any delay in these activities delays the entire project. Critical activities
have no slack time, defined as the latest time an activity can be completed without
delaying the project, minus the earliest time the activity can be completed.
 While identifying the critical path in a small network can be done by comparing all
possible paths, as the number of activities increases, it becomes complex and time-
consuming. Therefore, an algorithm is needed for a systematic approach to determine the
critical path. Critical path calculations involve two phases: the forward pass, which starts
from the left and moves to the right through the network, and the backward pass, which
starts from the right and moves backward to the left through the network.

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 Advantages of Critical Path Method (CPM):
 The Critical Path Method (CPM) offers several advantages in the field of project
management. Here are the key benefits:
 Provides an Outline for Long-Term Coordination and Planning: CPM allows project
managers to create a comprehensive outline for the long-term coordination and planning
of a project. This enables teams to have a clear roadmap and understand the sequence of
activities required for successful project completion.
 Recognizes Critical Activities: One of the primary advantages of CPM is its ability to
identify critical activities within a project. Critical activities are those that, if delayed,
would directly impact the overall project completion time. Recognizing these critical
paths helps in prioritizing and focusing efforts on the most time-sensitive tasks.
 Easy to Plan, Schedule, and Control Projects: CPM provides a structured and
systematic approach to planning, scheduling, and controlling projects. The visual
representation through network diagrams makes it easy for project managers to
understand the flow of activities, dependencies, and the critical path. This simplicity
enhances the overall management of the project.
 Improves Productivity: With a clear understanding of project timelines and critical
paths, teams can work more efficiently and collaboratively. CPM helps in optimizing
resource allocation and minimizing idle time, leading to improved productivity. Teams
can prioritize tasks and allocate resources effectively to meet project milestones.
 Manages the Resources Needed: CPM facilitates the efficient management of resources
needed for project activities. By identifying the critical path, project managers can
allocate resources strategically to ensure that tasks on the critical path are completed on
time. This resource management helps prevent bottlenecks and ensures a smooth
workflow.
 Enhances Decision-Making: The clarity provided by CPM in terms of critical paths and
project timelines empowers project managers to make informed decisions. They can
anticipate potential challenges, assess the impact of changes, and make adjustments to the
project plan as needed. This proactive approach enhances overall decision-making
throughout the project life cycle.
 Facilitates Communication: CPM provides a visual representation of the project
schedule, making it easier to communicate the plan to stakeholders, team members, and
other relevant parties. This transparency fosters effective communication and ensures that
everyone involved in the project understands the sequence of tasks and their importance.
 Optimizes Project Duration: By focusing on the critical path, CPM helps in optimizing
the project duration. Project managers can identify opportunities to streamline activities,
reduce unnecessary delays, and ensure that the project is completed within the shortest
possible time frame.
 In summary, the Critical Path Method is a valuable tool in project management, offering
advantages that contribute to effective planning, resource management, and successful
project completion.
 Disadvantages of Critical Path Method (CPM):
 While the Critical Path Method (CPM) provides numerous benefits, it also comes with
certain limitations and disadvantages. Here are some drawbacks associated with CPM:

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 Difficulty for Beginners: CPM can be challenging for beginners or individuals who are
new to project management methodologies. The concept of critical paths, network
diagrams, and dependency relationships may initially be complex, requiring a learning
curve for effective implementation.
 Cost of Software: Implementation of CPM often involves the use of specialized project
management software. This software can be expensive, making it a significant drawback,
particularly for small businesses or projects with limited budgets. The cost of software
licenses and training can be a barrier to adoption.
 Time-Consuming Structuring: The process of structuring a CPM can be time-
consuming, especially for large and complex projects. Identifying activities, establishing
dependencies, and estimating completion times for each task can require significant
effort. This time investment can be a drawback in fast-paced projects.
 Limited Control Over Individual Schedules: CPM primarily focuses on the overall
project schedule and critical paths. However, it does not provide detailed control over the
schedules of individual team members or resources. The method may not address the day-
to-day activities and work schedules of each person involved in the project.
 Inadequate Resource Monitoring: While CPM helps in identifying critical paths and
optimizing resource allocation, it may not provide comprehensive monitoring of resource
usage throughout the project. This limitation can result in challenges when attempting to
ensure that resources are effectively utilized and do not face overallocation or
underutilization.
 Sensitivity to Changes: CPM schedules are sensitive to changes in project parameters,
such as task completion times or dependencies. Even minor alterations can impact the
critical path and, subsequently, the entire project schedule. Managing changes in a CPM
system requires careful consideration and adjustment.
 Assumes Fixed Activity Durations: CPM assumes that activity durations are fixed and
do not vary. In reality, uncertainties and unexpected events can impact the time required
to complete tasks. CPM may not account for these variations adequately, leading to
potential inaccuracies in the project schedule.
 Dependence on Correct Data: The accuracy of CPM heavily depends on the correctness
of the input data, including activity duration estimates and dependency relationships. If
these inputs are not accurate, the resulting schedule may not reflect the actual project
conditions.
 In conclusion, while CPM is a powerful project management tool, users should be aware
of its limitations and carefully consider whether it aligns with the specific needs and
characteristics of their projects.

PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT)

 The Program Evaluation and Review Technique (PERT) is a statistical instrument
employed in project management. Its primary purpose is to scrutinize and depict the
various tasks inherent in the accomplishment of a specific project. Originating in 1958,
PERT was initially crafted by the United States Navy and has since become a prevalent
tool in project management methodologies. Frequently employed alongside the Critical
Path Method (CPM), introduced in 1957, PERT serves as a valuable resource for project
planning and evaluation.

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 PERT was initially developed in 1957 for the U.S. Navy's special Project office,
specifically to support the U.S. Navy's Polaris nuclear submarine project. An early
notable application occurred during the planning and execution of the 1968 Winter
Olympics in Grenoble. PERT was employed for this purpose from 1965 until the opening
of the Games in 1968.
 Key characteristics and applications of PERT include:
 Event-Oriented Technique: PERT is characterized as more of an event-oriented
technique rather than one focused on start and completion points. It is particularly
applicable in projects where time plays a crucial role, prioritizing the sequencing of
events over specific start and end dates.
 Emphasis on Time Over Cost: PERT is particularly suited for projects where time is a
critical factor, placing more emphasis on time management than on cost considerations.
This makes it a valuable tool in scenarios where meeting deadlines is of paramount
importance.
 Application in Large-Scale, Complex Projects: PERT is well-suited for application in
very large-scale, one-time, complex projects. It finds particular relevance in non-routine
infrastructure projects and those related to research and development, where the intricate
nature of tasks demands a sophisticated management approach.
 Management Tool for Project Visualization: PERT provides a management tool that
relies on arrow and node diagrams representing activities and events. In these diagrams,
arrows signify the activities or work required to reach events or nodes, which, in turn,
indicate the completion of each phase within the overall project.
 Events and Activities in PERT
 In a PERT (Program Evaluation and Review Technique) diagram, the fundamental
elements are events and activities. These components, along with their characteristics,
play a pivotal role in illustrating and managing the flow of tasks within a project.
 Events:
 PERT Event: A point denoting the initiation or conclusion of one or more activities. It
does not consume time or resources. If an event signifies the completion of activities, it is
not considered "reached" until all preceding activities leading to that event have been
completed.
 Predecessor Event: An event directly preceding another event without any intervening
events. Events can have multiple predecessors and can also be the predecessor for
multiple events.
 Successor Event: An event directly following another event without any intervening
events. Similar to predecessors, events can have multiple successors and can also be the
successor for multiple events.

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 Activities:
 PERT Activity: The actual execution of a task that consumes time and requires
resources such as labor, materials, and machinery. It represents the effort and resources
needed to transition from one event to another. An activity cannot commence until the
predecessor event has occurred.
 PERT Sub-activity: A PERT activity can be further broken down into a set of sub-
activities. For instance, activity A1 can be decomposed into A1.1, A1.2, and A1.3. Sub-
activities share properties with activities, including having predecessor or successor
events. Sub-activities can undergo further decomposition into more detailed sub-
activities.
 In summary, events and activities, including their predecessor and successor
relationships, are the building blocks of a PERT diagram. Events mark key points in the
project timeline, while activities represent the execution of tasks. The granularity of
activities can be refined through sub-activities, providing a detailed and structured
representation of the project's flow.
 Types of Time
 In the context of PERT (Program Evaluation and Review Technique), four types of time
are defined to estimate the duration of an activity:
 Optimistic Time (o or O): The minimum possible time required to complete an activity
or a path. It assumes that everything proceeds better than is normally expected.
 Pessimistic Time (p or P): The maximum possible time required to complete an activity
or a path. It considers the scenario where everything goes wrong, excluding major
catastrophes.
 Most Likely Time (m or M): The best estimate of the time required to complete an
activity or a path under normal circumstances. It assumes that everything proceeds as
expected.
 Expected Time (te or TE): The best estimate of the time required to complete an activity
or a path, considering the possibility that things may not always proceed as normal. This
expected time takes into account variations and deviations from the norm. It implies that
the expected time is the average time the task would require if repeated on multiple
occasions over an extended period.

