Project Scheduling. Scheduling is an important part of the planning of any project. Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM) are tools widely used in project scheduling. Both are based on network diagrams applicable for both the planning and control aspects of production. Visual display of the network enhances the communication and highlights the interdependency of the various activities required for project completion. Perhaps the greatest contribution of these tools is the identification of sequentially time-critical activities that require the closest monitoring.

It is first necessary to develop a list of all the activities required, as listed in the work breakdown structure. Activities require both time and the use of resources. Typically, the list of activities is compiled with duration estimates and immediate predecessors. Some expertise is required in the planning stage. The concept of concurrent engineering makes the planning stage even more important, as enhanced expertise is needed to address which stages of the project can overlap, and how far this overlap can extend.

Both PERT and CPM rely heavily on time estimates, as derived from local experts, to determine the overall project time. These two project management tools, frequently used together, can assist the project manager in establishing contract dates for project completion, in  estimating  the risks and costs of contingencies,  and  in monitoring

project progress. Many commercial software packages exist to support

65

the project manager in tracking both costs and time incurred to date throughout the project duration.

Using CPM to Schedule and Control a Project. CPM uses the concept of the critical path to estimate project-completion time. The critical path is the longest path through the system, defining the minimum completion time for the overall project. This generally depends on which activities must be done in sequence so that there is no way to shorten the overall time. Note that this critical path is not dependent on the number of activities, but is rather dependent on the total time for a specific sequence of activities.

The managerial importance of this critical path is that any delay to the activities on this path will delay the project completion time. It is important to monitor this critical set of activities to prevent the missed due-date of the project. Other paths tend to require less monitoring, as these sets of activities have slack, or a cushion, in which activities may be accelerated or delayed without penalty. Total slack for a given path is defined as the difference in the critical path time and the time for the given path.

 CPM was designed to address time-cost tradeoffs, such as the use of additional resources to speed the overall process. The project manager should perform contingency planning early in the project to identify potential problems and solutions and the costs associated with employing extra resources. Cost-benefit analysis should be used to compare the missed due-date penalty, the availability and cost of resources, and the effect of these resources on the required quality of the output.

 Using PERT to Schedule and Control a Project. In repetitive projects, or in projects employing well-known processes, the duration of a given activity may be estimated with relative confidence. In less-familiar territory, however, it may be more appropriate to forecast a range of possible times for activity duration. The estimated time and or standard deviation for each activity are calculated from the formula for the flexible beta distribution. With a reasonably large number of activities, summing the means tends to approximate a normal distribution, and statistical estimates of probability can be applied.

 From a managerial viewpoint, it should be reiterated that there is only  a 50/50 chance of completing  the  project  within the sum of the

66

activity-time estimates on the critical path. This perspective is not emphasized in the CPM analysis, but is likely relevant in that context also. Adding a buffer to the promised due date enhances the probability that the project will be completed as promised.

 There may be competitive advantages to bidding a project on the basis of a nearer-term completion date, but managers can assess the risks involved using PERT analysis. By using PERT, managers can allocate the resources on a more informed basis.

Exercises