Case Study: Using CPM or PERT in time planning & control
80For over three decades, I worked for a development bank. My main job was to evaluate proposals for setting up of industrial projects initially as an Officer and later as Head of the Division. I have many interesting stories to share in project planning and implementation. One such story is the success of Pakistan Mineral Water Corporation (PMWC) in water-bottling. The company no more exists. It has since been swallowed up by multinational brands of bottled-water like AVA, Aquafina & Culligan.
In early 1986, three companies, including PMWC, applied for water- bottling plants. The market justified only one. I called sponsors of the companies and told them that I would recommend the case of one which could demonstrate its ability to go into production before October 1987. “What is that for!!!” all spoke at the same time. “Well, as a bottlers you should know upcoming Cricket Cup at Karachi” I told them and added, “Anyone who catches the event would have an instant success.” Only one, J. Rashid of PMWC, turned up with a rudimentary sketch of CPM which convinced me of his ability to beat the deadline.
CPM
- Critical Path Method (CPM)
Network analysis technique used in complex project plans with a large number of activities.
WHAT IS CPM?
Simply put, CPM stands for Critical Path Method used in planning and controlling time. It helps estimate time for project completion, pin-points activities critical for achieving the target. Above all, it gives a graphic view of the activities of a project which is easy to understand in one go.
BACKGROUND INFORMATION
As per information provided by J. Rashid, the project required basic facilities like land, building and machinery which have been shown in Table #1 along with estimated time. As would be observed that after acquiring land, the company can go for three activities: (i) placing order for machinery, (ii) construction of building, (iii) placing order for plastic bottles for water filling.
When buildings are complete, machines can installed and the same time, racks can be erected for storing plastic bottles. Thus the company can go for trials runs as necessary pre-requisites are in order.
- MS PROJECT 2007
This is perhaps the latest version. Like earlier version, it takes a lot of time to understand.
Format of a network or CPM varies. Basic structure is given in the text books or Software (MS Project 2007) which can be suitably modified. Personally, I like a detailed format for presentation.
Here each box or node has nine cells as shown in its legend. ES means Early Start while EF mean Early Finish.
In sketch # 1, some information has already been inserted about a particular activity such as ID, Description & Duration. The activities are also placed keeping their relationships in view.
Sketch # 1
FORWARD PASS
Let us start with ES & EF. This is simple except where we confront a Merge Event. We would insert Zero ( or expected date ) in the first cell of activity #1. Since duration for this activity is 1 month, the EF would be 0 + 1 = 1. Same would be carried for activities #2, #3 & #4 and EF worked out accordingly.
The ES of activity #5 would be 9, same as EF of its predecessor #3. It is natural; you cannot start erecting racks (#5) unless buildings (#3) are complete.
When you go next to activity #6, you would see two activities (#2 & #3) are merging. Obviously, you cannot start installation of machines (#6) unless the machinery has arrived as per order (#2) and buildings (#3) are complete. Here we would take maximum of EF of the both as both must be complete before #6 can be started. In the same way, we can complete rest of the diagram. We find that the project would take 19 months to be completed as shown in Sketch # 2 below:
Sketch #2
BACKWARD PASS
As the name implies, we move backward to the origin. In this example, the project completion time is 19 months. So its Early Finish (EF) or Late Finish (LF) must be the same. In other words, call it early or late, it must be finished by 19th month.
We start from last activity #8 and insert 19 in its LF cell. This activity has duration of 4 monthss. Calculating backward, we find that its LS should be 15th months (19 - 4 =15 ). In other, if #8 was started as late as on 15th months and it takes 4 months, it could still meet the deadline of 19 months.
We go back further and trace tails of any arrows touching #8. We find two, one linking with #7 (Store Raw Materials) and other with #6 (install machinery). We would put 15 in the LF Cells of #6 & #7. We can now calculate their LS by deducting from 15 their respective durations. For example, the LS of #6 should now be 9 (15-6=9).
We can continue likewise till we hit a "Burst Event" like #3 & #1. For explanation, #1 would be better as three activities are leading back to this activity. (There are three tails touching #1.) In such a situation, we shall take minimum of the LS of the three which is one month and it would be LF of #1. Why? The longest activity after #1 is #3. In order to enable #3 to start on time, it is essential that the preceding activity is completed well in time.
The complete working is shown in Sketch # 3 below:
Sketch # 3
- Project Management - Project Evaluation and Review Technique
Project Evaluation and Review Technique - Complex projects will have a significant number of activities that need to be performed, both in sequence and in parallel.
WHAT IS A PERT?
PERT stands for “Project Evaluation and Review Technique”. It is almost the same as CPM except for the following differences:
- CPM is for repeated projects while PERT is for first-timers.
- CPM is used both for time and cost whereas in PERT only time is taken care of.