 Management tools in PERT

 PERT provides several management tools to facilitate the determination of key concepts
in project management:

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 Float or Slack: Float or slack is a measure of the excess time and resources available to
complete a task. It indicates the amount of time a project task can be delayed without
causing a delay in subsequent tasks (free float) or the entire project (total float). Positive
slack denotes being ahead of schedule, negative slack indicates falling behind schedule,
and zero slack suggests being on schedule.
 Critical Path: The critical path is the longest continuous pathway from the initial event
to the terminal event. It determines the total calendar time required for the project. Any
delays along the critical path will result in a corresponding delay in reaching the terminal
event by at least the same amount.
 Critical Activity: A critical activity is an activity with total float equal to zero. However,
having zero free float does not necessarily mean that an activity is on the critical path, as
its path may not be the longest.
 Lead Time: Lead time refers to the time by which a predecessor event must be
completed to allow sufficient time for the activities that must occur before a specific
PERT event reaches completion.
 Lag Time: Lag time is the earliest time by which a successor event can follow a specific
PERT event. It represents the minimum time required between events.
 Fast Tracking: Fast tracking involves performing more critical activities in parallel. This
approach is employed to expedite the project schedule and reduce overall completion
time.
 Crashing Critical Path: Crashing the critical path involves shortening the duration of
critical activities. This strategy aims to compress the project schedule and accelerate
project completion.
 These management tools within PERT offer valuable insights into project scheduling,
resource utilization, and the identification of critical components. They help project
managers make informed decisions to ensure the successful and timely completion of the
project.

 Advantages of PERT:
 Planning for Large Projects: PERT is particularly useful for planning and scheduling
large-scale projects. Project managers can effectively use PERT to organize and manage
complex tasks in projects that involve numerous activities and resources.
 Visibility of Critical Path: PERT provides a clear visualization of the critical path within
a project. The critical path represents the sequence of activities that cannot be delayed
without impacting the overall project timeline. This visibility helps project managers
focus on key tasks and prioritize efforts where they are most needed.
 Analysis of Activity: PERT offers a comprehensive analysis of project activities. This
includes progress reporting and project completion assessments, allowing management to
track the project's status and adherence to the budget. The detailed insights provided by
PERT contribute to informed decision-making.
 Coordination Ability: PERT enhances coordination and communication within different
departments of a company. By providing a structured approach to project management,
PERT facilitates collaboration between various teams and departments involved in the
project. This improved coordination helps ensure that everyone is aligned with project
goals.

