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**Project Scheduling Models
**

1

5.1 Introduction

A project is a collection of tasks that must be completed in minimum time or at minimal cost. Objectives of Project Scheduling

± Completing the project as early as possible by determining the earliest start and finish of each activity. ± Calculating the likelihood a project will be completed within a certain time period. ± Finding the minimum cost schedule needed to complete the project by a certain date.

2

5.1 Introduction

A project is a collection of tasks that must be completed in minimum time or at minimal cost. Objectives of Project Scheduling

± Investigating the results of possible delays in activity¶s completion time. ± Progress control. ± Smoothing out resource allocation over the duration of the project.

3

± The degree of activity details depends on the application and the level of specificity of data. 4 .´ ± Estimated completion time (and sometimes costs) are associated with each activity.Task Designate Tasks are called ³activities. ± Activity completion time is related to the amount of resources committed to it.

5. ± Determine the precedence relations among activities. 5 .2 Identifying the Activities of a Project To determine optimal schedules we need to ± Identify all the project¶s activities. Based on this information we can develop managerial tools for project control.

and market the Klonepalm 2000 palmbook computer. INC. KLONE Computers manufactures personal computers. 6 . Example KLONE COMPUTERS. manufacture.Identifying Activities. It is about to design.

KLONE COMPUTERS. ± Advertise the new computer. ± Train staff and vendor representatives. 7 . INC There are three major tasks to perform: ± Manufacture the new computer. KLONE needs to develop a precedence relations chart. The chart gives a concise set of tasks and their immediate predecessors.

INC Activity A Manufacturing activities B C D E Training activities F G H Description Prototype model design Purchase of materials Manufacture of prototype model Revision of design Initial production run Staff training Staff input on prototype models Sales training Pre-production advertising campaign Post-redesign advertising campaign Advertising activities I J 8 .KLONE COMPUTERS.

because it must be competed just prior to the commencement of B. INC From the activity description chart. we can determine immediate predecessors for each activity. Activity A is an immediate predecessor of activity B. 9 A B .KLONE COMPUTERS.

INC Precedence Relationships Chart Activity A B C D E F G H I J Immediate Estimated Predecessor Completion Time None 90 A 15 B 5 G 20 D 21 A 25 C.I 45 10 .F 14 D 28 A 30 D.KLONE COMPUTERS.

**5.3 The PERT/CPM Approach for Project Scheduling
**

The PERT/CPM approach to project scheduling uses network presentation of the project to

± Reflect activity precedence relations ± Activity completion time

PERT/CPM is used for scheduling activities such that the project¶s completion time is minimized.

11

**KLONE COMPUTERS, INC. - Continued
**

Management at KLONE would like to schedule the activities so that the project is completed in minimal time. Management wishes to know:

± The earliest and latest start times for each activity which will not alter the earliest completion time of the project. ± The earliest finish times for each activity which will not alter this date. ± Activities with rigid schedule and activities that have slack in their schedules.

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**Earliest Start Time / Earliest Finish Time
**

Make a forward pass through the network as follows:

± Evaluate all the activities which have no immediate predecessors.

The earliest start for such an activity is zero ES = 0. The earliest finish is the activity duration EF = Activity duration.

± Evaluate the ES of all the nodes for which EF of all the immediate predecessor has been determined.

ES = Max EF of all its immediate predecessors. EF = ES + Activity duration.

**± Repeat this process until all nodes have been evaluated
**

EF of the finish node is the earliest finish time of the project.

13

120 II 30 .110 C C 5 110.170 E E 21 0.105 B B 15 105.115 F F 25 129.165 194 149.Earliest Start / Earliest Finish ± Forward Pass 90.124 115.177 H 194 H 28 EARLIEST FINISH 120.129 G G 14 170 149.194 J J 45 14 90.149 D D 20 177 149.90 A A 90 90.

± Evaluate the LF of all the nodes for which LS of all the immediate successors has been determined. The latest finish for such an activity is LF = minimal project completion time.activity duration. LS = LF . ± Repeat this process backward until all nodes have been evaluated.Activity duration.Latest start time / Latest finish time Make a backward pass through the network as follows: ± Evaluate all the activities that immediately precede the finish node. LF = Min LS of all its immediate successors. The latest start for such an activity is LS = LF . 15 .

149 20 28 14 129.194 J J 45 194 16 .166 H D H G 129.129 129.177 115.90 129.149 G 129.149 I I 30 105.149 149.90 0.170 173.115 90.129 129.194 129.149 129.110 149.95 A A 90 29.149 D 146. 115 F F 25 90.120 119.194 149.149 149.119 0.149 115.149 129.110 110.105 95.149 153.194 E E 21 B B 15 5.115 90.Latest Start / Latest Finish ± Backward Pass C C 5 90.173 166.

