OPERATIONS MANAGEMENT & STRATEGIC MANAGEMENT

6.3 PERT AND CPM

Network Analysis
Network analysis is the general name given to certain specific techniques which can be used for planning,
management and control of project. It often acts as a network management tool for breaking down projects
into components or individual activities and recording the result on a flow chart or network diagram. These results
generally reveal information that is used to determine duration, resource limitations and cost estimates associated
with the project.
It offers insight into what is occurring at each critical point of the network. Project management and efficient
resource allocation are two critical aspects of the production and operations managers’ responsibilities. Since a
project is non-repetitive and temporal in nature, the mode of management differs from the usual job shop or other
related types of scheduling.
Network analysis enables us to take a systematic quantitative structural approach to the problem of managing a
project through to successful completion. Also, since it has a graphical representation, it can be easily understood
and used by those with a less technical background.
Network is a graphical representation of all the Activities and Events arranged in a logical and sequential order.
Network analysis plays an important role in project management. A project is a combination of interrelated
activities all of which must be executed in a certain order for its completion. Activity is the actual performance
of the job. This consumes resources (Time, human resources, money, and material. An event refers to start or
completion of a job. This does not consume any resources.

Applications:
• Construction of a Residential complex,
• Commercial complex,
• Petro-chemical complex
• Ship building, Aircraft Manufacturing
• Satellite mission development
• Installation of a pipe line project etc...

The procedure of drawing a network is:

1. Specify the Individual Activities: From the work breakdown structure, a listing can be made of all the activities
in the project. This listing can be used as the basis for adding sequence and duration information in later
steps.
2. Determine the Sequence of the Activities: Some activities are dependent on the completion of others. A
listing of the immediate predecessors of each activity is useful for constructing the CPM network diagram.
3. Draw the Network Diagram: Once the activities and their sequencing have been defined, the CPM diagram
can be drawn. CPM originally was developed as an activity on node (AON) network, but some project
planners prefer to specify the activities on the arcs.
4. Estimate Activity Completion Time: The time required to complete each activity can be estimated using past
experience or the estimates of knowledgeable persons. CPM is a deterministic model that does not take into
account variation in the completion time, so only one number is used for an activity’s time estimate.
5. Identify the Critical Path: The critical path is the longest-duration path through the network. The significance
of the critical path is that the activities that lie on it cannot be delayed without delaying the project. Because
of its impact on the entire project, critical path analysis is an important aspect of project planning.

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The critical path can be identified by determining the four parameters for each activity. The four parameters are
Earliest Start, Earliest Finish, Latest Finish and Latest Start.
Rules for drawing the network diagrams.
In a network diagram, arrows represent the activities and circles represent the events.
• The tail of an arrow represents the start of an activity and the head represent the completion of the activity.
• The event numbered 1 denotes the start of the project and is called initial event.
• Event carrying the highest number in the network denotes the completion of the project and is called terminal
event.
• Each defined activity is represented by one and only arrow in the network.
• Determine which operation must be completed immediately before other can start.
• Determine which other operation must follow the other given operation.
• The network should be developed on the basis of logical, analytical and technical dependencies between
various activities of the project.
The basic network construction – Terminology used.
Network representation: There are two types of systems –

AOA system AON system

(Activity on Arrow system) (Activity on Node system)
In this activities are represented by an arrows. In this method activities are represented in the circles.

A project consists of tasks with definite starting and ultimate ending points and hence a project manager is saddled
with the responsibilities of getting job done on schedule within allowable cost and time constraint specified by the
management. Typically all projects can be broken into:
Separate activities – where each activity has an associated completion time (time from the start of the activity to
its finish).
Precedence relationships – which govern order in which we may perform the activities.
The main problem is to bring all these activities together in a coherent fashion to complete the project at a
required time.
Apart from the traditional method of adding activity durations, these exist two different techniques for network
analysis namely the PERT – Program Evaluation and Review Technique and CPM – Critical Path Management.
PERT has the ability to cope with uncertainty in activity completion times while CPM emphasized on the trade-off
between cost of the project and its overall completion time.
The CPM has the advantage of decreasing completion times by probably spending more money.
Differences between PERT & CPM

PERT CPM
1. It is a technique for planning scheduling & 1. It is a technique for planning scheduling & controlling
controlling of projects whose activities are subject of projects whose activities not subjected to any
to uncertainty in the performance time. Hence it uncertainty and the performance times are fixed.
is a probabilistic model. Hence it is a deterministic model.
2. It is an Event oriented system 2. It is an Activity oriented system
3. Basically does not differentiate critical and non- 3. Differentiates clearly the critical activities from the
critical activities. other activities.

