This diploma thesis deals with time analysis and its application in practice. The
aim is to provide the time analysis of two diferent projects and draw results
from the analysis to help a company decide which project to choose. Two types
of methods were used: Program and Review technique (PERT) and Critical Cha-
in Method.
Keywords
Abstrakt
Bc. Anna Horkov. Hodnocen projektu pomoc PERT a Critical Chain metod.
Diplomov prce. Brno: MZLU v Brn, 2011.
Tato diplomov prce se zabv asovou analzou a jej aplikac v praxi. Clem
prce je aplikovat asovou analzu na dva projekty z praxe. Z tchto analz vy-
vodit zvry, kter napomohou spolenosti vybrat si, kter ze dvou projekt rea-
lizovat. Jsou pouity dv metody asov analzy: Program and Review Tech-
nique (PERT) a Critical Chain matoda.
Klov slova
Critical Chain, MS Project, PERT, asov analza, projektov management
Content
1 Introduction and goals 11
1.1 Introduction ............................................................................................... 11
1.2 Goals ......................................................................................................... 11
2 Methodology 13
2.1 Critical Path Method (CPM)......................................................................... 13
2.2 Project Evaluation and Review Technique (PERT) ......................................... 16
2.3 Theory of constrains (TOC) ......................................................................... 19
2.4 Critical Chain.............................................................................................. 21
2.5 Microsoft Office Project ............................................................................. 30
2.5.1 View in MS Office Project ...................................................................... 31
2.5.2 PERT Analysis toolbar ...........................................................................35
2.5.3 CCPM+................................................................................................36
3 Projects Description 37
3.1 The concepts of the Company XY: .............................................................. 38
3.1.1 Concept A ........................................................................................... 38
3.1.2 Concept B............................................................................................ 38
3.1.3 Concept C............................................................................................ 38
3.1.4 Concept D ............................................................................................39
3.1.5 Concept E.............................................................................................39
3.1.6 Concept F.............................................................................................39
3.1.7 Concept G ........................................................................................... 40
3.1.8 Concept H ........................................................................................... 40
3.2 Project specification ....................................................................................42
3.2.1 Projec Town..........................................................................................42
3.2.2 Project Mall .....................................................................................43
3.3 Project scheduling .......................................................................................44
3.3.1 Tasks in Town project............................................................................45
3.3.2 Tasks in Mall project ............................................................................. 47
6 Conclusion 61
7 Bibliography 62
A Annex 66
B Annex 67
C Annex 68
D Annex 69
List of Pictures
Obr. 1 Picture: CPM Network diagram with Critical Path 16
1.1 Introduction
Project Management is probably the most important of all the skills which can give a
company a competitive advantage in markets. Scheduling and cost overruns on projects
are infamous. The solution to stop the overruns cannot be accomplished with simple
procedures, based solely on intuition and experience. Poor project management and im-
plementation of the results can be in many cases very unfortunate and lead in many cases
to disastrous consequenses. The methodology of project management has changed radical-
ly in the past few years. While in the past project management only simplified the specifi-
cation of each action in the project, today it is a combination of a huge amount of factors.
These factors effect the project and will even effect the implementation of the process wi-
thin the company. New approaches in methodology and project management can save
considerable money and prevent potential problems in project implementation.
People, including the project managers, often do not realize that they manage many
projects without thinking about it further. The project is something that has a beginning
and an end and the predetermined target. Each of us can improve our chances of success
by transferring the focus and emphasis on how these projects are managed.
Projects can be tangible or intangible. Examples of the most complex projects could be
building a spaceship or Nuclear power plant. A less demanding project may be the
reconstruction of a living room. And the simplest projects are the ones we do not think
about or even consider a project, such as cooking dinner or organizing a school reunion.
1.2 Goals
Since the data drawn from the internal databases of the selected company is very sensitive,
the company does not wish to be named. The use of this data by any competition could
lead to fatal consequences. For the purpose of the diploma thesis is the company called
"the Company XY".