- Because CPM is for repeated projects, there is a track-record or database of previous projects. It enables the manager to be realistic in their estimates. For PERT, being for first time projects, one has to ask the knowledgeable persons to give time-estimates for each activity as to (i)Minimum time as in most favorable conditions, (ii) Maximum time as in most unfavorable conditions and (iii) Normal time. Thereafter a weighted average is calculated as shown in Sketch #4.
Sketch #4
- NEXT ARTICLE
I have since written the next hub which is about FLOATS. It uses the data given in this article and is one step forward.
OTHER ISSUES
Once time has been estimated, the rest is the same as in CPM.
In the upcoming articles, I would cover probabilities of project completion in different situations, relationship amongst activities, slacks and resource management.
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Comments
nice case
sir thank you for the intresting artical
i fully ubderstand the CPM part but have a little confusion in understanding the Pert specially the diagram , some more explanation would help .
thank you again
Thanks for your comments. As the name implies, we move backward to the origin. In this example, the project could be completed in 19 days as proved in the forward pass. This is the shortest time for completion. (Critical Path is longest path but shows shortest time for completion. Other paths are of lesser duration. For example, if you go from Activity #1 to Activity #4 to #7 and finally #8, the total duration would be 10 days or much lesser than 19 days.
So the project's EF (Early Finish) and LF(Late Finish) must be the same. From there we go back to the tails of arrows which, in one case, touches #7. We put LS of #8 in LF of #7. Another tail points towards #6. It should have the same property in LF i.e. 15. The problem would come when there are two or more tails. For example, if you see #3, it has backward link with #5 & #6. We would take lower of the two. Incidentally, both have the same property i.e. 9. We go further back to Activity #1 where three tails are touching. Lowest of the three would be carrid back to #1 ( others are 10 & 4 for activity #2 &4 ). Obviously, finishing #1 latest by day 1 would enable all the successors(#2, #3 & #4) to start well in time. The benefit would mainly go to Activity # 3 which cannot be delayed. Others might have some margin for delay which, as I said earlier, would be covered in my next article.
Hope this clarifies the position. If not, please do not hesitate to ask.
For Mr. Shahnawaz Sheikh.
In CPM & PERT, there is a small difference in working and that too only in the initial stage. While for PERT, we use a weighted average of minimum, maximum and most likely, in CPM we are already given a completion time and so there is no need to compute. In PERT, we use the formula: (minimum x 1)+(maximum x 1)+( most likely x 4). The total would be divided by 6 since weights are six (1+1+4) to arrive at Time Estimate.
Hope this clarifies you query?
Its a realy very nice xplanation of PERT n CPM..i learned a lot for this practical xample as i have already learn these 2 mthod in ICMA ...but u desribed it very well ..nice case stdy
Sir, thank you so much for sharing this article. It really helped me in understanding the topic in an easy way.
Sir i thank you for giving us detailed view of CPM and PERT but still there is a little confusion in understanding Sketch #3. However the casestudy is flawless. Thank you
Respected Sir ,
Thanks for sending this case study , it has certainly cleared my mind .
Yours sincerely
Imran Ali
For Shahnawaz Otho. Please read my comments, third from the top. It further explains the nature of sketch #3.
THANK YOU SIR FOR THIS A VERY INTRESTING CASE.
THIS CASE GIVE GREAT KNOWLEDGE ABOUT CPM AND PERT. IT IS VERY HELPFUL FOR ME IN MY FUTURE LIFE.
THANK YOU SIR ONCE AGAIN.
Great practical example on cpm and pert.
Ms project is wonderfull tool to work with. i use ms project for project managment at my job as design and development head at Allied Engineering . I have video training available for learning ms project . this training is step by step and easy to follow.
Regards,
Mushtaq Ahmed
MBA-4 Bahria University
Thank You very much for sharing such a knowledgeable case.
I will ask you for help later on.........
Uptil now, each and every aspects of case, are clear.
This case study contains vivid explanation in every aspect; hence i firmly understood the nature, criteria and practical exposure of PERT & CPM.
Cognizance case study.. good job done... Thanks.
Good article
25724
Sir we student of MBA4 of Bahria University are very much thankful to you for giving such information through mails also, as we are already given good lectures by you in class but placing such articles on net and mailing students clears the mind of students all around .... as i had a confusion in backward pass but through your above comment i understood that .... Hope we will have such type of good articles in our whole semester....
Thankyou
Regards,
Qamar Bezanjo
sir thank you for the intresting artical
i have a little confusion in understanding the FORWARD PASS specially the diagram , some more explanation would help .
thank you again
Sir, thank you so much for sharing this article. It really helped me in understanding the topic in an easy way.
Respected Sir ,
Thanks for sending this case study.
Yours sincerely
ABDUL AZIZ
thank you Sir.
SIR,I THANKS TO YOU FOR THIS WONDERFUL AND INTERESTING CASE STUDY.IT HELPS IN INCREASING OF KNOWLEDGE.SIR I HAVE LITTLE CONFUSION ON THE PART OF FORWARD PASS,
Thank you v. much.....
