Pert and CPM :
Network Techniques of Project Management To achieve the objectives of project management network
techniques is widely used. It is commonly known as PERT (Programmed Evaluation and Review
Technique), CPM (Critical Path Method).
Evolution of Network Techniques
By the end of 18th century, the decision-making process was mainly depended on the managerial
capabilities, experiences and academic background of managers. In the early stage of 19th century, the
pioneers of scientific management started developing the scientific management techniques. During
World War I, Henry L. Gantt developed Gantt chart for production scheduling which was later on
modified to bar chart for the purpose of project and production scheduling. The network techniques of
PERT and CPM were concurrently developed in 1957. In the beginning, CPM was used for planning and
scheduling of constructional projects. It was also used for scheduling the maintenance shutdown. The
construction industry in general and the petrochemical industry in particular were the major areas of
CPM applications. PERT was developed by US Navy for scheduling the research and development work
for the Polaris Fleet Ballistic Missiles Programmed whose activities were subject to a considerable
degree of uncertainty. Initially, this technique was named as “Programmed Evaluation and Review
Technique” after 1958, this technique was used by Russian Scientists for the utilization and management
of their huge ammunition. But after 1960, this technique came up as a revolutionary technique for the
purpose of decision-making. With the passage of time, PERT and CPM applications started overlapping
and now they are used almost as single technique and the difference between the two is only of the
historical and academic interest.
Types of Network
1. AOA Network: Activity on Arrow Network. 2. PDM/AON Network: Precedence Diagram
Method/Activity on Node Network.
CPM The PERT model was developed for projects characterized by uncertainty and the CPM model was
developed for projects which are relatively risk-free. While both the approaches ‘begin with the
development of the network and a focus on the critical path, the PERT approach is ‘probabilistic’ and the
CPM approach is ‘deterministic’. This does not, however, mean that in CPM analysis we work with single
time estimates. In fact, the principal focus of CPM analysis is on variations in activity times as a result of
changes in resource assignments. These variations are planned and related to resource assignments and
are not caused by random factors beyond the control of management as in the case of PERT analysis.
The main thrust of CPM analysis is on time cost relationships and it seeks to determine the project
schedule which minimizes total cost. Assumptions The usual assumptions underlying CPM analysis are:
1. The costs associated with a project can be divided into two components: direct costs and indirect
costs. Direct costs are incurred on direct material and direct labour. Indirect costs consist of overhead
items like indirect supplies, rent, insurance, managerial services, etc. 2. Activities of the project can be
expedited by crashing which involves employing more resources. 3. Crashing reduces time but enhances
direct costs because of factors like overtime payments, extra payments, and wastage. The relationship
between time and direct activity cost can be reasonably approximated by a downward sloping straight
line.
4. Indirect costs associated with the project increase linearly with project duration.
Procedure Given the above assumptions, CPM analysis seeks to examine the consequences of crashing
on total cost (direct cost plus indirect cost). Since the behaviour of indirect project cost is well defined,
the bulk of CPM analysis is concerned with the relationship between total direct cost and project
duration. The procedure used in this respect is generally as follows: 1. Obtain the critical path in the
normal network. Determine the project duration and direct cost. 2. Examine the cost time slope of
activities on the critical path obtained and crash the activity which has the least slope. 3. Construct the
new critical path after crashing as per step 2. Determine project duration and cost. 4. Repeat steps 2 and
3 till activities on the critical path (which may change every time) are crashed.
