PM presentation(PROJECT EVALUATION AND REVIEW TECHNIQUES)

PROJECT EVALUATION AND REVIEW TECHNIQUES:

PROJECT EVALUATION AND REVIEW TECHNIQUES

Introduction:

Introduction Project evaluation and review techniques refers to the method of stimating activity, time estimating, total time for the programme using the concepts of CPM/PERT

PERT(Project Evaluation Review Technique) :

PERT(Project Evaluation Review Technique) PERT is one of the management techniques which is considerably more useful to some managers than to others.

PERT is concerned with two concepts:

PERT is concerned with two concepts 1. Events : An event is a specific accomplishment that occurs at a recognisable point of time and does not call for either the need of time or resources. 2. Activities : An activity is the work required to complete a specific event.

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1 2 3 4 5 8 7 6 Task X Task Y Task Z Gantt Milestone Chart

Steps in PERT:

Steps in PERT Step 1 : Identify each activity in the project Step 2 : Determine the sequence of activities and draw a network showing the precedence relationships. Step 3 : The thre estimates for an activity time are TO= Optimistic time – The minimum time in which the activity can be completed. TM= Most likely time. Since this is the time most frequently taken by the activity, it is also the mode of beta distribution TP= Pessimistic time. The minimum reasonable time the activity would take to be completed even under adverse conditions.

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Step 4: Calculate the expected time TE(j) for each activity(j). The formula for this calculation is TE (j) = TO(j)+4TM(j)+TP(j) 6 Step 5: Determine the critical path. Using the expected times, a critical path is calculated in the same way as the single time case. Step 6: Calculate the variances ( σ² ) of the activity times. This is the variance, σ² , associated with each TE(j) and is completed as follows: σ² = [ TP(j) - TO(j ) ]² 6 Thus, the variance is the square of one-sixth the difference between the two extreme time estimates. Of course, the greater this difference, the larger the variance.

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Step 7 : Determine the probability of completing the project on a given date, based on the application of the standard normal distribution. The probability is derived as under: a. Take the total of the variance values associated with each activity on the critical path. b. Substitute this figure, along with the project due date and the project expected completion time, into the Z transformation formula. This formula is Z= D-T E √∑ σ² cp Where D = Desired completion date for the project T E = Expected completion time for the project ∑ σ² CP = Sum of the variances along the critical path Z = The no. Of standard deviations of the project due date from expected completion time. c. Using the value of Z, find the probability of meeting the project due date.

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Activity Designation Time estimates TO TM TP Expected times(ET) TO+TM+TP/6 Activity Variances( σ² ) [TP(j) – TO(j)/6]² A 10 22 28 21 9 B 4 10 5 1 C 6 14 7 2 7/9 D 1 2 3 2 1/9 E 1 5 9 5 1 7/9 F 7 8 9 8 1/9 G 2 2 2 2 0 Activity Expected Times & Variances

Advantages of PERT:

Advantages of PERT 1.This technique gives the management the ability to plan the best possible use of resources to achieve a given goal within the overall time and cost limitations. 2.It helps management to handle the uncertainties involved in programmes where no standard time data of the Taylor-Gantt variety is available. 3.It presses for the right action ,at the right point ,and at the right time in the organisation .

Limitations of PERT:

Limitations of PERT 1.The basic difficulty comes in the way of time estimates for the completion of activities because activities are of non-repetitive type. 2.This technique does not consider resources required at various stages of the project. 3.Use of this technique for active control of a project requires frequent updating and revising the PERT calculations and the proves quite a costly affair.

CPM(Critical path method):

CPM(Critical path method ) CPM was developed in 1956 at the E.I. Dupont Nemours & Co., USA., in connection with the periodic overhauling and maintainance of a chemical plant. It mainly deals with time cost estimates for any activity. It has two time-cost estimate(one time –cost estimate for the normal situation and the other estimate for the crash situation)

Steps in CPM :

Steps in CPM Step 1 : Identify each activity in the project. Estimate the time of completion of each activity. Step 2: Establish the sequence of activities and prepare a network showing the precedence relationship. This is done by first identifying the immediate predecessors associated with each activity. The precedence relationship is indicated in the table. Activity designation Immediate Predecessors Time(weeks) A None 1 B A 2 C A 1 D B & C 1

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Step 3 : Determine critical path- The critical path is the path where the sum of activity times is the longest. A(1) C(1) B(2) D(1) Step 4 : Determine the early start/finish and late start/finish schedule

Advantages of CPM:

Advantages of CPM 1.It helps in ascertaining the time schedule. 2.With its aid ,control by the management is made easy. 3.It makes better and detailed planning possible. 4.It provides a standard method for communicating project plans, schedules ,time and cost performance. 5.It identifies the most critical elements and thus more attention can be paid to those activities.

Limitations of CPM:

Limitations of CPM 1.CPM fails to incorporate statistical analysis in determining the time estimates. 2.It operates on the assumption that there is a precise know time that each activity in the project will take but this may not be true in actual life. 3.It is difficult to use CPM as a controlling device for the simple reason that one must repeat the entire evaluation of the project each time when changes are induced into the network. It may be remembered that CPM was initially developed as static planning model and not as a dynamic controlling device.

Difference between PERT and CPM:

Difference between PERT and CPM PERT CPM The origin is military It is an event oriented approach. There is allowance for uncetainly It has three time estimates It is probabilistic model with uncertainty in activity duration It does not demarcate between critical and non-critical activities. The origin is industrial It is an activity-oriented system No such allowances. There is only one single estimate of time and the emphasis is on cost. It is a deterministic model with well-known activity time based upon past experience It marks critical activities.

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PERT CPM It is especially suitable when high precision is required in time estimates Time is averaged The concept of crashing is not applied It lays emphasis on reduction of the execution time of the project without too much cost implications .It is time based. It is suitable when reasonable precision is required. No averaging of time is required The concept of crashing is applied It lays emphasis on the greatest reduction in the completion time with the least increase in project cost. It is cost-based.

Management information system:

Management information system A management information system is a collection of data processing equipment , procedures, software, and people that integrates the sub-systems of the organisation and provides the needed information in time foe efficient managerial decision-making to discharge the managerial functions promptly and efficiently.

Benefits of Management Information system:

Benefits of Management Information system 1.It ensures early and logical planning of the whole project, in terms of both aggregates and disaggregates. 2.It puts into perspective the full interrelationship of all activities concerned in the project. 3.It monitors the progress of the project to its completion date.

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