Slack Times Activity start time and completion time may be delayed by planned reasons as well as by unforeseen reasons. time. and form the critical path. To learn about the effects of these delays. path. Some of these delays may affect the overall completion date. we calculate the slack time. 17 .

Slack Times ± Slack time is the amount of time an activity can be delayed without delaying the project completion date. assuming no other delays are taking place in the project.ES = LF . Slack Time = LS .EF 18 .

149 0 19 .Slack time in the Klonepalm 2000 Project ctivity B C lac Critical activities must be rigidly scheduled J 149 .

The critical activities (activities with 0 slack) form at least one critical path in the network. The sum of the completion times for the activities on the critical path is the minimal completion time of the project. connecting the START node with the FINISH node. A critical path is the longest path in the network. 20 .The Critical Path The critical path is a set of activities that have no slack.

129 G G 14 129.177 166.115 90.194 B B 15 90.110 105.170 173.194 H H 28 149.110 110.149 I I 30 C C 5 E E 21 149.90 0.149 D D 20 J 45 J 21 .115 149.105 95.120 119. 115 F F 25 90.194 0.149 129.90 A A 90 115.194 149.129 115.The Critical Path 90.

Possible Delays We observe two different types of delays: ± Single delays. ± Multiple delays. The conditions that specify each case are presented next. 22 . Under certain conditions the overall project completion time will be delayed.

the entire project to be delayed by the same amount. the entire project is not delayed. 23 . non A delay of a certain amount in a non-critical activity will delay the project by the amount the delay exceeds the slack time. causes activity. When the delay is less than the slack.Single delays A delay of a certain amount in a critical activity.

THE PROJECT COMPLETION TIME IS NOT DELAYED ES=90 LS =119 I 30 J 45 24 DELAYED START=90+15 =105 .Multiple delays of non critical activities: Case 1: Activities on different paths ES=149 B 15 C 5 DELAYED START=149+15=164 LS=173 E 21 A 90 F 25 G 14 D 20 H 28 Activity E and I are each delayed 15 days.

90 90 A B C D E F G H I J Gantt chart demonstration of the (no) effects on the project completion time when delaying activity ³I´ and ³E´ by 15 days. 25 15 105 115 129 5 20 21 194 149 194 Activity E 14 28 30 Activity I 45 25 .

ES=90 DELAYED START =94 LS =95 ES=149 DELAYED START=149+15 =164 LS =173 B 15 C 5 E 21 A 90 F 25 G 14 D 20 H 28 Activity B is delayed 4 days. activity E is delayed 15 days THE PROJECT COMPLETION TIME IS NOT DELAYED I 30 J 45 26 . separated by critical activities.Multiple delays of non critical activities: Case 2: Activities are on the same path.

C LS =110 3 DAYS DELAY IN THE ENTIRE PROJECT B 15 5 E 21 A 90 F 25 G 14 D 20 H 28 Activity B is delayed 4 days.Multiple delays of non critical activities: Case 2: Activities are on the same path. ES= 90 DELAYED START =94 DELAYED FINISH = 94+15=109 DELAYED START= 109 + 4 =113. THE PROJECT COMPLETION TIME IS DELAYED 3 DAYS I 30 J 45 27 . Activity C is delayed 4 days. no critical activities separating them.

5. B.4 A Linear Programming Approach to PERT/CPM Variables ± Xi = The start time of the activities for i=A. 28 . C. «.J ± X(FIN) = Finish time of the project Objective function ± Complete the project in minimum time. L. Constraints ± For each arc L M a constraint states that the start time of M must not occur before the finish time of its immediate predecessor.

The objective then is Minimize X(FIN) While this objective function is intuitive other objective functions provide more information.A Linear Programming Approach Define X(FIN) to be the finish time of the project. 29 . and are presented later.

A Linear Programming Approach Minimize X(FIN) ST X(FIN) uXE + 21 uX X(FIN) uXH + 28 uX X(FIN) uXJ + 45 uX XD uXG + 14 uX XE uXD + 20 uX XH u XD + 20 XJ u XD + 20 XJ u XI + 30 C 5 F 25 G All X s are nonnegative XG u XC+ 5 XG uXF+ 25 uX XI uXD+ 90 uX XF u XA+ 90 XC u XB+ 15 XD u XG+ 14 XB uXA+ 90 uX 30 .

