PERT CPM Project may be defined as a
PERT & CPM ‘Project’ may be defined as a plan for an undertaking involving huge cost and time. The term project management refers to the proper execution of projects and their control. The need for proper project management arises because of the huge capital expenditure and long gestation period involved in it.
STAGES INVOLVED IN THE PROJECT MANAGEMENT The execution and management of a project, usually, involves the following four stages : 1. Planning 2. Appraisal 3. Implementation 4. Review and Control
1. Project Planning n Project planning refers to the formulation of plans of an undertaking to build up new production capacities or to diversity its business activities or to extend its existing capacities. The essentially the first and foremost stage in the execution of a project.
2. Appraisal of Projects The term ‘project appraisal’ refers to a detailed evaluation of the project to determine its technical, economic and financial viabilities. Such appraisal is done at two stages : (i) At project identification stage by the entrepreneur or the promoter, and (ii) At financing stage by the financial institutions. The experts of the financial institutions make minute appraisals of the project to evaluate : (i) Financial Viability (ii) Economic Necessity (iii) Technical Feasibility
(i) Financial Viability The financial institutions evaluate the project with the help of projected financial statements prepared for a number of years. The evaluation relates not only to profitability but also to cash flows to determine the capacity of the firm to pay interest charges and repayment of debt installments.
(ii) Economic Necessity The financial institutions have to ensure that investments are made in the desired channels as per the objectives of the plan and the project financed contributes towards the overall economy.
(iii) Technical Feasibility The technology used must be up to date, availability of technical know how, thinking of personal, transport facilities & market are available.
3. IMPLEMTNATION OF THE PROJECT The next crucial stage in the execution of the project is the actual implementation of the project. The project manager has to ensure that the project is implemented as per the cost frame and time frame as envisaged at the planning and appraisal stage.
NETWORK ANALYSIS Network analysis is the synthesis of two most useful Techniques of project management, namely Program (Project) Evaluation Review Technique (PERT) and Critical Path Method (CPM). Both the techniques, PERT and CPM use ‘network’ and ‘critical path’ as the basic tool of project management and both are very helpful in completing a project on schedule by coordinating different jobs involved in its completion.
Objectives of Network Analysis n n To minimize the project cost. To minimize the project time. To ensure optimum utilization of human and other resources. To ensure minimum conflicts and unnecessary delays.
The Process of Network Analysis The techniques define and intensify the jobs or activities, integrate them by arranging them in proper sequence which is necessary for timely completion of the project. The following are the various steps involved in the process : 1. Identify the jobs, events or activities. 2. Arrange the jobs in logical sequence.
Basic Key Concepts in Network Analysis (a) Network : A network is a graphical representation of the project and comprises of a series of activities. (b) Activities : An activity refers to the physically identifiable part of the project which consumes some time and needs man-power, material and other resources. An activity is represented by an arrow. The activity may have a predecessor activity and a successor activity. (i) Predecessor Activity : The activities which must be completed before starting another activity are called predecessor activities. (ii) Successor Activity : The activities which have to follow the activity under consideration are known as successor activities.
(c) Event : An event represents the start and the end point of an activity. It is normally represented by a circle called nodes. Let us look at the following figures to better understand the concept.
(i) Merge Activity / Merge Node Two activities A and B are terminating into a single node / event called as the merge node. (ii) Burst Event / Burst Node Activities A and B are in the above figure emerging or coming out from a single node known as the burst node/ event
(d) Dummy Activities : There can be some activities happening (e) Path : Path refers to the unbroken chain of activities between two events.
CRITICAL PATH METHOD (CPM) Critical Path Analysis (Method) is a special application of the network analysis. It uses network analysis for scheduling production, construction projects as well as research and development activities. It is the longest path in time through the network. The critical path in a network is that sequence of the interconnected events and activities which will require the greatest length of time between the commencement and completion of the network. This is called the critical path since any delay in completing the activities along with the path is sure to delay the completion of the project.
Identifying the Critical Path The critical path can be identified by determining the following parameters for each activity : 1. Earliest Start Time for Activity i (ESi) : It is the earliest possible time that the activity can begin given that its precedent activities must be complete first. 2. Earliest Finish Time for Activity i (EFi) : It is the earliest possible time for the completion of the activity. It is equal to the earliest start time for the activity plus the time required to complete the activity. EFi = ESi + Ti
3. Latest Possible Start Time for Activity i (LSi) : It is the latest start time for an activity and is equal to latest finish time minus the estimated time for the activity to be performed. LSi -= LFi - T 4. (LFi) : It is the latest time an activity can finish without delaying the project beyond the deadline. 5. latest and the earliest event times i. e. Slack = Li - Ei
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