Tuesday, April 15, 2014

Network Analysis - PERT AND CPM

Network Analysis offers the various techniques for project management. These techniques are the extensions of the traditionally used Gantt charts which are also used for the same purpose. They help to plan, coordinate and track specific tasks in a project. In this article we will discuss two techniques of network analysis viz Critical Path Method (CPM) and the Programme Evaluation Review Technique (PERT).

Critical Path Method (CPM)


This technique of network analysis was developed in 1950s by the Du Pont Company. The basic aim was to do efficiently the scheduling work for timely completion of the construction projects. All the projects were human and material resources were required for timely completion of the projects with fixed performance parameters could be completed using this technique. These could be even research & development projects. The CPM technique splits a programme or project into its various contents which are its interconnecting parts. This way strategic elements of the project are found out and the project can be planned, designed and controlled in an effective way.

A project or programme is represented pictorially as shown below :


NETWORK ANALYSIS - PERT AND CPM

In the above figure events have been shown by the various circles while the arrows indicate the various activities which lead to these events. Various paths are possible from the initial event to the last event but the path which takes the longest time is called the “critical path”. The events and activities which fall on this critical path are the strategic events and activities. Slack time, which is defined as the time difference between the target time & the project completion time, is least along the critical path. Thus, critical path is that path which takes minimum expected time for the completion of the project or programme. Several critical paths may exist simultaneously in a network system but only one is taken into consideration.

Advantages of CPM Technique


There are following advantages of using the CPM technique for project management :

  1. Timely completion of the project/programme can be achieved using this technique. The project completion time can be reduced in many cases.

  2. It helps in analyzing the project in terms of utilisation of resources. An optimum utilisation of resources can be ensured using this technique.

  3. The various activities in the project can be planned thoroughly. Various strategic events, barriers in their completion can be identified by this technique.

  4. Individual activities can be concentrated upon by this technique. Thus each activity can be planned and controlled leading to better co-ordination of the whole project.


Disadvantages of CPM Technique


Despite a number of benefits there are some drawbacks also of the CPM technique.  Some of these are :

  1. The CPM technique is well suited only for the non-repetitive kind of projects. For the repetitive projects it has only marginal use.

  2. The time allotted for completion of individual activities does not take into consideration any contingencies or unforeseen circumstances. Hence the project completion time may prove to be unrealistic in many cases.


Programme Evaluation and Review Technique (PERT)


The PERT was first developed by the US Defence Department. It was developed as part of the Polaris Missile Project in 1958. In this technique of network analysis a large number of events and activities can be handled. This way it is quite sophisticated technique in comparison to other CPM. We had mentioned while discussing CPM that the time allotted for completion of various activities does not take into consideration any unforeseen circumstances. This anomaly has been refined by PERT by incorporating the statistical methods for computing completion time of each activity. Three ‘estimated times’ viz the optimistic time, the most likely time and the pessimistic time, are mentioned for each activity. The ‘expected time’ of completion of each activity is then computed as the weighted arithmetic mean of these three different estimated times. The ‘expected mean time’ could further be found by taking into consideration the standard deviation and probability. Further, PERT can handle a large number of events and activities even if no past information is available regarding them. It helps the decision makers by offering alternative decisions and routes to optimize the human, material and time resources.

Like CPM, PERT also used pictorial representation to demonstrate the project. Events are represented with the help of circles and activities with the help of arrows. As in CPM critical path is computed as the longest path. As originally conceived PERT was mainly concerned with ensuring the time and performance of projects, cost of project was not taken into consideration. Later on, this technique has been modified to incorporate cost considerations also but this has made it quite complex. This has resulted in limited use of PERT in the complex projects of late.

Advantages of PERT


Some of the unique advantages offered by PERT are following :

  1. It can incorporate a large number of events & activities going on at different levels in the organisation. Hence systematic planning can be ensured using PERT.

  2. The managers also have to do planning in advance for using this technique.

  3. To ensure that all the activities are completed in the expected times PERT helps in developing a system of control in the organisation.

  4. A proper amount of co-ordination at proper time is ensured through it. Disadvantages of PERT


Some of the limitations of PERT are:



  1. If the programme/project is new with little prior information about the past then it becomes difficult to predict the expected time for completion of each activity with certainty.

  2. PERT is not that conducive for being applied in repetitive kind of activities, it is best utilized in “creative planning”.

  3. PERT does not take into consideration the “cost” element of the projects. Thus it is suitable for only those projects where time & performance only are of essential significance or where time and cost are closely related. PERT has been modified to take into account the cost considerations but it has complicated the whole technique thereby limiting its use.




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