31 . The project completion time is minimized. This objective function and the additional constraint ensure that the optimal X values are the latest start times of all the activities. X(FIN) = 194 and all the other constraints as before.T. Maximize XA+XB+«+XJ S.A Linear Programming Approach Minimize XA+XB+«+XJ This objective function ensures that the optimal X values are the earliest start times of all the activities.

the variance on one critical path of interest. VARIANCE* 0 PROBABILITY COMPLETE BEFORE = Acitivty Node Critical Design A * Materials B Manufacture C Design Revision D * Production Run E Staff Training F * Staff Input G * Sales Training H Preprod.5 Obtaining Results Using Excel CRITICAL PATH ANALYSIS MEAN 194 STANDARD DEVIATION* 0 * Assumes all critical activities are on one critical path If not. enter in gold box.5. Advertise Q 90 15 5 20 21 25 14 28 30 45 W W ES 0 90 105 129 149 90 115 149 90 149 EF 90 105 110 149 170 115 129 177 120 194 LS 0 95 110 129 173 90 115 166 119 149 LF 90 110 115 149 194 115 129 194 149 194 Slack 0 5 5 0 24 0 0 17 29 0 32 . Advertise I * Post.

5. A Gantt Chart is a graphical presentation that displays activities as follows: ± Time is measured on the horizontal axis. A horizontal bar is drawn proportionately to an activity¶ s expected completion time. In an earliest time Gantt chart each bar begins and ends at the earliest startfinish the activity can take place. start 33 .6 Gantt Charts Gantt charts are used as a tool to monitor and control the project progress. ± Each activity is listed on the vertical axis.

Hereµs how we build an Earliest Time Gantt Chart for KLONEPALM 2000 34 .

F 14 D 28 A 30 D.I 45 115 15 5 20 21 25 14 28 30 45 194 129 149 194 35 .90 105 90 A B C D E F G H I J Activity A B C D E F G H I J Immediate Estimated Predecessor Completion Time None 90 A 15 B 5 G 20 D 21 A 25 C.

Appropriate percentage of a bar is shaded to document the completed work. The manager can easily see if the project is progressing on schedule (with respect to the earliest possible completion times). 36 .Gantt ChartsChartsMonitoring Project Progress Gantt chart can be used as a visual aid for tracking the progress of project activities.

Activity ³I´ has a slack and therefore can be delayed!!! 28 30 45 135 37 .Monitoring Project Progress 90 A B C D E F G H I J 15 5 194 20 21 14 194 The shaded bars represent completed work BY DAY 135. 25 Do not conclude that the project is behind schedule.

Advantages. 38 . ± Does not show whether the project is behind schedule. Disadvantages ± Gives only one possible schedule (earliest). ± Easy to construct ± Gives earliest completion date. ± Does not demonstrate the effects of delays in any one activity on the start of another activity. ± Provides a schedule of earliest possible start and finish times of activities. thus on the project completion time.Gantt Charts ± Advantages and Disadvantages Advantages.

5. Resource leveling methods (usually heuristics) are designed to: ± Control resource requirements ± Generate relatively similar usage of resources over time.7 Resource Leveling and Resource Allocation It is desired that resources are evenly spread out throughout the life of the project. 39 .

40 . Step 1: Consider the schedule that begins each activity at its ES.Resource Leveling ± A Heuristic A heuristic approach to ³level´ expenditures ± Assumptions Once an activity has started it is worked on continuously until it is completed. Step 2: Determine which activity has slack at periods of peak spending. Costs can be allocated equally throughout an activity duration. but within the time period between their ES and LF. Step 3: Attempt to reschedule the non-critical activities performed during these peak periods to periods of less spending.

Inc. To perform this analysis cost estimates for each activity will be needed. 41 . . ± Daily expenditures are kept as constant as possible.continued Management wishes to schedule the project such that ± Completion time is 194 days.Resource Leveling ± KLONE COMPUTERS.

Inc.623 Total Ti e (days) 90 15 5 20 21 25 14 28 30 45 42 ost per ay 25 12 18 15 11 10 5 14 17 30 F I J Total cost = . ± cost esti ates ctivity escription rototype odel design urchase of aterials anufacture of prototype evision of design Initial production run taff training taff input on prototype ales traini ng re-production advertise ent ost-production advertise ent Total ost (x10000) 2250 180 90 300 231 250 70 392 510 1350 5.esource Leveling ± KLONE OMPUTERS.

55 50 45 40 35 30 25 20 15 10 5 20 Cumulative Daily Expenditure ± Earliest Times vs. Latest Times Earliest Start-Earliest Finish Budget Feasible Budgets Latest Start-Latest Finish Budget Time 40 60 80 100 120 140 160 180 200 43 .

Daily Expenditure of the ES Schedule 55 50 45 40 35 30 25 20 15 10 5 20 25 C Cost Leveling 39 I 55 H H 44 I IIIII I ES = 90 45 LS = 110 E 32 27 22 I I I E E H I H J 30 A B F F F G D J JJ J 15 40 60 80 100 120 140 160 180 200 44 .