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4. Used in projects where resources (men, materials, 4. Used in projects where overall costs is of primarily
money) are always available when required. important. Therefore better utilized resources.
5. Suitable for Research and Development projects 5. Suitable for civil constructions.
where times cannot be predicted.

Critical Path Analysis and PERT are powerful tools that help you to schedule and manage complex projects. They
were developed in the 1950s to control large defense projects, and have been used routinely since then.
As with Gantt Charts, Critical Path Analysis (CPA) or the Critical Path Method (CPM) helps you to plan all tasks that
must be completed as part of a project. They act as the basis both for preparation of a schedule, and of resource
planning. During management of a project, they allow you to monitor achievement of project goals. They help
you to see where remedial action needs to be taken to get a project back on course.
Within a project it is likely that you will display your final project plan as a Gantt Chart (using Microsoft Project
or other software for projects of medium complexity or an excel spreadsheet for projects of low complexity).
The benefit of using CPA within the planning process is to help you develop and test your plan to ensure that it is
robust. Critical Path Analysis formally identifies tasks which must be completed on time for the whole project to
be completed on time. It also identifies which tasks can be delayed if resource needs to be reallocated to catch
up on missed or overrunning tasks. The disadvantage of CPA, if you use it as the technique by which your project
plans are communicated and managed against, is that the relation of tasks to time is not as immediately obvious
as with Gantt Charts. This can make them more difficult to understand.
A further benefit of Critical Path Analysis is that it helps you to identify the minimum length of time needed to
complete a project. Where you need to run an accelerated project, it helps you to identify which project steps
you should accelerate to complete the project within the available time.

Critical Path Analysis (CPA) is a project management tool that:

• Sets out all the individual activities that make up a larger project.
• Shows the order in which activities have to be undertaken.
• Shows which activities can only taken place once other activities have been completed.
• Shows which activities can be undertaken simultaneously, thereby reducing the overall time taken to
complete the whole project.
• Shows when certain resources will be needed – for example, a crane to be hired for a building site.

In order to construct a CPA, it is necessary to estimate the elapsed time for each activity – that is the time taken
from commencement to completion.
Then the CPA is drawn up based on dependencies such as:
• The availability of labour and other resources
• Lead times for delivery of materials and other services
• Seasonal factors – such as dry weather required in a building project

Once the CPA is drawn up, it is possible to see the CRITICAL PATH itself – this is a route through the CPA, which has
no spare time (called ‘FLOAT’ or ‘slack’) in any of the activities. In other words, if there is any delay to any of the
activities on the critical path, the whole project will be delayed unless the firm makes other changes to bring the
project back on track.
The total time along this critical path is also the minimum time in which the whole project can be completed.
Some branches on the CPA may have FLOAT, which means that there is some spare time available for these
activities.

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What can a business do if a project is delayed?

• Firstly, the CPA is helpful because it shows the likely impact on the whole project if no action were taken.
• Secondly, if there is float elsewhere, it might be possible to switch staff from another activity to help catch up
on the delayed activity.
• As a rule, most projects can be brought back on track by using extra labour – either by hiring additional
people or overtime. Note, there will be usually be an extra cost. Alternative suppliers can usually be found –
but again, it might cost more to get urgent help.
• Nodes are numbered to identify each one and show the Earliest Start Time (EST) of the activities that
immediately follow the node, and the Latest Finish Time (LFT) of the immediately preceding activities
• The CPA must begin and end on one ‘node’ – see below
• There must be no crossing activities in the CPA
• East activity is labelled with its name eg ‘print brochure’, or it may be given a label, such as ‘D’, below.
• The activities on the critical path are usually marked with a ‘//’
In the example below
• The Node is number 3
• The EST for the following activities is 14 days
• The LFT for the preceding activities is 16 days
• There is 2 days’ float in this case (difference between EST and LFT)
• The activity that follows the node is labelled ‘D’ and will take 6 days

Earliest Start Time

Activity

14 D
3
16 6

Elapsed time of activity

Latest Finish Time

Node no.