Project evaluation applying the PERT and the Critical Chain metods 12
The aim of the Company XY, which will be presented in this thesis is to open a new
branch of one of its brands in the city of Brno. The first alternative is the opening of a
branch in the city center, the second alternative is the opening of a branch in the Olympia
Shopping Center, located on the outskirts of town. The company has already developed the
cost analysis of both options. The task of the thesis will be to examine the different
perspectives of the project specifications by time analysis.
Decision-making within the company through time analysis is not provided by any
instruments or other quantitative approaches. It is surprising that XY Company, which is
one of the largest apparel corporations in the world, is not using time analysis.
The aim of the thesis is to use two methods of network analysis, namely PERT analysis and
Critical Chain, to calculate the actual project in real practice. Compare the results of both
methods and the conclusion drawn from them, which would assist in an important
strategic choice between the two methods of network analysis.
Project evaluation applying the PERT and the Critical Chain metods 13
2 Methodology
Of the numerous methods used in project management, the most common group of
methods are those of network analysis. This group of special analytical methods are used in
cases where it is necessary to analyze and optimize a network of interconnected and related
elements. They are, therefore, the application of project management, which are key
elements of project activities in the mutual time relation. Methods of network analysis
focus on calculating and optimizing the critical path between the elements. The basic
network analysis methods include: Critical Path Method (CPM), Critical Chain Method
(CCM), Program Evaluation and Review Technique (PERT), Graphical Evaluation and
Review Technique (GERT), Metra Potential Method (MPM).
There are a number of researchers, including Lechler, Tonen, Stohar (2005) or Leach
(2000), who have discussed the concepts underlying the Critical Path approach and the
Critical Chain approach at a conceptual level. All of them agree that the philosophy behind
these two approaches is remarkably different, resulting in a different mindset for managers
and a different set of management practices. This is the reason why the project in this the-
sis is solved by two relatively different methods of network analysis.
Both of the projects will be solved by following methods of network analysis:
Project Evaluation and Review Technique (PERT) and
The following paragraph will describe not only how PERT and Critical Chain methods are
used in the analysis of the project, but also the methods of which PERT and Critical Chain
are based on. A short description of the program MS Project, which is used for solving the
projects will also be described.
As shown by Janov, Kolman (2011, p.105) or Vaverka (2007), the CPM scheduling was
developed in 50s, to address the challenges of different global projects. CPM is one of the
basic methods of network analysis. Its aim is to determine the duration of a project, based
Project evaluation applying the PERT and the Critical Chain metods 14
on the length of the critical path. The duration of the project's activities is known based on
the experience and knowledge gained from past projects. Durations are not statistically
proven. The method can determine both the critical and non-critical activities within the
project and also determine the reserves in the project for the non-critical activities.
The critical path is defined as the longest possible path from the starting point to the
ending point on a graph chart. Each project has at least one critical path. The date of
completion of the last task in the critical path is also the date of completion of the project.
Critical Path is part of all phases of the project's life cycle.
ubrt, Langrov (2003, p.71) has drawn two rules which are valid for critical path:
The acceleration of work on the task that lies at the critical path reduces the
duration of the project as a whole.
Delayed tasks on the critical path is absolutely reflected in delays to the project as a
whole.
Each activity is represented as a node on the network, and connecting lines are drawn to
represent the time schedule to complete that activity.
As shown by, ubrt, Langrov (2003, p.74), the CPM is created by completing the follow-
ing steps:
Identify and determine the sequence of the activities.
Creation of network.
The beta distribution is generally used to describe the basic variability in time estimates.
The define key activity parameters used for analysis in PERT are:
, (3.1)
Standard deviation
, (3.2)
Variance
, (3.3)
. (3.4)
Similarly as EPD, the overall variance is the sum of the variances for all activities on the
critical path and is defined as:
. (3.5)
), (3.6)
where:
TD ..target duration,
..standard deviation.
Example of the network diagram for a project is shown in the picture below, with 3 times
estimations for each activity. Left figure is Optimistic time, middle figure is Most likely time
and right figure is Pessimistic time.