55 50 45 40 35 30 25 20 15 10 5 20 25 Cost Leveling 55 H H 44 I E 32 27 22 I I I H H 30 I C H E E J A B F F F G D J JJ J 15 40 60 80 100 120 140 160 180 200 45 .

PERT is a technique that treats activity completion times as random variables.5. Completion time estimates are obtained by the Three Time Estimate approach 46 .8 The Probability Approach to Project Scheduling Activity completion times are seldom known with 100% accuracy.

m = the most likely time to perform the activity. We use the notation: a = an optimistic time to perform the activity. b = a pessimistic time to perform the activity.The Probability Approach ± Three Time Estimates The Three Time Estimate approach provides Three completion time estimate for each activity. 47 .

Mean. and Standard Deviation of an Activity Approximations for the mean and the standard deviation of activity completion time are based on the Beta distribution. a + 4m + b Q = the mean completion time = 6 b -a = the standard deviation = 6 48 .The Distribution.

The Project Completion Time Distribution Assumptions To calculate the mean and standard deviation of the project completion time we make some simplifying assumptions. 49 .

50 . Assumption 3 ± There are enough activities on the critical path so that the distribution of the overall project completion time can be approximated by the normal distribution.The Project Completion Time Distribution Assumptions Assumption 1 ± A critical path can be determined by using the mean completion times for the activities. ± The project mean completion time is determined solely by the completion time of the activities on the critical path. Assumption 2 ± The time to complete one activity is independent of the time to complete any other activity.

the following parameters: Mean = Sum of mean completion times along the critical path.The Project Completion Time Distribution The three assumptions imply that the overall project completion time is normally distributed. Variance = Sum of completion time variances along the critical path. Standard deviation = Variance 51 .

The Probability Approach ± KLONE OMPUTERS A ctivity A Op ti istic Mo st L ikely Pessi istic E F I J 76 12 4 15 18 16 10 24 22 38 86 15 5 18 21 26 13 18 27 43 120 18 6 33 24 30 22 32 50 60 52 .

53 .The Probability Approach ± KLONE COMPUTERS Management at KLONE is interested in information regarding the completion time of the project. The probabilistic nature of the completion time must be considered.

. 7 3. 7 W 53.33 WA2 = (7. .33)2 = 53.KLONE OMPUTERS ± inding a ti ities¶ mean and arian e QA = [76+4(86)+120]/6 = 90 W% = (120 . . 2. . . .33 3.78 . . . E I 54 .78 A ti it A 5 5 2 2 25 28 3 5 Q W 7.33 .78 3. 5.33 .78 2 .33 2.76)/6 = 7.

F.G . ± The project variance =WA2 +WF2 +WG2 +WD2 +WJ2 = 85. ± Expected completion time = QA +QF +QG +QD +QJ=194.D ± J. Thus.KLONE COMPUTERS ± Finding mean and variance for the critical path The mean times are the same as in the CPM problem.66 =W ± The standard deviation = W = 9.255 55 . the critical path is A . previously solved for KLONE.

5 9.The Probability Approach ± Probabilistic analysis The probability of completion in 194 days = 194 194 -194 P( e 194) = P(Z e ) ! P(Z e 0) ! 0.255 56 .

96(9. 57 .The Probability Approach ± Probabilistic analysis An interval in which we are reasonably sure the completion date lies is Q ±z 0. The probability that the completion time lies in the interval [175.025 W .95. 213] days.95 Q The interval is = 194 ± 1.255) $ [175.213] is 0.

5 .0655 180 -1.4345 = 0.0655 58 .0.51) = 0.The Probability Approach ± Probabilistic analysis The probability of completion in 180 days = 0.51 194 0 X Z P(X e180) = P(Z e -1.

4582 194 0 210 1.458= 0.0418 ? P(X u 210) = P(Z u 1.0418 59 .The Probability Approach ± Probabilistic analysis The probability that the completion time is longer than 210 days = .73 X Z 0.5 .73) = 0.0.

01 P(XuX0) = 0. or P(Z u?.33 Z 0.56 days.The Probability Approach ± Probabilistic analysis Provide a completion time that has only 1% chance to be exceeded. There is 99% chance that the project is completed in 215.01.49 194 0 X0 X 2. .

X0=Q+Z0W =194 + 2.01.33) = 0.56 days.X0 ± Q)/WA = P(ZuZ0) = .01 P(Z u 2.33(9.255) = 215. 60 .

025. 9. 194. TRUE) 1 .255) NORMDIST(180.NORMDIST(210.255. 9.The Probability Approach ± Probabilistic analysis with a spreadsheet NORMDIST(194. TRUE) NORMINV(.255) NORMINV(. 9. 9. 194. 194.255.99. TRUE) NORMINV(. 9. 9.255. 194.255) 61 .975. 194. 194.

