Network Analysis

INTRODUCTION

Project
y A project may be defined as a combination

of interrelated activities which must be executed in a certain order before the entire task can be completed. y The aim of planning is to develop a sequence of activities of the project so that the project completion time and cost are properly balanced and that the successive demand of key resources is avoided.

Network Analysis
y To meet the object of systematic planning,

the managements have evolved a number of techniques applying network strategy. PERT and CPM are two of the many network techniques which have been widely used for planning , scheduling and controlling the large and complex projects.

DIFFERENCE BETWEEN PERT & CPM

y The project which comprise of the variable

type activities associated with probabilistic type time estimates, employ PERT version of the networks and the project comprising of the deterministic type of activities are handled by CPM version of networks. y PERT is event oriented and CPM is activity oriented.

Phases of Project management

y Planning y Scheduling y Controlling

Planning
y Setting the objective of the project and

assumption to be made. y Development of WBS. Depending upon the objective, the extent of control desire and the availability of the computational aids, the project is broken down in to clearly definable activities. y Estimating activity duration, their resources requirements and costs, and y Establishing the interdependence relationships between the activities.

Scheduling
y In this phase the activities are kept according

to precedence order and then determiningy Start and finish times for each activity. y Critical path on which the activities require special attention, and y Slack and float for critical paths.

Controlling
The controlling phase is to follow up to the planning and scheduling phase and involvesy Making periodical progress reports. y Reviewing the progress. y Analyzing the status of the project, and y Management decisions regarding updating, crashing and resource allocation, etc.

Network Diagram (Arrow Diagram)

y Activity: Physically identifiable part of a project which

consumes time and resources. It is represented by an arrow, tail represents Start and head represents the finish of an activity.

y Event: The beginning and end points of an activity are

called events or nodes. Event is a point in the time and does not consume any resources. It is generally represented by a numbered circle. The head event is always numbered higher than the tail event. initial events to some other event is called a path.

y Path: An unbroken chain of activity arrows connecting the

Network
Network is a graphical representation of logically and sequentially connected arrows and nodes representing activities and events of a project. Networks are also called arrow diagrams. Network construction: Firstly the project is split into activities. Start and end events, precedence order for all activities are decided. All activities are kept in a logical sequence by using notations. Then check: Which activity must be completed before starting particular activity? What activity/ies follow this? What activities must be performed concurrently with this?

y y y

Types of Activities
y Activity which must be completed before starting

particular activity is called a predecessor activity and those which must follow a particular activity are called successor activity. E.g. B is successor to A, means A is predecessor of B, this can be written as B>A. y Dummy activity: An activity which only determines the dependency of one activity over the other, but does not consume any time and resources is called dummy activity. These activities are represented by dotted line arrows.

To remember
y Looping:

The arrow diagram must flow from left to right and there should be no looping in between.
y Dangling:

The situation where activities other than the final activity do not have any successor activity called dangling and it must be avoided.

Draw network diagram for the following

For following precedence relationship draw network diagram. B >A ; C >B ; D, E, H > C ; F > D ; G>E

Draw network diagram for the following

Precedence relationships are : A, C, D can start immediately. E>B, C ; F, G > D ; H, I >E, F ; J > I, G ; K> H ; B>A

PERT Computations
FORWARD PASS COMPUTATION Start calculating from left to right that is from initial event to end event. Initial event is assigned 0 time and calculate the time at which that event is expected to occur at the earliest. This is called Earliest expected time(TE) . For event j TE j =Maximum of all (T E i + t E ij ) for all ij .

PERT Computations
BACKWARD PASS COMPUTATION Start calculating from right to left that is from last event to first event. For Last event time of occurrence is decided i.e. same as TE . This is called Contractual Obligation Time denoted by Ts. The objective of backward pass computation is to calculate Latest allowable occurrence time(TL). For event i TL i =Minimum of all (T L j - t E ij ) for all ij . Is the latest allowable occurrence time for event i.