3 Source: Skripta ZU
Project evaluation applying the PERT and the Critical Chain metods 19
The Theory of Constraints states that every system must have at least one constraint limit-
ing its output. Leach (2000)
The TOC is a thinking process that enables people to invent simple solution to seemingly
complex problems. Bates (2006)
There is no choice in the matter; either you manage the constraints or they manage you.
The constraints will determine the output of the system whether they are acknowledged
and managed or not. Bates (2006)
All of the above mentioned are definitions for Theory of Constraints. TOC was initiated by
Dr. Eliyahu M. Goldratt, in his book titled The Goal in 1984, since that the theory is still
evolving. The main motto of this philosophy is: The goal is to make more money, now
and in the future.
The TOC process look for to identify the constraint and restructure the rest of the organi-
zation around it, through the use of Five Focusing Steps.
According to the motto or The Goal the Five Focusing Steps are:
Once the constrain is defined, now the company has to focuse on how to deal with
this situation, in other words how to get more productive within the existing capac-
ity limitations.
whole organization or system must adapt to support the weak link by accepting the
decision made above.
After all steps before are satisfied it means the main constraint is define, exploited
of the available capacities, subordination of non-constraint resources, the next step
is to determine if the output of the constraint is enough to supply market demand.
Company should make another major changes to break down the constraint.
5. The fifth step is to go back to the step number 1 and repeat whole process again.
According the definition that every system must have at least one constraint.
Example of a group of cyclists. Assuming management by which a team leader can let all
the members (activities) reach the final destination (increase throughput) as soon as possi-
ble. The team leader doesnt know how good the members are in their physical capacity.
After starting to ride the bicycles the team leader realise who is the weakest member of the
team, i.e. the bottleneck (first step). Everytime somebody will be the weakest member of
the team. (definition).
The interval between the person who is the bottleneck and the person who rides
before him will get wider and the same is the opposite direction, the interval between the
bottleneck person and the person who rides behind him will get narrower. One of the solu-
tion of this issue could be place the bottleneck person at the front of the group (second
step) to make all the other members synchronize with him (third step). Like this the group
Project evaluation applying the PERT and the Critical Chain metods 21
does not spread out and the speed of the weak person increases a little bit, allowing the
speed (throughput) of the whole team to increase by increasing the speed of the bottleneck
person. The team leader can come out with more ideas how to increase the speed of the
bottleneck. Can give him some refreshment and cold water or by cheering him on to in-
crease his capacity and the increase of the whole team (fourth step).
Can happen that the speed of the whole group increase, it can cause another mem-
ber decrease the overall speed and become the new bottleneck of the group (fifth step).
The team leader have to repeat the same process for the new bottleneck again so the over-
all speed will get faster and faster.
Important is to point out the concept to increase the overall speed not by making
all of the members exercise at the capacity they can handle but by making improvements
focusing on the capacity of one or more bottleneck persons.
The Critical Chain Method is a superior network analysis technique. The method is based
on CPM and includes accessibility and availability of resources Cook (1998) while at the
same time Critical chain is an extension of TOC, designed specifically for project environ-
ments Goldratt (1997). The Critical Chain Method, as well as in the Theory of Constraints
(TOC), aims to determine the duration of a project based on the so-called critical chain
length, which is a sequence of interdependent activities with the smallest advance. It also
takes into account the limitations imposed by resources and the moving parts of the
implicit reserve activities in so-called action buffer. The concept of critical chain is replaced
by the critical path of the CPM. The Critical Chain Method allows for facilitating effective
coordination of individual time.
This method thus combines CPM and the TOC reduction theory that is seen as a shared
resource with capacity constraints and sets the calculated time with some reserve.
Therefore improves results by eliminating the shortcomings of CPM or PERT.