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 What-if Analysis: PERT allows for what-if analysis, enabling companies to assess
potential risks associated with a project. By considering various scenarios and potential
deviations from the plan, organizations can identify and address potential challenges early
in the project lifecycle. This proactive approach helps in risk mitigation and contingency
planning.
 Explicit Definition of Dependencies: PERT charts explicitly define and make visible the
dependencies, also known as precedence relationships, between different elements in the
work breakdown structure (WBS). This clarity helps project teams understand the
sequence of tasks and their interdependencies.
 Critical Path Identification: PERT is effective in identifying the critical path within a
project. The critical path represents the series of tasks that collectively determine the
minimum duration required to complete the project. Identifying and focusing on the
critical path is crucial for project management.
 Early Start, Late Start, and Slack Identification: PERT facilitates the identification of
early start, late start, and slack for each activity. This information is valuable for project
managers in determining the flexibility and time available for each task, allowing for
better scheduling and resource allocation.
 Potential for Reduced Project Duration: PERT provides the potential for reduced
project duration by offering a better understanding of dependencies. This understanding
enables improved overlapping of activities and tasks where feasible, leading to more
efficient project timelines.
 Organization of Project Data: PERT allows for the organization of a large amount of
project data in a visual diagram. This visual representation aids in decision-making
processes by providing a comprehensive overview of the project structure, timelines, and
critical elements.
 Probability Assessment: PERT can provide a probability of completing the project
before a given time. This probabilistic aspect allows project managers to assess the
likelihood of meeting specific deadlines and supports better risk management by
incorporating uncertainties into the planning process.
 Disadvantages of PERT:
 Time-Focused Method: PERT is inherently time-focused, emphasizing the completion
of projects or activities within specified timeframes. If deadlines are not met, it can lead
to problems, and the success of the project may be compromised.
 Subjective Analysis: Project activities in PERT are identified based on available data,
and this process can be subjective. In PERT projects, which are typically applicable to
new and non-repetitive endeavors, collecting information becomes subjective and may
lack the objectivity of past records.
 Prediction Inaccuracy: PERT lacks historical records for project frameworks, relying
heavily on predictions. If these predictions are inaccurate, the project's success may be
jeopardized. The absence of past data can lead to uncertainties in estimating activity
durations.
 Expense: PERT can be expensive in terms of time consumption, research efforts,
prediction processes, and resource utilization. The comprehensive nature of PERT
requires significant investment in terms of both time and resources.
 Complexity in Large Projects: In projects with potentially hundreds or thousands of
activities and individual dependency relationships, PERT can become complex and

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 unwieldy. Managing a vast network of activities and relationships can be challenging,
particularly when dealing with large-scale projects.
 Scalability Challenges: PERT is not easily scalable for smaller projects. Its intricate
methodology, designed for complex and large projects, may be overly detailed and
resource-intensive for smaller-scale endeavors.
 Large and Unwieldy Network Charts: The network charts in PERT can be large and
unwieldy, often requiring several pages to print and specially-sized paper. This can make
it challenging to visualize and communicate project details effectively.
 Lack of Timeframe in Charts: PERT/CPM charts often lack a specific timeframe,
making it harder to represent project status. Although colors can be used to indicate
completed nodes, the absence of a clear timeframe may hinder the ability to convey the
project's progress.
 These disadvantages highlight challenges related to the time-focused nature of PERT,
subjective analysis, prediction accuracy, resource-intensive processes, complexity in large
projects, scalability issues, and the practicality of presenting information in network
charts.

DIFFERENCES BETWEEN PERT AND CPM

 The distinction between PERT and CPM stems from their original applications, with
PERT initially designed for research and development projects and CPM for construction
projects. Both methods share the concept of a critical path and rely on network analysis to
identify critical activities for effective control to meet completion dates.
 PERT is well-suited for non-repetitive and complex projects with uncertain time
estimates, while CPM is best applied to repetitive and non-complex projects with more
certain time estimates.
 The choice between the two methods depends on the degree of uncertainty associated
with time estimates and the cost implications of inaccurate time estimates. In essence,
PERT focuses on the time variable, while CPM considers time-cost trade-offs.
 Key differences are here-

Aspect PERT (Program Evaluation CPM (Critical Path

and Review Technique) Method)
Technique Measures uncertain activities, Manages well-defined
focusing on time planning and activities, emphasizing time
control. and cost management.
Focus Minimizes time required to Trade-off between cost and
complete a project by a specified time, with emphasis on
deadline. minimizing costs.
Evolution Evolved for research and Suited for non-research
development projects with high projects like construction
uncertainty. with more predictability.
Orientation Event-oriented, focusing on the Activity-oriented, focusing
sequencing and timing of events. on the sequencing and
duration of activities.
Model Probabilistic model, considering Deterministic model,
uncertainties and variations in assuming known activity

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 activity durations. durations with certainty.
Time Three-time estimates (optimistic, Single time estimate for
Estimates pessimistic, most likely) for each activity, suitable for
high-precision. reasonably predictable
times.
Activities Effective for managing Well-suited for managing
Type unpredictable activities in predictable and well-defined
projects with high uncertainty. activities.
Job Nature Beneficial for non-repetitive Applied to projects with a
projects or those with unique repetitive nature and similar,
characteristics. well-established activities.
Crashing Crashing (compression Applicable crashing concept
Concept technique) not applicable; PERT to reduce project duration
is more concerned with and associated costs.
uncertainty.

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