Am I rite if i interpret sketch # 3 as:
If the company starts late....It is Intalling racks, machinery and packing orders at the same time. Must start pacing orders by the 11th month and must finish it by the end of the 13th month....Must start install Machinery in Month 9.....and the company is instaaling machinery and packing orders in month # 11....
Thank you sir for sending this article , This article is really clear the concept of CPM , PERT, FP and BP which you are trying to deliver.
Remember me in your prayers!
Thank you sir for sending this article , This article is really clear the concept of CPM , PERT, FP and BP which you are trying to deliver.
Remember me in your prayers!
sir
thanq for sharing this article.
AASALAM-0-ALAYKUM SIR..
THANKS FOR SENDING ME SUCH AN INFORMATIVE ARTICLE...ITS REALLY VERY GOOD..BUT I HAVE LITTLE BIT CONFUSION REGARDING DIAGRAMS..
Thats really informative
I think that these pictorial views give me more understanding to have in your articles.
Regards,
Mubin Ashraf.
thank yo so much for sharing your articale
I've saved this case study for future reference. Thanks a lot to Mr. Hafeez Ur Rehman for this excellent work.Regards,Muhammad Fahad Khan.
thank you sir for sharing with us such a valueable article.The article has was worth reading and increased my knowledge.
THIS ARTICLE IS VERY MUCH WORTH FULL AND I AM GLAD THAT YOU SHARED IT WITH US. THANK YOU SIR.
This aricle is very informative thank you so much about sharing of information
very informative artical
thank you sir for giving such a knowledgeable article that assisted to insrease me information about pert & cpm......
why the most likely to happen take the weight 4
It is a normal condition others ( minimum or maximum, optimistic or pessimistic, most favourable or un-favourable) have less chances. Considering law of probability normal condition is likely to occur many times in a given scenario and therefore given the weight of 4. By normal condition mean usual condition. If there are power outage for 4 hours a day, it is said to be normal or most likely. If condition improve for an extended period of time to no-power outages, it would become normal.
thanks for your care ,but iam asking why specialy 4 not 3 or 5 (i need an explanation from the point of statistical view)
PERT Formula for Variance is developed after long deliberations by the statisticians. They have given a weight of four to most-likely event. (Certainly, this weightage is not mine).
Thank you very much for this hub! It's really very useful.. I appreciate it very much and will follow your advice!
hi sir it was very informative and here one thing i would like to say that your reaction to where student is not confortable is very good.whatever problem we discuss more in cless you send related material on it.thanks sir
Dear Sir,
You have explained CPM and PERT so well, the sketches were so simple and easy. Amazing work!
You bring each and every thing to single platform. After reading this HUB, I ain't need to open book and brush up again.
A MILLION THANKS!
RUFI SHAHZADA
now very much clear sir :)
dear sir;
Before i read your this artical i have read abot PERT and CPM in Operational Mnagement book of Jay hiezer and Barry render but they were more difficult to understand but as i read yor artical i all my concept regarding CPM , PERT, AND CRITICAL PATH has been cleared.
Thanks for your explaination of above artical in simple and understansable way.
Dear sir,
after going through the article i really come to understand the real essences of PERT & CPM i have studied this topic before but the book reading was not that much easy as you just explained it in a very simple way.now my concepts are more clear and these diagrams are really helpfull to understand the whole structure but sir its really time consuming to build up the boxes as we do not get that much time in the examination,i hope so you will surely come up with some smart tricks in the lecture to resolve this problem.
all over its really worth full for of us
thanks a lot for sharing this information with us
Asalam o Alikum Sir
Thanx for sharing this valuable information with us
Sir can you explain why we use pert if cpm give us both time and cost estimate for a project??
CPM is used for repeated projects. It is based on track record or database already with us. But when we want to venture into some projects which we have never handled before, we are bound to use PERT where we ask knowledgeable persons to give us optimistic, pressimistic and normal time estimates. By taking their weighted average, we can have an idea about expected duration.
Dear Teacher,
Thanque for sharing this article, it helps alot to understand your class lectures...
Thank you Sir! very informative and well explain
ASlam alekum sir,
i tried my level best to understand the pert and cpm concept but that didnt work, but through this article i tried this example at home and got the answer.Thank you so much sir.
Hi ,This is very helpful for me in writing my MBA assignment.. You explained complicated mathematical model in a simplified way
Thanks Kevin Peter for your comments. I am MBA myself. I did it in 1965 from IBA Karachi, Pakistan which was affiliated with University of Southern California. I joined PICIC, an affiliate of the World Bank which offered me a scholarship to go for a diploma to Harvard Business School in Project Evalaution. This honed my skills.
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thanks sir..
really this helped me alot in preparing my seminar over cpm and cleared my concepts too.
really this text helped me alot
and cleared my doubts..
thanks .
usman alvi says:
8 months ago
sir u explain CPM and PERT tromendasly i have little confusion in backward pass of CPM i need little guidence of ur expertise for my clearification.