Project evaluation applying the PERT and the Critical Chain metods 22
Critical Chain is defined by time as the longest possible path from start point to end point
of a graph and takes into account the capacity constraints of the resources. Each project
has at least one critical string. Each critical chain consists of a list of activities a project
manager should focus on if he wants to ensure timely completion of the project. The Date
of completion of the last task in the critical chain is also the date of completion of the
project. For critical tasks to be their total time reserve and thus free time reserve is equal to
zero, ie., that delays the start of this task or extend its duration will affect the project end
date. Critical chain is reflected in the scheduling and project management in virtually all
phases of the project life cycle.
The difference between Critical Chain and Critical Path is that Critical Path is the longest
possible path from start point to end point without taking into account the capacity
constraints of the resources. On the other hand Critical Chain taking into consideration the
capacity constraints of the resources.
Multitasking
Critical chain sets using the tools of project management situation where individual
resources for starting work on the project activity runs as fast as possible and once
work is completed, immediately forward it to continue regardless of the term.
Uncertainty over the actual projects activities are accumulated from each activity
and stored in the buffer time. Instead of time provisions, which are usually
associated with different activities, using Critical Chain accumulates time buffers
located at the end of the project and on the road project linking with the Critical
Chain. Cuts the time the reserve is based on the fact that everything will go wrong.
But this is just about as likely as the fact that everithing will go right. Accumulated
time buffers to exploit the positive variations during the project.
Parkinsons law
Another reason why the duration of the project exceeded expectations is that
workers continue to work on a task, even if the task is already completed. If a
worker can complete the task before the estimated time they are rarely admitting
this fact. They are afraid that next time they are assigned the same task they will be
given less time to complete it, and will no longer be able to successfully accomplish
the task. Many companies try to eliminate the Parkinson's Law by the introduction
of motivational factors.
Student syndrome
Student's syndrome has the same principle as a student preparing for an exam, or to
fulfill a given task. First students tried to negotiate an extension of the deadlines for
submission. Once they succeed, the students should begin working immediately on
a given task. The students rarely start to work on the given task immediately,
assuming they have enough time to submit the deadlines. Students tend to start
Project evaluation applying the PERT and the Critical Chain metods 24
preparing at the last minute, the same as workers in companies. Picture 3.1. shows
the efford of student to submit a task.
The WBS (Work Breakdown Structure) must be made. This is the method
of dividing the project into work packages, tasks, or activities. Its task is to ensure
that all required project activities have been identified and logically linked.
Another important step is to define and assign resources to tasks. Resources can be both
human and material. Human resources may include anyone in a specific organizational unit
or other people with certain skills. Material resources are any kind of equipment such as
manufacturing equipment, computer usage, time, etc. Money may be considered the
material resource.
Based on all this information put together the initial network design. Network
graph shows what resources are required and when, which may reveal that some resources
need to be more than they will at some time available.
Critical Chain takes into account both time analysis and resource analysis. By contrast,
Critical path distinguishes only the time analysis.
Resources become overloaded when they are assigned to work beyond their capacity, for
example, when a full-time employee is assigned to multiple tasks simultaneously. An
indispensable and irreplaceable source can become a critical resource. To determine the
criticality of resources you can use an objective or subjective approach.
Goldratt contends that most schedules have safety time built into each task esimate. Cook
(1998) Figure shows under distribution presenting the possible outcomes for most of the
tasks.
As Stephen Cook describe in his study (1998) the mentioned times has the follow
meaning:
Time A
Time B
Time C
is highly achievable, despite unexpected disasters. Goldratt calls this time 95%
time because 95% of the time a resource will finish sooner than the given estimate.
Managers always setting estimates with safety built in.
While identifying Critical Chain we must successfully complete steps one and two, then
find the Critical Path. Which is the longest path in the network and resource dependencies
after resolving resource contentions.
This is similar to the PERT method, however, Critical Chain goes deeper. Critical Chain
Methods use for calculating the Critical Path times B instead of times C as is the case with the
PERT method.