A simple example – baking a loaf of bread

Here is a simple example, in which some activities depend on others having been undertaken in order, whereas
others can be done independently.

Activity Preceded by Elapsed time (minutes)

A - Weigh ingredients - 1
B - Mix ingredients A 3
C - Dough rising time B 60
D - Prepare tins - 1
E - Pre-heat oven - 10
F - Knock back dough and place in tins C&D 2

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G - 2 nd dough rising time F 15

H - Cooking time E&G 40

D
1

0 A 1 B 4 C 64 F 66 G 81 H 126
1 2 3 4 5 6 7
0 1 1 3 4 60 64 2 66 15 81 45 126

E
10

In this example, there is a clear sequence of events that have to happen in the right order. If any of the events on
the critical path is delayed, then the bread will not be ready as soon. However, tasks D (prepare tins) and E (heat
the oven) can be started at any time as long as they are done by the latest finish time in the following node.
So, we can see that the oven could be switched on as early as time 0, but we can work out that it could be
switched on at any time before 71 – any later than this and it won’t be hot enough when the dough is ready for
cooking. There is some ‘float’ available for tasks D and E as neither is on the critical path.
This is a fairly simple example, and we can see the LST and LFT are the same in each node. In a more complex CPA,
this will not necessarily be the case, and if so, will indicate that there is some ‘float’ in at least one activity leading
to the node. However, nodes on the critical path will always have the same EST and LFT.
CPA is a planning and project management tool. Whilst it can help ensure a project is completed as quickly as
possible, and resources used as efficiently as possible, it does depend on the accuracy of the information used.
Just drawing up a CPA will not in itself ensure a project runs to plan; most projects encounter some delay or
something unexpected, so managers need to use tool such as CPA to monitor the project and take swift action
to rectify any problems.
Drawing a Critical Path Analysis Chart
Use the following steps to draw a CPA Chart:
Step 1. List all activities in the plan
For each activity, show the earliest start date, estimated length of time it will take, and whether it is parallel or
sequential. If tasks are sequential, show which stage they depend on.
Figure 1. Task List: Planning a custom-written computer project

Dependent
Task Earliest start Length Type
on...

A. High level analysis Week 0 1 week Sequential

B. Selection of hardware platform Week 1 1 day Sequential A

C. Installation and commissioning of hardware Week 1.2 2 weeks Parallel B

D. Detailed analysis of core modules Week 1 2 weeks Sequential A

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E. Detailed analysis of supporting modules Week 3 2 weeks Sequential D

F. Programming of core modules Week 3 2 weeks Sequential D

G. Programming of supporting modules Week 5 3 weeks Sequential E

H. Quality assurance of core modules Week 5 1 week Sequential F

I. Quality assurance of supporting modules Week 8 1 week Sequential G

J. Core module training Week 6 1 day Parallel C,H

K. Development and QA of accounting reporting Week 5 1 week Parallel E

L. Development and QA of management reporting Week 5 1 week Parallel E

M. Development of Management Information System Week 6 1 week Sequential L

N. Detailed training Week 9 1 week Sequential I, J, K, M

Step 2. Plot the activities as a circle and arrow diagram

Critical Path Analyses are presented using circle and arrow diagrams.
In these, circles show events within the project, such as the start and finish of tasks. The number shown in the left
hand half of the circle allows you to identify each one easily. Circles are sometimes known as nodes.
An arrow running between two event circles shows the activity needed to complete that task. A description of the
task is written underneath the arrow. The length of the task is shown above it. By convention, all arrows run left to
right. Arrows are also sometimes called arcs.
An example of a very simple diagram is shown below:

