PROJECT MANAGEMENT NETWORK MODELS - CPM / PERT

Network Model

·         Network analysis is a technique of planning, scheduling and controlling of a large and complex project comprising various activities.

·         Network technique provides a rational approach to the planning and controlling of construction works.

·         The application of such techniques is inevitable when there is a constraint on resources and a need for higher productivity.

·         The two commonly used network techniques are CPM and PERT.

o   CPM stands for Critical Path Method

PERT stands for Programme Evaluation and Review Technique.                                               

1.         Critical Path Method (CPM)

·         CPM was developed in 1956, in the USA, by a team of engineers working for Dupont Corporation and Remington Rand.

·         The method was successfully tried for the construction of chemical plant in Louisville, USA.

·         The method was also used with extraordinary success for carrying out the repair of a unit in a chemical plant, resulting in nearly 30 % reduction in the shut down time.

·         The usefulness of CPM was thus fully established.

·         Presently this method is used world wide in business and industry also.

·         Use of CPM provides meaningful answers to such questions as:

• What will be the completion time of the project?
• If there is a delay in one activity, will the entire project be delayed? If so, by how much?
• What is the most economical way to speed the project
• How to schedule material deliveries so as to have materials when needed but avoid costly storage for long periods.

Advantages of CPM

·         CPM is widely used in construction industry by a number of private and public organizations.

·         Application of CPM results in better decision – making and a saving in the overall cost of the project.

·         It shows different activities of large and complex project clearly.

·         It shows clearly the interrelationships among various activities.

·         It defines the time required for each activity.

·         It will be easier for the new person in the orientation of the project.

2.         Programme Evaluation and Review Technique (PERT)

·         PERT was developed by engineers of the United States Navy while working on the Polaris Missile Program during 1957 – 58.

·         Since then, PERT has been in use for various research and development projects which are non – repetitive in nature. Such projects are characterized by an extreme degree of uncertainty both in the development of the system and in the time duration of various activities.

·         Three time estimates are used to determine the expected or average time of each activity.

• Optimistic time estimate - It is the shortest possible time for completing an activity if everything proceeds as planned without any problem, i.e. the activity is performed under ideal conditions.
• Most likely time estimate - It is the maximum for completing an activity under normal conditions. In this case, conditions are not ideal and minor mishaps may occur.
• Pessimistic time estimate - It is the maximum time required to complete an activity under abnormal or extremely adverse conditions in which every thing goes wrong. The estimate, however does not include catastrophes such as fires, earthquakes, floods etc.

Differences between CPM and PERT

CPM	PERT
CPM is activity oriented	PERT is event oriented
Single time estimates are used for the various activities i.e. the time estimates are deterministic.	The time estimates for activities are probabilistic. The following three types of time estimates are used for each activity: Optimistic time (to) Pessimistic time (tp) Likely time (tl)
CPM is used for repetitive types of projects where the time estimates for various activities are either known or can be determined fairly accurately.	PERT is used for pioneering type of projects i.e. projects which are the first of their own kind and where prior data about activity times is not available.
CPM places emphasis upon optimizing allocation of resources and minimizing overall project cost.	PERT lays emphasis on reducing project completion time without cost constraint.