Buffers
After removing the safty part from the task or other words after moving from Times C to
Time B we have to create buffers with the time we saved by cutting down the tasks. Buffers
have the capacity to absorb overrunning tasks without affecting the targeted end of the
project. Distinguish three types of buffers:
Project Buffer
They are placed at the end of Critical Path, or in other words, at the end of the
project. The size of the Project Buffer is half of the length of the Critical Chain
tasks. As already mentioned above, Project buffers protect the project from
overruns on the Critical Chain.
Feeding Buffers
Feeding Buffers have the same function as Project Buffer in that they protect the
Feeding chain against overruns. Feeding buffers are placed where the feeding chain
intersects with the Critical Chain. The size of the Feeding Buffer is equal to half of
the length of the feeding chain.
Resource buffers
Project evaluation applying the PERT and the Critical Chain metods 28
Resource Buffers are used when working with limited resources. The Resource
Buffers ensure the availability of the resource during the whole project. These
buffers are used at times when limited resources are being used to ensure the
activities that lie on the Critical Chain, while ensuring other activities.
Identification of the Critical Chain
Inserting the buffers changes the network topology. It is therefore necessary for the
new network to find a new Critical Path. When finding a new Critical Path we have
to make sure the buffers have the right length or the critical path will need to be
recalculated. This procedure must be repeated until the source is not in conflict
with any of the critical resource. At this point you may fully declare that critical
path of the project is consistent with the critical chain.
Example Critical Chain
The following table is defining project which has six activities. Activities are marked with
the letters A through F and are secured by five different working sources. The table below
shows the duration of each activity and their predecessors.
Activities Duration Predecessors Resource
A 4 Working
B 8 A Working
C 12 B Working
D 4 C; F Working
E 4 A Working
F 8 E Working
Defined project can be viewed in the network diagram as shown in Figure . The Critical
Path was already found in this project, which consists of the activities A, B, C, D. The
length of the Critical Path is 28 days.
A=4 B=8 C = 12
D=4
E=4 F=8
Project evaluation applying the PERT and the Critical Chain metods 29
The next step is to shorten the duration of each activity by 50%, to do so we will have
following data available.
Median
Activities Duration Reserve
Duration
A 4 2 2
B 8 4 4
C 12 6 6
D 4 2 2
E 4 2 2
F 8 4 4
The following is the calculation of the Project Buffer and Feeding Buffer. As mentioned
in the previous chapter, the Project buffer is equal to the sum of median durations of the
activities forming the Critical Path . In our case it is activities A, B, C, D. The Feeding
chain consists of two activities, E and F. Feeding buffers will be placed where the feeding
chain intersects with the Critical Chain. The values of the two buffers are shown in Table
.
Median Median
Activities Activities
Duration Duration
A 2 E 2
B 4 F 4
C 6 SUM 6
D 2 FB 3
SUM 14
PB 7
The following Figure shows adding the Project and Feeding Buffers in the project.
D=2 PB = 7
E=2 F=4 FB = 3
There is no conflict in sources; we can state that the critical path of the project is consistent
with the critical chain. The total duration of project as determined by the Critical Chain will
be 21. The original duration of Critical Path was 28 days. Applying the Critical Chain
method to the project save us 7 days, which is remarkably different.
Microsoft Office Project is a powerful and flexible tool to manage both simple and
complex projects. MS Project is the most widely used tool for project planning and man-
agement, not only in the Czech environment. The program has become a world standard
because of its affordability and full compatibility with products from Microsoft Office
Professional. MS Office Project allows you to manage large projects in various areas from
construction and engineering activities, to marketing activities, the introduction of new
products, and software testing, to re-engineering and the planning of infrastructure
development in the regions. Samuk (1998, pp.XVII) The output of MS Project is on one
side the project schedule and on the other side a detailed analysis of project costs,
consumption, labor, and material consumption. MS Project allows you to effectively
manage resources and to pay attention to different types of emergencies and whether they
are sources of congestion, over budget, or keeping the date. The great advantage of MS
Project is a wide range of graphical outputs and outcomes in the form of reports.