For the following network diagram compute T E and T L using forward and backward computations. Also compute slack and Find critical path

Event i 10 10 20 20 30 30 30 40 50 50 60 70

Event j 20 30 30 40 40 50 60 60 60 70 70 80

Duration t ij 6 8 3 8 6 10 12 8 6 12 8 7

Network diagram

Calculation of TE, TL and slack

Event i Event j Duration t ij TEi Earl. Start time TE j Finish time TL i Latest start time
-

TLj Lat. finish time

Slack = TL i -T E i

10 10 20 20 30 30 30 40 50 50 60 70

20 30 30 40 40 50 60 60 60 70 70 80

6 8 3 8 6 10 12 8 6 12 8 7

0 0 6 6 9 9 9 15 19 19 25 33

6 8 9 14 15 19 21 23 25 31 33 40

0 0 6 9 11 9 13 17 19 21 25 33

6 9 9 17 17 19 25 25 25 33 33 40

0 0 0 3 2 0 4 2 0 2 0 0

Q 2 Find the Earliest Expected time and latest occurrence time for all activities and also critical path.

Event I 10 10 10 20 30 30 40 40 50 50 60 70

Event j 20 30 40 50 40 60 50 60 70 80 70 80

Duration t ij 8 10 16 11 7 12 8 8 6 11 18 7

Network Diagram

Network with computations

Calculation of TE, TL and slack

Event i Event j Duration t ij TEi Earl. Start time TE j Finish time TL i Latest start time
-

TLj Lat. finish time

Slack = TL i -T E i

10 10 10 20 30 30 40 40 50 50 60 70

20 30 40 50 40 60 50 60 70 80 70 80

8 10 16 11 7 12 8 8 6 11 18 7

0 0 0 8 10 10 17 17 25 25 25 43

8 10 16 19 17 22 25 25 31 36 43 50

18 0 1 26 10 13 29 17 37 39 25 43

26 10 17 37 17 25 37 25 43 50 43 50

18 0 1 18 0 3 12 0 12 14 0 0

Time Estimates
PERT system is based on three time estimates of the performance time of an activity.
y 1 Optimistic time estimate (to) : y 2 Pessimistic time estimate (tp): y 3 Most likely time estimate (tm):

Time Estimates
From these time estimates we can calculate mean time and standard deviation of time estimates for each activity. The formulae For mean =( to+4tm + tp)/6 Standard deviation = (tp to)/6 (Squaring both sides we get variance).

Probability of Meeting the Scheduled Dates:

y tE ij= Average time /duration of activity

= (to+4tm + tp)/6
y Standard deviation

for network = Square root of Sum of the variances along the Critical Path ______ = ij 2

y We calculate probability using normal

distribution (Standard normal variate Z) Z= (Ts -TE )/

What is the probability that the project will be completed in20days? The diagram is given below.
y Where P(0<Z<0.48)=0.1846

Solution
y Expected time duration TE =19 days

y Contractual obligation time Ts= 20days

Standard Deviation for project = (for activity durations of all activities on critical path = ( ij 2 ) = 2.08 Normal Variate Z= (Ts-Te)/ = o.48 From the probability table, probability= 0.6846

CPM computations
y

Earliest Start time: Earliest Start time of an activity is the earliest occurrence time of an event from which the activity emanates. Earliest start time for activity ij is denoted by Esi & is same as Earliest occurance time of event i. Esi = TEi Latest Completion Time: This is the Latest Occurrence time of the event at which the activity terminates. Latest Completion time of an activity ij is denoted by Lcj Lcj = TLj Latest Start Time: This is the Latest completion time of the activity minus the activity duration. For activity ij, the latest start time is, Lsij = Lcj - tE ij Earliest Completion Time: This is the earliest start time of the activity plus the duration of the activity. For activity ij, the earliest completion time is Ec ij = Esi+ tE ij = TEi + tE ij

Float
y Float of an activity has the same significance as the

slack of the events. Slack corresponds to events, hence to PERT, while float corresponds to activities & hence to CPM. There are four types of floats y Total y Free y Independent y Interfering