Figure 2: Simple Circle and Arrow Diagram

1 Week
A B
High Level Analysis

This shows the start event (circle 1), and the completion of the ‘High Level Analysis’ task (circle 2). The arrow
between them shows the activity of carrying out the High Level Analysis. This activity should take 1 week.
Where one activity cannot start until another has been completed, we start the arrow for the dependent activity
at the completion event circle of the previous activity. An example of this is shown below:

Circle and Arrow Diagram showing two activities that cannot be

started until the first activity has been completed.

1.2
C

e
y ar
Da rdw
1 a
c tH
e
Sel

0 1 Week 2 Week 3
A B 1 D
High Level Analysis Core Module Analysis

Here the activities of ‘Select Hardware’ and ‘Core Module Analysis’ cannot be started until ‘High Level Analysis’
has been completed. This diagram also brings out a number of other important points:

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• Within Critical Path Analysis, we refer to activities by the numbers in the circles at each end. For example, the
task ‘Core Module Analysis’ would be called activity 2 to 3. ‘Select Hardware’ would be activity 2 to 9.
• Activities are not drawn to scale. In the diagram above, activities are 1 week long, 2 weeks long, and 1 day
long. Arrows in this case are all the same length.
• In the example above, you can see a second number in the top, right hand quadrant of each circle. This
shows the earliest start time for the following activity. It is conventional to start at 0. Here units are whole
weeks.
A different case is shown below:

Circle and Arrow Diagram showing an activity (6 to 7) that cannot start until
other activities (11 to 6, 5 to 6, 4 to 6, and 8 to 6) have been completed.

11
C

1 mo ing
or tra

D
e in

ay du
le

1 Week 2 Week
5 6 7
QA of supporting Detailed Training
modules
k A
ee d Q ts
1 W p an epor
lo g R
ve n
4 De ounti
c
IS

c
k

A
M
ee
p
W

lo
ve
1
De

Here activity 6 to 7 cannot start until the other four activities (11 to 6, 5 to 6, 4 to 6, and 8 to 6) have been
completed.
Click the link below for the full circle and arrow diagram for the computer project we are using as an example.
Critical Path Analysis for Example Computer Project
1 Week
Install and Commission Hardware

1.2 5 1 Week 6
9 7.8 10 7.8 1 8.8
QA of Core Modules
du of

Co Train
Co gram eks

1 D odule
re

Mo ng
les

re ing
wa

Pro 2 We
ay

ay
re mi

M
1D
ard
tH
lec
Se

0 1 Week 1 2 Week 3 2 Week 5 2 Week 8 1 Week 9 1 Week 10

1 2 3 4 5 6 7
0 High Level Analysis 1 Core Module Analysis 3 Supporting Module 5 Programming of 8 QA of Supporting 9 Detailed Training 10
Analysis Supporting Module Modules