The Probability Approach ± Critical path spreadsheet CRITICAL PATH ANALYSIS MEAN 194 ANDARD DEVIATION* 9 255629 * Assu es all critical activities are on one critical path VARIANCE* 85 66667 If not.77778 13. ROBABILITY COMPLETE BEFORE 180 0 065192 Ac v Node Critica Design A * Materials B Manufacture C Design Revision D * Production Run E Staff Training F * Staff Input G * Sales Training H Preprod.444444 4 1. the va a ce on one critical path of interest. enter in gold box.777778 21. Advertise I * Post.44444 ES 0 90 105 129 149 90 115 149 90 149 EF 90 105 110 149 170 115 129 177 120 194 LS 0 95 110 129 173 90 115 166 119 149 LF 90 110 115 149 194 115 129 194 149 194 Slack 0 5 5 0 24 0 0 17 29 0 62 .333333 4.666667 W 53 77778 1 0 111111 9 1 5. Advertise Q 90 15 5 20 21 25 14 28 30 45 W 7 333333 1 0 333333 3 1 2 333333 2 1.666667 3.

45 3.33333 PROBABILITY COMPLETE BEFORE 180 = 0. P(X ux cannot Slack Q W ES EF LS LF Design A * 90 7. in which case running a computer simulation seems to be Post. However.777778 144 172 161 17 Preprod.333333 0. Advertise I 30 4. W Acitivty Node Criticalthe probabilities of interest (for example. If not.The Probability Approach ± critical path spreadsheet CRITICAL PATH ANALYSIS MEAN 189 A comment ± multiple critical paths STANDARD DEVIATION* 9.0185 * Assumes all In the case of multiple critical critical activities are on one critical path paths (a not unusual situation). check 90 Materials B * 1 90 105 90 105 0 whether the*paths 15 independent.444444 90 104 96 110 6 [Pr(Completion timeux) = Pr(Path 14 x)P(Path 2ux)«Path k110 u ux)] 124 Staff Input G * 14 2 110 124 0 IfH paths are dependent.333333 53.77778 90 120 114 144 24 cumbersome.1 are 0.666667 0. VARIANCE*determine the probabilities for each critical path separately using its 81.111111 105 Manufacture C 5 110 105 110 0 IfD paths are independent (no common activities among the paths). enter in gold box.159152 standard deviation. the calculations might become very189 the Sales Training 28 1.333333 1. 0 the * Design Revision 20 3 9 124 144 124 144 Production Run E 21 1 1 165 168 189 24 multiply the probabilities of all the paths: 144 Staff Training F 14 0. Advertise J * 189 144 189 0 more practical. the variance on one critical path of interest.77778 0 90 0 0 be determined by each path alone.666667 13. To find these probabilities.666667 21.44444 144 63 .

64 .9 Cost Analysis Using the Expected Value Approach Spending extra money. in general should decrease project duration.5. Is this operation cost effective? The expected value criterion is used to answer this question.

yields an additional profit of $400. ± Completion time reduction can be achieved by additional training.KLONE COMPUTERS Cost analysis using probabilities Analysis indicated: ± Completion time within 180 days yields an additional profit of $1 million.000. 65 . ± Completion time between 180 days and 200 days.

New time estimates are a = 19. pursued? 21. m = 14. and b = 23 days. New time estimates are a = 12. m= ± Technical staff training: Cost $250.000.KLONE COMPUTERS Cost analysis using probabilities Two possible activities are considered for training.000. ± Sales personnel training: Which option should be Cost $200. 66 . and b = 16.

± This option should be further studied as follows: Calculate expected profit when not spending $250.KLONE COMPUTERS Cost analysis using probabilities Evaluation of spending on sales personnel training. Calculate expected profit when spending $250. ± This activity (H) is not critical. 67 . Evaluation of spending on technical staff training.000. this option should not be considered further. ± This activity (F) is critical. ± Under the assumption that the project completion time is determined solely by critical activities. Select the decision with a higher expected profit.000.

P(180<X<200) = . Use Excel to find the required probabilities: P(X<180) = . . Let X represent the project¶s completion time.000 on training.000) + P(X>200)(0).25841 Expected gross additional profit = .065192.20 68 .25841(0) = $335. P(X>200) =.676398(400K)+ . Expected gross additional profit = E(GP) = P(X<180)($1 million) + P(180<X<200)($400.751.065192(1M)+.KLONE COMPUTERS Cost analysis using probabilities ± Case 1: Do not spend $250.676398.

with a mean time = 189 days.0185 days. 69 . The revised mean time and standard deviation estimates for activity F are: QF= (12 + 4 (14) + 16)/6 = 14 WF= (16 -12)/6 =0.67 WF= 0(.44 Using the Excel PERT-CPM template we find a new critical path PERT(A-B-C-G-D-J).000 on training.KLONE COMPUTERS Cost analysis using probabilities ± Case 2: Spend $250. and a standard (Adeviation of = 9.67)2 =0.