Total Float
y The total float is equal to the difference between the maximum time

available time to perform the activity and the activity duration time. The maximum time available time for any activity is from the earliest start time to the latest completion or finish time. Thus, for an activity (i-j), the total float is given by: TF ij =Lcj - Esi - tE ij = Lsij - Esi =Col 5-Col 3

y In other words, it is the difference between the maximum time

available for the activity and the actual time it takes to complete. Thus, total float indicates the amount of time by which the actual completion of an activity can exceed its earliest expected completion time without causing any delay in the project duration.

Free Float
y It is defined as that portion of the total float within which an

activity can be manipulated without affecting the float of the succeeding activities. It can be determined by subtracting the head event slack from the total float of an activity.

i.e. FF ij = T-F ij - (slack of head event j) = (Esj - Esi) - tE ij = Esj - Ec ij y or y The free float indicates the value by which an activity in question can be delayed beyond the earliest starting point without affecting the earliest start, and therefore the total float of the activities following it.

Independent float
y It is defined as that portion of the total float within

which an activity can be delayed for start without affecting float of the preceding activities. It is computed by subtracting the tail event slack from the free float. i.e. IF ij = FF ij {slack of tail event i} IF ij = Esj - Lci - tE ij
y The independent float is always either equal to a less

than the free float of an activity. If a negative value is obtained, the independent float is taken to be 0.

Interfering float
y Utilization of the float of an activity can affect the

float of subsequent activities in the network. Thus, interfering float can be defined as that part of the total float which causes a reduction in the float of the successor activities. In other words, it can be defined as the difference between the latest finish time of the activity under consideration and the earliest start time of the following activity, or 0, whichever is larger. Thus, interfering float refers to that portion of the activity float which cannot be consumed without affecting adversely the float of the subsequent activity or activities.

EXAMPLE
y A small assembly plant assembles PCS through 9

interlinked stages according to following precedence process:Activity Duratn i)Draw network & find critical path. (1) (2) 1-2 4 ii) Tabulate total, free & independent float 1-3 12
1-4 2-4 2-5 3-6 4-6 5-7 6-7 6-8 7-8 8-9 10 8 6 8 10 10 0 8 10 6

Solution
Earliest Activity (1) Duration (2) Start time Esi (3) Comp time Ec ij (4) Start time Lsij (5) Comp time Lcj (6) Total Lsij -Esi
(slack)

Latest

Float Free Esj - Ec ij (8) Indep Esj- Lci - tE ij (9)

(7)

1-2 1-3 1-4 2-4 2-5 3-6 4-6 5-7 6-7 6-8 7-8 8-9

4 12 10 8 6 8 10 10 0 8 10 6

0 0 0 4 4 12 12 10 22 22 22 32

4 12 10 12 10 20 22 20 22 30 32 38

0 2 2 4 6 14 12 12 22 24 22 32

4 14 12 12 12 22 22 22 22 32 32 38

0 2 2 0 2 2 0 2 0 2 0 0

0 0 2 0 0 2 0 2 0 2 0 0

0 0 2 0 0 0 0 0 0 2 0 0

Cost analysis, Contracting and Updating

y Project Cost y

Each activity of a project consumes some resources and hence has cost associated with it. In most cases cost of activity depends on the amount of time consumed by it. Thus by increasing the cost, the project duration can be reduced. The aim is always strike the balance between the costs and time and to obtain the optimum project schedule. The optimum project schedule implies lowest possible cost & the associated optimum time for the project. The total cost of any project consists of the direct & indirect cost involved in its execution.