MS Office Project offers various views in any phase of the project. The various views can
show a subset of information from a database format as showed Hydrk (2007) in his
book. All views allow the user to enter information, edit information, or simply view
information. We can get different views while organizing the project, doing the task
scheduling and resource scheduling, or monitoring progress in the project from different
sides. There are two main categories: view of tasks and view of resources.
Network diagram
In addition to the names of tasks and their time duration, knowing the start and finish is
also important to see the relation between tasks. For this purpose MS Project contains the
network diagram. The main advantage is a good overview of the critical path and duration.
The disadvantage can be an especially bad picture of deadlines due to the inability to view a
timeline and difficult modeling of summary tasks.
Lists
The lists represent a way to view information about the project in the form of text.
Lists provide information about tasks or resources in a tabular format. While tasks
or resources are in rows, categories of information about them are in columns. The
most widely used view is a List of resources and List of tasks. Both these views are
suitable for procurement and planning either tasks or resources.
Forms
Form is best used to enter detailed information about tasks and resources. It is usually used
in conjunction with another display. In this case, it acts more or less as a support function.
Viewing information on the project can be simple; we can draw from a single
screen display or a combined view where the screen shows two mutually, functioning
connected display. Using the combined display can highlight the benefits of certain types of
display contrast and minimize their weaknesses. Combination display is often used as Gantt
Chart with a form of tasks or Gantt chart with a diagram of dependencies, etc.
Tables
The tables contain information about tasks or resources in a tabular format which means in
rows and columns. Each column contains information such as start dates or rates.. The
table Costs, shows all the necessary information on the cost of tasks. Switch to the Work table
to display information regarding the work to be done to complete the task, such as the total
and remaining work. Like other views, the tables are divided into two categories, the table
of tasks that can display tasks and resource tables used to display resources.
View most of the time shows all tasks or all project resources. The project often
includes a large number of tasks or resources that will share some of the properties. Some
tasks can be already completed, other tasks are aggregated, and other resources may be
overloaded. To view information about the tasks or resources that share certain
characteristics, we use a filter.
Filters
Filters include criteria determining the conditions which the shown tasks or resources must
meet. Filters, as well as view or table, is divided into two main groups: filters of tasks, and
resource filters. Both these groups contain three types of filters desribed Kali, ha (2008):
Standard
Differentiate tasks and resources on one or more of the commonly used criteria. For
example, to display only the critical tasks, we use the Critical filter.
Interactive
Interactive criteria filter requires filter values. Value range or simply value can be
entered.
Automatic
The fastest way to view subsets of tasks or resources is Automatic. These filters are
available only in tables, and displays the tasks or resources that match the criteria
associated with a particular column, where each column contains an automatic filter.
Group
A similar principle as the filter is adopted for the creation of groups with the difference
that the information are not filtered, but classified into predefined categories.
The goal of all views, tables, filters or groups is to get different perspectives on tasks or
resources to obtain the maximum amount of information relevant to the development of a
project, but also project management.
MS Project 2010 is currently the most widely used tool for project planning and
management. Projects such as the Prague metro, marketing plans of major global banks,
mobile network concept development, and concept development of infrastructure in the
regions, are being run and managed with the help of MS Project. Good knowledge of the
environment in conjunction with the orientation in the field of project management is great
advantage for efficient labor market.
The MS Project is able to calculate the PERT analysis, but does not allowed the probability
analysis. To control the PERT analysis in MS Project is used PERT Analysis toolbar.
If we want to change the values set weight use the PERT Set Weights. Weights are set by
the MS Project as shown in Figure.
2.5.3 CCPM+
MS Project can not calculate the Critical Chain without an additional tool. One of the tools
or add-in applications is CCPM+ program.
3 Projects Description
As mentioned above, the company does not want to be named for very obvious reasons.
These days competing is all about gathering information on your competitors, therefore,
this thesis could become a powerful competitive weapon for them. The company is a world
leader in the apparel industry and one of the world's largest fashion retailers, welcoming
shoppers at its eight store formats boasting more then 5.000 stores in 77 countries
throughout Europe, the Americas, Asia and Africa, and from April 2011 in Australia as
well. Each format focuses on a different group of customers according to age, gender, and
income status. The Company also owns more than a hundred companies associated with
the manufacture and distriution of textile and fashion design. A unique business model
based on innovation and flexibility is the main reason for the group's success.