1 Week
Develop and QA
Accounting Reports

1 Week 6
8
Develop and QA 8
Management Reports

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This shows all the activities that will take place as part of the project. Notice that each event circle also has a figure
in the bottom, right hand quadrant. This shows the latest finish time that’s permissible for the preceding activity if
the project is to be completed in the minimum time possible. You can calculate this by starting at the last event
and working backwards. The latest finish time of the preceding event and the earliest start time of the following
even will be the same for circles on the critical path.
You can see that event M can start any time between weeks 6 and 8. The timing of this event is not critical. Events 1
to 2, 2 to 3, 3 to 4, 4 to 5, 5 to 6 and 6 to 7 must be started and completed on time if the project is to be completed
in 10 weeks. This is the ‘critical path’ – these activities must be very closely managed to ensure that activities are
completed on time. If jobs on the critical path slip, immediate action should be taken to get the project back on
schedule. Otherwise completion of the whole project will slip.
‘Crash Action’
You may find that you need to complete a project earlier than your Critical Path Analysis says is possible. In this
case you need to re-plan your project.
You have a number of options and would need to assess the impact of each on the project’s cost, quality and
time required to complete it. For example, you could increase resource available for each project activity to bring
down time spent on each but the impact of some of this would be insignificant and a more efficient way of doing
this would be to look only at activities on the critical path.
As an example, it may be necessary to complete the computer project in Figure 5 in 8 weeks rather than 10 weeks.
In this case you could look at using two analysts in activities 2 to 3 and 3 to 4. This would shorten the project by
two weeks, but may raise the project cost – doubling resources at any stage may only improve productivity by,
say, 50% as additional time may need to be spent getting the team members up to speed on what is required,
coordinating tasks split between them, integrating their contributions etc.
In some situations, shortening the original critical path of a project can lead to a different series of activities
becoming the critical path. For example, if activity 4 to 5 were reduced to 1 week, activities 4 to 8 and 8 to 6 would
come onto the critical path.
PERT (Program Evaluation and Review Technique)
PERT is a variation on Critical Path Analysis that takes a slightly more skeptical view of time estimates made for
each project stage. To use it, estimate the shortest possible time each activity will take, the most likely length of
time, and the longest time that might be taken if the activity takes longer than expected.
Use the formula below to calculate the time to use for each project stage:
shortest time + 4 x likely time + longest time
6
This helps to bias time estimates away from the unrealistically short time-scales normally assumed.
Illustration 5.
XYZ Auto-manufacturing company has to prepare a design of its latest model of motorcycle. The various activities
to be performed to prepare design are as follows:
Activity Description of activity Preceding activity
A Prepare drawing —
B Carry out cost analysis A
C Carry out financial analysis A
D Manufacture tools C
E Prepare bill of material B, C
F Receive material D,E
G Order sub-accessories E
H Receive sub-accessories G
I Manufacture components F
J Final assembly I,H
K Testing and shipment J

Prepare an appropriate network diagram.

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Solution:
The network diagram will be as follows:

Where D1 and D2 are dummy activities.

Illustration 6.
The following table gives data on normal time & cost and crash time & cost for a project.

Activity Normal Crash

Time (days) Cost (`) Time (days) Cost (`)
1—2 6 600 4 1,000
1—3 4 600 2 2,000
2—4 5 500 3 1,500
2—5 3 450 1 650
3—4 6 900 4 2,000
4—6 8 800 4 3,000
5—6 4 400 2 1,000
6—7 3 450 2 800

The indirect cost per day is ` 100.

(i) Draw the network and identify the critical path.
(ii) What are the normal project duration and associated cost?
(iii) Crash the relevant activities systematically and determine the optimum project completion time and cost.
Solution:
(i) The network for normal activity times indicates a project time of 22 days with the critical path 1-2-4-6-7.

5
9 15 4
3

1 6 2 5 4 8 6 3 7
0 0 6 6 11 11 19 19 22 22

4 6
3
4 5

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(ii) Normal project duration is 22 days and the associated cost is as follows:
Total cost = Direct normal cost + Indirect cost for 22 days.
= 4,700 + 100 x 22 = ` 6,900.
(iii) For critical activities, cost - slope is given below:
Critical activity Cost-slope* (`/day)
Crash Cost − Normal Cost
1-2 1000 - 600 * Cost slope =
= 200 Normal Time − Crash Time
6-4
2-4 1500 - 500
= 500
5-3
4-6 3000 - 800
= 550
8-4
6-7 800 - 450
= 350
3-2
Of the activities lying on the critical path, activity 1—2 has lowest cost slope Therefore, we shall first crash this
activity by just one day.
Duration = 21 days, and cost = 4700 + 1 x 200 + 100 x 21 = ` 7000.