Direct Cost
The Direct cost is directly dependent on the amount of resources involved in the execution of the individual activities. This is the cost of the materials equipments and labor required to perform the activity. As the activity is compressed, the direct cost goes on increasing. If it is compressed beyond a point C, the cost increases rapidly for significant change in activity duration time. This point is called as Crash point. Crash time is thus the minimum activity duration to which an activity can be compressed by increasing the resources and hence increasing the direct cost. Crash cost Normal Cost Normal Time - Crash Time

Cost Slope =

Indirect Cost
It can be divided into two parts: y Fixed indirect cost is due to general admin expenses, license fee, insurance cost and taxes and does not depend on progress of project.
y Variable indirect cost depends on the time consumed

by the project & consists of overhead expenditure, supervision, interest on capital and depreciation, etc. It is assumed that indirect cost increases linearly with time.

Crashing the Network Example 1

y For the following information about a project, draw

network. What is normal duration cost of project? Which one should be selected for crashing? What will be project duration and total cost after first crashing? y Find the optimum duration and cost. (Indirect cost is Rs.1000 per week)

Cost Table
Activity 1-2 1-3 2-3 2-5 3-4 4-6 5-6 5-7 6-8 7-8 7-9 8-9 Time(weeks) 8 4 0 6 7 12 15 7 5 14 8 6 total Cost (Rs.) 7000 6000 0 9000 2500 10000 12000 12000 10000 6000 6000 6000 86500 Crash Time(weeks) Cost (Rs.) 3 10000 2 8000 0 1 11500 5 3000 8 16000 10 16000 6 14000 5 10000 7 7400 5 12000 4 7800

Draw the Network Diagram

y ii) Normal duration y cost of project is = direct cost of all activities + indirect cost for 41 weeks y = 86500 + 41*1000 y =1,27,50 y

Calculation of Cost Slope

Activity Time (weeks) 8 4 0 6 7 12 15 7 5 14 8 6 total Crash Cost(Rs.) Time(weeks) Cost(Rs.) 7000 6000 0 9000 2500 10000 12000 12000 10000 6000 6000 6000 86500 3 2 0 1 5 8 10 6 5 7 5 4 10000 8000 11500 3000 16000 16000 14000 10000 7400 12000 7800 1,15,700 T C C/ T

1-2 1-3 2-3 2-5 3-4 4-6 5-6 5-7 6-8 7-8 7-9 8-9

5 2 0 5 2 4 5 1 0 7 3 2

3000 2000 0 2500 500 6000 4000 2000 0 1400 6000 1800

600 1000 0 500 250 1500 800 2000 200 2000 900

First find all possible paths and their duration, among which select critical path. On this path identify the activities which can be crashed, with their cost of crashing. Now select the one which is costing minimum.

Paths 1-3-4-6-8-9 1-2-3-4-6-8-9 1-2 -5 -6-8-9 1-2-5-7-8-9 1-2-5-7-9

Normal duration 34 38 40 41 critical 29

Crash duration 24 25critical 24 21 15

Crashing
y On the critical path,

y y y y y

Activities 1 -2 2-5 5-7 7-8 8-9

Cost of crashing/unit time 600 500 2000 200 (can be crashed by 1 weeks & 900 add cost of 200)

will

y Now the critical path is 1-2 -5 -6-8-9 with max duration. y y Paths Normal duration Crash duration y 1-3-4-6-8-9 34 24 y 1-2-3-4-6-8-9 38 25critical y 1-2 -5 -6-8-9 40 24 y 1-2-5-7-8-9 41 critical (crashed by 1) 21 y 1-2-5-7-9 29 15

Select the activity to be crashedy y y y y y

Activities 1-2 2-5 5-6 6-8 8-9

Cost of crashing/unit time 600 500 to be crashed by 2 weeks 800 cant be crashed 900

y Paths
y y y y y

1-3-4-6-8-9 1-2-3-4-6-8-9 1-2 -5 -6-8-9 1-2-5-7-8-9 1-2-5-7-9

Normal duration 34 38 40 38 41 40 38 29 27

Crash duration 24 25critical 24 21 15

Select the activity to be crashed & reduce the duration for the project
Paths 1-3-4-6-8-9 1-2-3-4-6-8-9 1-2 -5 -6-8-9 1-2-5-7-8-9 1-2-5-7-9 Normal duraton 34 32 38 (34) 32 40 38 (34) 32 41 40 38 (34) 32 29 27 (23) Crash duration 24 25critical 24 21 15