111287(0) = $450.976.40 70 . P(180 < X < 200) = . From Excel we find: P(X < 180) = .729561 P(X > 200) = .729561(400K)+ .111287 ± Expected Gross Additional Revenue = P( X<180)(1M)+P(180<X<200)(400K)+P(X>200)(0) = .159152.159152(!M)+ .KLONE COMPUTERS Cost analysis using probabilities ± The probabilities of interest need to be recalculated.

000 = $200.976 < $335.KLONE COMPUTERS Cost analysis using probabilities The expected net additional profit = 450. 71 .976450.000 on training Conclusion: Management should not spend money on additional training of technical personnel.976-250.751 Expected additional net profit when spending $250.000 on training Expected profit without spending $250.

Reducing an activity¶s completion time is called ³crashing. Completion time depends only on the amount of money allocated to activities.5.10 Cost Analyses Using The Critical Path Method (CPM) The critical path method (CPM) is a deterministic approach to project planning.´ 72 .

73 . ± Normal completion time (TN). ± Crash cost (CC).Crash timeCrash cost There are two crucial completion times to consider for each activity. The activity is completed in TC. The activity is completed in TN. The cost spent on an activity varies between ± Normal cost (CN). ± Crash completion time (TC). the minimum possible completion time.

74 . Any percentage of the maximum extra cost (CN ± CC) spent to crash an activity. This can be achieved when spending CN ± CC. yields the same percentage reduction of the maximum time savings (TC ± TN).Crash timeCrash cost ± The Linearity Assumption The maximum crashing of activity completion time is TC ± TN.

Crashing CC = $4400 TC = 12 days 5 10 15 20 25 30 35 40 45 Cost ($100) 75 .Time 20 «and save on completion time 18 «and save more on completion time 16 14 12 10 8 6 4 2 Normal CN = $2000 TN = 20 days Total Cost = $2600 A days demonstration Job time = 18 of the Linearity Assumption « to save 25% of the max... cost... Add 25% of the extra cost... time reduction Add Add more to the normal normal cost.

**Crash time/ Crash cost The Linearity Assumption
**

Additional Cost to get Max. Time Reduction Maximum Time reduction

Marginal Cost =

=

(4400 - 2000)/(20 - 12) = $300 per day

M=

E R

76

Crashing activities ±

Meeting a Deadline at Minimum Cost

If the deadline to complete a project cannot be met using normal times, additional resources must be spent on crashing activities. The objective is to meet the deadline at minimal additional cost.

77

**Baja Burrito Restaurants ±
**

Meeting a Deadline at Minimum Cost

Baja Burrito (BB) is a chain of Mexican-style fast Mexicanfood restaurants. It is planning to open a new restaurant in 19 weeks. Management wants to

± Study the feasibility of this plan, ± Study suggestions in case the plan cannot be finished by the deadline.

78

Determined by the PERT. the restaurant will open in 17 weeks at crash cost of $300.000. the restaurant will open in 29 weeks at a normal cost of $200.000. When all the activities are crashed to the maximum.xls template 79 .Baja Burrito Restaurants ± Without spending any extra money.

Baja Burrito Restaurants ± Network presentation E I B A C H D L 80 O K J M N F G P .

5 81 .Baja Burrito Restaurants ± Marginal costs R = TN ± TC = 5 ± 3 = 2 E = CC ± CN = 36 ± 25 = 11 M = E/R = 11/2 = 5.

± The maximum time reduction for each activity is limited. ± The project completion time is reduced only when critical activity times are reduced. 82 . Three observations lead to the heuristic. ± The amount of time a critical activity can be reduced before another path becomes critical is limited.Baja Burrito Restaurants ± Heuristic Solution Small crashing problems can be solved heuristically.

time reduction.Baja Burrito Restaurants ± Linear Programming Linear Programming Approach ± Variables Xj = start time for activity j. 83 . Start time of an activity takes place not before the finish time of all its immediate predecessors. ± Constraints No activity can be reduced more than its Max. The project must be completed by the deadline date D. Yj = the amount of crash in activity j. ± Objective Function Minimize the total additional funds spent on crashing activities.

5YN+4YO+5.67YC+4YD+2.67YG+10YH+ 5.5YA+10YB+2.33YI+12YJ+4YK+5.33YL+1.Baja Burrito Restaurants ± Linear Programming Min 5.8YE+6YF+6.33YP Minimize total crashing costs 84 .

