Pert.cpm. Pert Cost
12
PERT Use of PERT provides Pioneer Audio management with some useful information about the Response 1000 project: The expected project completion time is 19 weeks. There is a better than 60% chance of finishing before 20 weeks. Activities C,J,K and L are on the critical path; they must watched more closely than others, for if they fall behind, the whole project falls. Activities not on the critical path ( A,B,D,E,G,H and I ) can fall behind by varying amounts( their slack times) without causing the project to be late. The earliest starting and finishing times for all activities in the project known from fig.1-6 and fig.1-8.
Transcript of Pert.cpm. Pert Cost
PERT
Use of PERT provides Pioneer Audio management with some useful information about the Response 1000 project:
The expected project completion time is 19 weeks.There is a better than 60% chance of finishing before 20 weeks.Activities C,J,K and L are on the critical path; they must watched more closely than others, for if they fall behind, the whole project falls.Activities not on the critical path ( A,B,D,E,G,H and I ) can fall behind by varying amounts( their slack times) without causing the project to be late.The earliest starting and finishing times for all activities in the project known from fig.1-6 and fig.1-8.
PERT / COST
PERT/Cost is a modification of PERT that allows a manager to plan, schedule, monitor and control cost as well as time.
ESTIMATING PROJECT COSTS BY ACTIVITY Managers should know the amounts of money that are to be expected for each activity over the planned duration of the project; one usually assumes that expenditures for each activity are made at a constant rate during that activity.
PERT / COST - ESTIMATING PROJECT COSTS BY ACTIVITY
1
2
4
5
3
6
7
AT=
3
$30,
000
B
D
F
G
H
I
T=2$200,000
$75,000
$20,000
$100,000
$75,000
$18,000
$240,000
E
T=2
T=4
T=1
T=4
T=3
T=5
Fig. 2-1 The nine-activity project network
$40,0
00
T=
1
C
PERT / COST - ESTIMATING PROJECT COSTS BY ACTIVITY
TABLE 2-1 ACTIVITY INFORMATION FOR NINE-ACTIVITY PROJECT NETWORK
Activity ES LSDuration,
Months Total Cost Cost/Month
A 0 0 3 $ 30,000 $ 10,000
B 0 8 2 $ 200,000 $ 100,000
C 3 9 1 $ 40,000 $ 40,000
D 3 3 4 $ 20,000 $ 5,000
E 7 7 5 $ 75,000 $ 15,000
F 4 10 2 $ 100,000 $ 50,000
G 4 10 1 $ 75,000 $ 75,000
H 12 12 3 $ 18,000 $ 6,000
I 5 11 4 $ 240,000 $ 60,000
Total Cost $ 798,000
CPM – Crashing a Project
In many situations, it is possible to reduce the length of a project by injecting additional resources; that is, by increasing direct expenses to speed up the project, thereby realizing savings on indirect project cost associated with the project, such as facilities and equipment costs, supervision and labor and personnel costs. The process of shortening the project is called crashing.
1. Find normal critical path and identify critical activities.2. Compute crash cost per week for all activities.3. Select critical activity with smallest crash cost per week. Crash this activity4. Check to make sure critical path is still critical. If not, find the new one. Return to step 3.
Steps in Project Crashing
CPM -Crashing a Project
ActivityCost
Time
Normal
Crash
time
Crashtime
Normal
Cost
Normal
Cost
Crashper week
Cost
Crash
Crash Cost = the cost required to achieve the crash time
Crash time = the shortest possible activity time
Normal Cost = the cost required to achieve the normal time
Normal time = the expected time for the activity
Fig. 3-1 Crash & Normal Times and Costs
Fig. 3-2 CPM -Crashing a Project
Catch basin network with all normal times
1
2
4
3
56.0
A
E
D
C
B
4.0
7.0
8.0
3.0
16.0
Critical Path: A-C-E
Table 3-1 Calculation of the cost crashing Catch Basin Project
Time, Weeks Cost Cost to reduce
Activity Normal Crash Normal Crash per week
A 6 4 $ 10,000 $ 14,000 $ 2,000
B 4 3 5,000 8,000 3,000
C 3 2 4,000 5,000 1,000
D 8 6 9,000 12,000 1,500
E 7 4 7,000 8,000 333
Total Costs $ 35,000 $ 47,000
Fig. 3-3 CPM -Crashing a Project
Activities E, C, D and A crashed on catch basin project
1
2
4
3
54.0
A
E
D
C
B
3.0
4.0
6.0
2.0
10.0
Fig. 3-4 CPM -Crashing a Project
Catch basin project with crash times for all activities
1
2
4
3
54.0
A
E
D
C
B
3.0
4.0
6.0
2.0
10.0
Table 3-2 The network in fig. 3-2 and table 3-1 after crashing
Project Duration Total Network Cost
Original Network 16 $ 35,000
Crash activity E to 4 weeks 13 $ 36,000
Crash activity C to 2 weeks 12 $ 37,000
Crash activity D to 6 weeks 12 $ 40,000
Crash activity A to 4 weeks 10 $ 44,000
Definition of important terms
Activities- Project steps that consume resources and/or time. Activity Time Estimates- Three time estimates that are used in determining
the expected completion time and variance for an activity in a PERT network. Beta Probability Distribution- A probability distribution that is often used in
computing the expected activity completion times and variances in the network. Backward Pass- A procedure that moves from the end of the network to the
beginning of the network. Critical Activities - Activities on the critical path. Critical Path- The longest path; determines expected project duration. Crashing –The process of reducing the total time that it takes to complete a
project by expending additional funds. Events - The starting and finishing of activities designated by nodes and arrows. Forward Pass – A procedure that moves from the beginning of a network to the
end of a network Immediate Predecessor- An activity that must be completed before another
activity can be started. Network or precedence diagram- A diagram of project activities that shows
sequential relationship by use of arrows and nodes. Path – A sequence of activities that leads from the starting node to the finishing
node. Slack Time – the amount of time that an activity can be delayed without
delaying the whole project.