Other activities too have become critical. Now we have 2 critical paths:
1→2→4→6→7 and 1→3→4→6→7.
To reduce duration of the activity further, we shall have to reduce duration of both the paths. We have following
alternatives:
Crash activity 6 — 7 by 1 day at a cost of ` 350.
Crash activity 4 — 6 by 4 days at the cost of ` 550 per day.
Crash activities 1—2 and 1 — 3 by 1 day each at a cost of ` (200 + 700) = ` 900.
Crash activities 2 — 4 and 3 — 4 by 2 days each at a cost of ` (500 + 550) = ` 1050/day.
Thus, we shall first crash activities 6 — 7 by 1 day and then activity 4 — 6 by 4 days.
On crashing activity 6 — 7 by 1 day, cost = 4900 + 350 x 1 + 100 x 20 = ` 7250, and duration = 20 days. Next we crash
4—6 by 4 days.
Cost = 5250 + 550 x 4 + 100 x 16 = ` 9050. Duration = 16 days.

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Next we crash activities 1—2 and 3—4 by 1 day each.

Cost = 7450 + 200 x 1 + 550 x 1 + 100 x 15 = ` 9700.

Next we crash activities 2 4 and 3 4 by 1 day each.

Cost = 8200 + 500 x 1 + 550 x 1 + 100 x 14 = ` 10,650. Duration = 14 days.

We crash activities 1—3 and 2—4 by 1 day each.

Cost = 9250 + 700 x 1 + 500 x 1 + 100 x 13 = ` 11,750 Duration = 13 days.

Now there are three critical paths:

1—2—5—6—7, 1—2—4—6—7, 1—3—4—6—7
Also, no further crashing is possible. Hence minimum duration of the project =13 days with cost ` 11,750

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Illustration 7.
Draw the network for the following activities and find critical path and total duration of project.

Activity Duration (months) Activity Duration (months)

1-2 2.5 4-5 2.0
2-3 2.5 5-6 3.0
2-4 1.5 6-7 1.5
3-4 1.0 5-7 1.5
3-5 1.0

Answer:
6
3
1 1.5
3 5
1.5
5
2.
7
2.5 1
1 2
2

1.
5

Paths Duration
1-2-3-5-6-7 2.5+2.5+1+3+1.5 = 10.5
1-2-3-5-7 2.5+2.5+1+1.5 = 7.50
1-2-3-4-5-6-7 2.5+2.5+1+2+3+1.5 = 12.5 (Critical path)
1-2-3-4-5-7 2.5+2.5+1+2+1.5 = 9.5
1-2-4-5-7 2.5+1.5+2+1.5 = 7.5
1-2-4-5-6-7 2.5+1.5+2+3+1.5 = 10.5

Illustration 8.
The following activities must be accomplished in order to complete a construction project:

Activity A B C D E F G H I J
Time 3 8 4 2 1 7 5 6 8 9
Predecessors — — AB B A C EF DF GH I
• Construct a network diagram for this project. Find the CP and the duration of the project.
• Assume that you are project manager of the project mentioned above. The project has progressed for 10
weeks and the status is follows:
Activities completed: A, B, E. Other activities have not started as yet.
 If no managerial action is taken at all when will the project get completed?
 What action might you take to get the project back to a schedule that can be completed by the end of
week 42?

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Answer:
E
2 7
1
G
5
A
3 C F I J
1 4 5 6 9 10 11
4 7 8 9
B
8

H
6
D
3 8
2

Paths Duration (weeks) Paths Duration (weeks)

1-2-7-9-10-11 26 1-3-4-5-6-7-9-10-11 41

1-2-4-5-6-7-9-10-11 36 1-3-4-5-6-8-9-10-11 42

1-2-4-5-6-8-9-10-11 37 1-3-8-9-10-11 33

Critical Path: BCFHIJ. Duration 42 weeks.

Paths 1-2-3-5-6-7 1-2-3-4-5-6-7 1-4-5-6-7

Duration (weeks) 33 34 Critical Path: CFHIJ 25

For completing the project as per original schedule, the project activities on the critical path should be reduced
by 2 weeks. For example, we may reduce any one of the activities CFHIJ by 2 weeks or any two activities by one
week each.

Illustration 9.
Given is the following information regarding a project:

Activity A B C D E F G H I J K L

Dependence - - - AB B B FC B EH EH CDFJ K

Duration 3 4 2 5 1 3 6 4 4 2 1 5

Draw the Network Diagram and identify the Critical Path and Project Duration.