8YE+6YF+6.5 1.33YL+1. 85 .5 1.0 2.67YC+4YD+2.Linear Programming Min 5.67YG+10YH+ 5.0 e 0.5 0.5 e e e e YG e YH e Maximum time-reduction constraints 0.33YI+12YJ+4YK+5.5 1..5YN+4YO+5.5YA+10YB+2.33YP ST X ( FIN ) e 19 Meet the deadline YA YB YC YD YE YF e 2.5 ««.

67YC+4YD+2.Linear Programming Min 5.33YL+1.33YI+12YJ+4YK+5.5YA+10YB+2.8YE+6YF+6.5YN+4YO+5.33YP XBuXA+(5 ± YA) -YA Baja Burrito Restaurants ± Network presentation E I B A C H D L 84 A A O K J M N XA XA+5-YA XA+5 BBBB B XBBBXB X XB X Activity can start only after all the Predecessors are completed.67YG+10YH+ 5. 86 F G P .

5YA+10YB+2.33YI+12YJ+4YK+5. Baja Burrito Restaurants ± Network presentation E I B A C H D L 84 O K J M N F G Activity can start only after all the predecessors are completed. P X(FIN)uXN+(3 ± YN) X(FIN)uXO+(4 ± YO) X(FIN)uXP+(4 ± YP) 87 .8YE+6YF+6..33YL+1.33YP XBuXA+(5 ± YA) XCuXA+(5 ± YA) XDuXA+(5 ± YA) XeuXA+(5 ± YA) XFuXA+(5 ± YA) XBuXB+(1 ± YB) XFuXC+(3 ± YC) XGuXF+(1 ± YF) ««.Linear Programming Min 5.67YC+4YD+2.67YG+10YH+ 5.5YN+4YO+5.

5 16.5 1.5 15 16.87637E-11 0 8 0 0 8 8 0.5 5 16.5 2.5 0 0 0.5 15 15 16.5 2 2 1.5 0 0 1.75 14 18 88 .75 6 0 Tota Cost 36 10 22 8 8 15 20 12 21 10 8 22 18 6.75 19 PRO CT NOR A CO T PRO ECT CRA H CO T inish Time 3 4 4.5 5 9 9 11.5 4 2 2.5 0.5 2 4 0.5 0 C st of Crashing 11 0 4 0 0 3 7.5 Am nt Crashe 2 0 1.5 1.Baja Burrito Restaurants ± Deadline Spreadsheet CRA HING ANALYSIS TOTA RO CT CO T CO PLETION TIME ACTIVITY Revisions/A rova s Gra e Land Purchase Materia s Order Equipment Order Furniture Concrete Floor Erect Frame Install Electrical Install Plumbing Install Drywall/Roof Bathrooms Install Equipment Finish/Paint Inside Tile Floors Install Furniture Finish/Paint Outside 248.5 13.5 0 0 1.5 1.5 4.5 2.5 19 19 17.5 200 300 NODE A B C D E F G H I K L M N O P C m et Time 3 1 1.5 4 t rt Time 0 3 3 3 12.5 13 13.5 13.5 5 9 11 11.

000 Management wants to minimize the project completion time under the budget constraint. 89 .5% above the ³normal cost´ projection. Crash budget = (12.5%)(200.Baja Burrito Restaurants ± Operating within a fixed budget Baja Burrito has the policy of not funding more than 12.000) = 25.

5YA + 10YB + 2.33Y L+ 1.8YE + 6YF + 6.Baja Burrito Restaurants ± Operating within a fixed budget The crash funds become a constraint Minimize X(FIN) Minimize 5.33YP X(FIN) e 19 5.8YE + 6YF + 6.33YI + 12YJ + 4YK + 5.67YC + 4YD + 2.5YN + 4YO + 5.67YC + 4YD + 2.33YI + 12YJ + 4YK + 5.33Y L+ 1.33YP e 25 The completion time becomes the objective function The other constraints of the crashing model remain the same.5YA + 10YB + 2.5YN + 4YO + 5.67YG + 10YH + 5. 90 .67YG + 10YH + 5.

5 7.5 0 0 0 0 0 1.5 14 14 16 16 17.1875 0 1 0 Cost of Crashing 0 0 4 0 0 0 0 0 8 0 0 8 1 0 4 0 Total Cost 25 10 22 8 8 12 20 12 21 10 8 22 11 6 12 18 91 .3125 Finish Amount Time Crashed 5 6 6.5 11.5 12 11.3125 23.5 20.5 2 2 1.3125 19.3125 7.Baja Burrito Restaurants ± Budget Spreadsheet CRASHING ANALYSIS TOTAL PROJECT COST COMPLETION TIME ACTIVITY Revisions/Approvals Grade Land Purchase Materials Order Equipment Order Furniture Concrete Floor Erect Frame Install Electrical Install Plumbing Install Drywall/Roof Bathrooms Install Equipment Finish/Paint Inside Tile Floors Install Furniture Finish/Paint Outside PROJECT NORMAL COST 23.5 7 20.5 2.5 20.5 14 14 16 17.3125 6.3125 20.3125 23.3125 PROJECT CRASH COST 225 200 300 NODE A B C D E F G H I J K L M N O P Completion Time 5 1 1.3125 23.3125 0 0 1.8125 3 3 4 Start Time 0 5 5 5 16.5 0.5 2 4 1 4 2 2.5 0 0 1.