(18)

To reduce duration to 34 from 38 select activities with min cost slopActivities 1-2 2-5 5-6 6-8 8-9 7-8 2-3 3-4 4-6 5-7 1-3 Cost of crashing/unit time 600 (crash 4 times will reduce the project duration to 34) 500 800 900 (crash 2times will reduce duration to 32) 200 na 250 1500 2000 1000

Crashing
y
New critical path is 1-2-3-4-6-8-9 duration 38 on which activity 3-4 is costing least for crashing, hence duration 7 is reduced to 5 ie by 2 weeks. And keep on doing the same method till the project duration becomes 25(Crash critical).No further crashing is possible.

Final table
Thus optimum duration is 30 weeks and optimum project cost is Rs. 123400.
Activity Crashed Nil 7-8 2-5 1-2 8-9 1-2, 3-4 2-5,3-4 1-3,2-5 1-3,2-5 4-6,7-8,5-6 Weeks saved 0 1 (200) 2 (500*2) 4 (600*4) 2 (900*2) 1(600+250) 1(500+250) 1(1000+500) 1(1000+500) Project duration 41 40 38 34 32 31 30 29 28 Direct cost Rs. 86500 86700 87700 90100 91800 92650 93400 94900 96400 103900, Indirect cost Rs. 41000 40000 38000 34000 32000 31000 30000 29000 28000 25000 Total cost Rs. 127500 126700 125700 124100 123800 123650 123400 123900 124400 128900

3(1500,200,800) 25

Example 2
y The time & cost estimates & precedence relationship of the different

activities constituting a project are given below: y i)Draw project network diagram & find critical path. y ii) If a dead line of 17 weeks is imposed for the completion of the project , what activities will be crashed? y What would be the additional cost and the critical activities after crashing the project?
Activity A B C D E F G H I Predecesso r activity B B A A F C,E,G F Time in weeks Normal Crash 3 2 8 6 6 4 5 2 13 10 4 4 2 1 6 4 2 1 Cost in Rs. Normal Crash 8000 9000 600 1000 10000 12000 4000 10000 3000 9000 5000 5000 1200 1400 3500 4500 700 800

Cost Slop Calculation

Activity A B C D E F G H I Node 1-2 1-3 3-5 3-6 2-5 2-4 4-5 5-6 4-6 Time in weeks Cost in Rs. Normal Crash Normal Crash 3 2 8000 9000 8 6 5 13 4 2 6 2 6 4 2 10 4 1 4 1 600 10000 4000 3000 5000 1200 3500 700 1000 12000 10000 9000 5000 1400 4500 800 C/ T 1000 200 1000 2000 2000 200 500 1000

Network
y y y y y y y

Path Normal Duration 1-2-4-5-6 15 1-2-5-6 22critical 1-2-4-6 9 1-3-5-6 20 1-3-6 13 But deadline is to complete project in 17 weeks, hence

Crash duration 11 16 critical 7 14 8

Activities to be crashed and cost involved

y y

y y y y y y y y y y y

Activities to be crashed and cost involved Critical path Alternative cost( C/ T) Activity 1-2-5-6 A(1-2) 1000 E(2-5) 2000 H(5-6) 500 1-2-5-6 A(1-2) 1000 E(2-5) 2000 1-2-5-6 1-3-5-6 1-3-5-6 E(2-5) E(2-5) B(1-3) E(2-5) C(1-3) 2000 2000 200 2000 3000

Crash activity H(twice) (5-6) A (1-2) E(2-5) E(2-5), B(1-3) not required

duration

21

19 18 17

Answer
y Total cost= normal cost + crashing cost y y y

= 36000 +(H twice)500*2+(A)1000+ (E twice) 2000*2+(B)200 = 36000 +6200 = 42200