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Answer:
Network Diagram:

Network Table:

Activity Duration EST LST EFT LFT Total Float Free Float Independent Float
(1) (2) (3) (4) (5) (6) (7) (8) (9)
A 3 0 2 3 5 2 2 – 1= 1 1–0 =1
B 4 0 0 4 4 0 0 0
C 2 0 8 2 10 8 8–3=5 5 – 0= 5
D1 0 4 5 4 5 1 1–1=0 0
D 5 4 5 9 10 1 1–0=1 1–1=0
E 1 4 7 5 8 3 3–3=0 0
F 3 4 7 7 10 3 3–3=0 0
G 6 7 10 13 16 3 3–0=3 3–3=0
D2 0 5 8 5 8 3 3–0=3 3–3=0
H 4 4 4 8 8 0 0 0
I 4 8 12 12 16 4 4 – 0= 4 4 – 0= 4
J 2 8 8 10 10 0 0 0
D3 0 7 10 7 10 3 3–0=3 3–3=0
K 1 10 10 11 11 0 0 0
L 5 11 16 16 16 0 0 0

Critical path is B – H – J – K – L. Expected Duration = 16days

The columns are updated in the following order as under:
(1) Activity (including Dummies) are listed from the Question and network Diagram
(2) Duration (including Dummies) are listed from the Question and Network Diagram
(3) EST = E value of LHS/ Tail Event from Diagram.
(6) LFT = L value of RHS/ Head Event from Diagram.
(5) EFT = EST + Duration as per Column (2). Hence Column (5) = Column (3) + Column (2)
(4) LST = LFT - Duration as per Column (2). Hence column (4) = Column (6) – Column (2)
(7) Total Float = [LET – EFT] or [LST – EST] = [Col.(6) – Col.(5)] or [Col.(4) – Col.(3)]
(8) Free Float = Total Float – Head Event Slack i.e. [Col.(7) – difference between L and E of RHS Event].
Note: If Total Float is Zero, Free Float is also equal to Zero If a negative value is derived, it is restricted to zero.
(9) Independent Float = Free Float – Tail Event Slack i.e. [Col (8) – Difference between L and E of LHS Event].
Note: If Free Float is Zero, Independent Float is also equal to Zero. If a negative value is derived, it is restricted
to zero.

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Note:
• The activities whose Total Float is Zero are Critical Activities. These Total Floats are circled and the respective
activities are indicated by double in the network diagram.
• Dummy Activities may or may not lie on the critical path. However, in this question, the dummy activities
do not fall on the Critical Path.

Illustration 10.
A project with normal duration and cost along with crash duration and cost for each activity is given below:
Activity Normal time (Hrs.) Normal cost (`) Crash time (Hrs.) Crash cost (`)
1-2 5 200 4 300
2-3 5 30 5 30
2-4 9 320 7 480
2-5 12 620 10 710
3-5 6 150 5 200
4-5 0 0 0 0
5-6 8 220 6 310
6-7 6 300 5 370
Overhead cost is ` 50 per hour.
Required:
Draw network diagram and identify the critical path.
Answer:

Paths → 1-2-5-6-7 1-2-3-5-6-7 1-2-4-5-6-7

(Let’s denote this by A) (Let’s denote this by B) (Let’s denote this by C)
Duration 31 hours 30 hours 28 hours
The critical path is A. Its duration is 31 hours

llustration 11.
What are the difference between CPM and PERT.
Answer:
CPM originated from construction project while PERT evolved from R & D projects. Both CPM and PERT share the
same approach for constructing the project network and for determining the critical path of the network.
There is some basic differences between PERT and CPM
PERT CPM
1. Time estimate is probabilistic with uncertainty in time 1. Time estimate is deterministic with known time
duration. Three time estimates. durations. Single time estimate
2. Event oriented 2. Activity oriented
3. Focused on time 3. Focused on time-cost trade off
4. More suitable for new projects 4. More suited for repetitive projects

194 THE INSTITUTE OF COST ACCOUNTANTS OF INDIA