11 PERT/COST PERT/Cost helps management gauge progress against scheduled time and cost estimates. PROJECT Work Package 1 Activity 1 Activity 2 Work Package 3 Work Package 2 Activity 3 Activity 5 Activity 4 Activity 6 92 . PERT/Cost is based on analyzing a segmented project. Each segment is a collection of work packages.7.

93 . a work package is performed continuously until it is finished.Assumptions ± Once started. ± The costs associated with a work package are spread evenly throughout its duration.Work Package .

± Expected remaining completion time = (1 ± p)(Original Expected Completion Time) 94 .Monitoring Project progress For each work package determine: ± Work Package Forecasted Weekly cost = Budgeted Total Cost for Work Package Expected Completion Time for Work Package (weeks) ± Value of Work to date = p(Budget for the work package) where p is the estimated percentage of the work package completed.

Monitoring Project progress Completion Time Analysis Use the expected remaining completion time estimates. 95 .[Value of Work to Date]. Cost Overrun/Underrun Analysis For each work package (completed or in progress) calculate Cost overrun = [Actual Expenditures to Date] . to revise the project completion time.

Management seeks out causes such as: ± Mistaken project completion time and cost estimates. 96 . ± Problematic departments or contractors that cause delays.Monitoring Project Progress ± Corrective Actions A project may be found to be behind schedule. ± Mistaken work package completion times estimates and cost estimates. and or experiencing cost overruns.

channel more resources to problem activities. ± In the case of cost underrun. ± Determine whether crashing activities is desirable.Monitoring Project Progress ± Corrective Actions Possible Corrective actions. non97 . ± Reduce resource allocation to non-critical activities. ± Focus on uncompleted activities. to be taken whenever needed.

If the campaign is not on target or not within budget.TOM LARKIN¶s MAYORAL CAMPAIGN Tom Larkin is running for Mayor. recommendations for corrective actions are required. Twenty weeks before the election the campaign remaining activities need to be assessed. 98 .

600 5.MAYO AL AM AI N ± M YO tatus eport Work ackage ire ca paign staff repare position paper ecruit volunteers aise funds ile candidacy papers repare ca paign aterial Locate/staff headquarter un personal ca paign un edia ca paign xpenditures ($) 2.000 3.000 0 tatus inish inish inish inish inish 40 co plete inish 25 co plete 0 co plete 99 I Work packages to focus on .000 5.000 700 5.600 700 2.

8 The remaining activities are expected to take 0.8+9=36. 100 .25)(20)=15 I 9 20+7. H 15 (1-p)(original expected completion time)=(1-0.8 F 7.MAYORAL CAMPAIGN ± Completion Time Analysis ± The remaining network at the end of week 20.8 20+15=35 Finish 27.8 .8 weeks longer than the deadline of 36 weeks.8=27.

500 2.500 2.900 .600 600 2000 -1500 2.000 0 24.600 700 2.000 4.700 2.500 1.000 700 5.500 500 13.600 5.000 5.500 6.000 7.500 200 400 -800 -500 0 101 3.500 0 20.000 4.000 40.000 1.000 100% 100% 100% 100% 100% 40% 100% 25% 0% Estimated ctual Cost Value Value Ocerrun 2.M YOR L C MP IGN ± Project Cost Control Budgeted Values Total Total Percent Work Time Cost Completed Package B C D E F G H I Total 4 6 4 6 2 13 1 20 9 2000 3.500 500 5200 1.000 3.000 3.

Cost over-run is observed in over± Work package F: $400. 102 . ± Work package I: 9 weeks. ± Work package H: $500. over The remaining completion time for uncompleted work packages is: ± Work package F: 7.MAYORAL CAMPAIGN ± Results Summary The project is currently . ± Work package H: 15 weeks.8 weeks.8 weeks behind schedule There is a cost over-run of $3900.

Copyright ¥John Wiley & Sons. Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only. or damages. and to modify this material to best suit their instructional needs. Inc. to make copies for distribution to students of the course the textbook is used in. John Wiley & Sons. caused by the use of these programs or from the use of the information contained herein. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. The Publisher assumes no responsibility for errors. Requests for further information should be addressed to the Permissions Department. omissions. 103 . Under no circumstances can copies be made for resale.

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