BUSINESS PLANNING AND PROJECT

MANAGEMENT

Faculty Name : Dr. Supriya Kamale

Unit No:2

Introduction to Project
Management and
Project Organisation
Project Management Techniques / Network
Techniques
What is a Project :
“A project is a series of activities directed to accomplishment of a desired objective.”

For example – major event like a wedding or Any construction project

What is a Project Network:

“ A flow chart that graphically depicts the sequence, interdependencies, and start
and finish times of the project through the network.”

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Benefits of Project Network

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Network Analysis in Project Management

Network analysis:

Network analysis is the general name given to certain specific techniques which can
be used for the planning, management and control of projects.

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Techniques in Project Management

 PERT
 CPM
History:

PERT was developed by the US Navy for the planning and control of the Polaris missile
program and the emphasis was on completing the program in the shortest possible
time. In addition PERT had the ability to cope with uncertain activity completion
times (e.g. for a particular activity the most likely completion time is 4 weeks but it
could be anywhere between 3 weeks and 8 weeks).

CPM was developed by Du Pont and the emphasis was on the trade-off between the cost
of the project and its overall completion time (e.g. for certain activities it may be
possible to decrease their completion times by spending more money - how does this
affect the overall completion time of the project?)

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PERT and CPM

A convenient analytical and visual technique of PERT and CPM prove extremely
valuable in assisting the managers in managing the projects.

PERT stands for Project Evaluation and Review Technique developed during 1950’s.

CPM stands for Critical Path Method which was developed by DuPont Company and
applied first to the construction projects in the chemical industry.

Though both PERT and CPM techniques have similarity in terms of concepts, the
basic difference is, PERT is used for analysis of project scheduling problems. CPM has
single time estimate for activities and uses probability theory to find the chance of
reaching the scheduled time.

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PERT and CPM

• PERT – It is a graph that represents all of the tasks required for a project’s completion
and the order in which they must be completed and subsequent time requirements.
Also dependent tasks with a specific order and certain parallel or concurrent
activities are mentioned.

• CPM – This method calculates a single, deterministic early and late start and finish
date for every activity based on specified, sequential network logic and single
duration estimate.
• CPM – It is used to calculate project duration by analysing the sequence of activities
(on which path) having the least amount of scheduling flexibility (the least amount of
float).

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PERT and CPM

• PERT and CPM are techniques of project management useful in the basic managerial
functions of planning, scheduling and control.

• These days the projects undertaken by business houses are very large and take a
number of years before commercial production can start.

• The techniques of PERT and CPM help greatly in completing the various jobs on
schedule. They minimise production delays, interruptions and conflicts.

• These techniques are very helpful in coordinating various jobs of the total project
and thereby expedite and achieve completion of project on time.

• PERT is a sophisticated tool used in planning, scheduling and controlling large

projects consisting of a number of activities independent of one another and with
uncertain completion times. It is commonly used in research and development
projects.

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Components of PERT / CPM Network

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Steps involved in PERT

1. The activities involved in project are drawn up in sequential relationship to show

what activity follows what.

2. The time required for each activity of the project is estimated and noted on the
network.

3. The critical activities of the project are determined.

4. Calculation of variability duration and the probability of completion in a given

time.

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Advantages of PERT

 It determines the expected time required for the completing activity.

 It helps complete the project within a given period of time.

 It helps management handle uncertainties involved in the project and thus,

reduces the risk element in the project.

 It enables management to make optimum allocation of limited resources.

 It presses for the right action, at the right point and at the right time in the
organization.

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Limitations of PERT

• It is mainly based on time estimates. On account of wrong time estimates, the

network is bound to become highly unrealistic.

• This technique does not consider the resources required at different stages of the
project.

• Calculating time estimates for each activity is very complex.

• This technique requires frequent updating and revising the PERT calculations.
This proves quite costly affair for an organization.

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Advantages of CPM

 It helps in ascertaining the time schedule of activities having sequential

relationship.

 It makes control easier for the management.

 It identifies the most critical elements in the project. Thus, the management is
kept alert and prepared to pay due attention to the critical activities.

 It makes better and detailed planning possible.

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Limitations of CPM

 CPM operates on the assumption that there is a precise known time that each
activity in the project will take . It may not be true in real practice.

 CPM time estimates are not based on statistical analysis.

 It can not be used as a controlling device for the simple reason that any change
introduced will change the entire structure of network.

 It can not be used as dynamic control device.

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Differences between PERT and CPM

BASIS FOR COMPARISON PERT CPM

Meaning PERT is a project management CPM is a statistical technique of

technique, used to manage project management that
uncertain activities of a project. manages well defined activities
of a project.

What is it? A technique of planning and A method to control cost and

control of time. time.

Orientation Event-oriented Activity-oriented

Evolution Evolved as Research & Evolved as Construction project
Development project

Model Probabilistic Model Deterministic Model

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Differences between PERT and CPM

BASIS FOR
PERT CPM
COMPARISON

Focuses on Time Time-cost trade-off

Management of Unpredictable Predictable
Activities activities
Nature of jobs Non-repetitive Repetitive nature
nature
Critical and Non- No differentiation Differentiated
critical activities
Suitable for Research and Non-research
Development projects like civil
Project construction, ship
building etc.
Crashing concept Not Applicable Applicable

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PERT and CPM

PERT and CPM have been used for a variety of projects, including the following
types.
1.Construction of a new plant
2.Research and development of a new product
3.NASA space exploration projects
4.Movie productions
5.Building a ship
6.Government-sponsored projects for developing a new weapons system
7.Relocation of a major facility
8.Maintenance of a nuclear reactor
9.Installation of a management information system
10.Conducting an advertising campaign

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Conclusion

The difference between these two project management tools is getting blurred as
the techniques are merged with the passage of time.

That is why, in most projects, they are being used as a single project.

The primary point that distinguishes PERT from CPM is that the former gives the
extreme importance of time, i.e. if the time is minimized, consequently the cost will
also be reduced. However, cost optimization is the basic element, in the latter.

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Before starting any of the above activity, the questions asked would be:

What activities must be finished before this activity can start ?

Could we complete this project in 30 weeks?

Could we complete this project in 20 weeks?

One answer could be, if we first do activity 1, then activity 2, then activity 3, ...., then
activity 10, then activity 11 and the project would then take the sum of the activity
completion times, 30 weeks.

“ What is the minimum possible time in which we can complete this project ? “

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Thank You