Creativity, quality design, and rapid turnaround are the key elements in the compa-
ny's approach towards fashion, and this helps them adjust to the changing market de-
mands. This approach allowed the company to expand worldwide at a fast pace and has
generated a splendid public response to the retailers' collections.
The first store opened to the customers in 1975 in A Corua (North-Western Spa-
in) the same place where the Company started business and where the headquarters are still
located.
The company is the sole or majority shareholder of all the stores they open, and
this is the development strategy for the sales formats. In culturally different and hard to
understand markets, the company has extended the store network through franchise agre-
ements. At the end of the year 2010 there were 710 franchised stores out of more than
5.000 stores.
As is written in Press kit and was mantion above, the company has different fashi-
on concepts which segment its approach to the market. All of them share the same com-
mercial and managerial focus: to be leaders in their segment through a flexible business
model and an international scope. However, each of the concepts have a great deal of au-
tonomy in managing its business; their management teams are independent in commercial
decision-making and in the way they administer their resources.
Project evaluation applying the PERT and the Critical Chain metods 38
Company XY, as the parent company, is responsible for the central corporate servi-
ces, i.e. those services shared by the eight concepts and which facilitate international
growth: administration, the use of logistics technology, the general HR policy, legal issues,
and financial capacity, among others.
3.1.1 Concept A
is the flag ship brand of the company. First store opened in 1975 in A Corua in Spain.
Since today there are more than 1.700 stores open in 77 countries, ideally located in major
cities. The turnover of this concept is 8.088 billion Euros as written in their Annual report.
It includes many different styles of fashion products, from casual clothing to formal wear.
But always with an emphasis on the latest trends, consistent high quality, and affordable
prices. Fashion for women from 18 and up, men 20 and up and kids clothes from 0 to 14
years old. There is six stores in Czech Republic, five of which are located in Prague, and
one we can find in Brno.
3.1.2 Concept B
was founded in 1991. By the end of 2010 more than 680 stores in 46 countries were open
with a turnover of 857 million Euros. This brand foces on youngpeople who dress casually,
rejecting stereotypes and want to feel comfortable in their clothes. This concept draws its
ideas from international trends, mixing them with street, club, and urban fashion influences
and reinterpreting the style to create comfortable and easy to wear clothes and accessories
at accessible prices. Fashion for women and men from 18 to 25. Four of these stores are
open in Czech Republic, three in Prague and one in Brno.
3.1.3 Concept C
this concept was developed in 1985 and joined the Group in 1991. Today it has more than
530 stores in over 50 countries. Their turnover is 897 million Euros. The brand originally
20Because the Company doesnt want to be named, is obvious the individual concepts can not
be named neither. Lets named them in alphabetical order.
Project evaluation applying the PERT and the Critical Chain metods 39
focused on mens fashions and in 1992 concept C launched its women fashion collection.
2003 saw the launch of its collections for boys and girls. Not all stores have the kids col-
lection, only those stores which are large enough. The concept offers a wide variety of
clothes, from sophisticated high-end fashion clothes to easygoing casual wear. This chain is
more expensive than the rest of stores in the group because it focuses on high quality gar-
ments from next-generation and 100% natural fabrics. Fashion for women and men from
21 and up, recently for children from 5 to 10 years old. Concept C has only one store in the
Czech Reupublic and it is located in Prague.
3.1.4 Concept D
was founded in 1994 and acquired by company XY in 1999. There are currently 593 stores
in 43 countries. The turnover of this concept is 780 million Euros. This brand has an inno-
vative and youthful approach to fashion. Very feminine, fresh and creative clothing and
accessories. Targeting young women ages 18 to 35. We can find this concept in Czech
Republic, but only in Prague.
3.1.5 Concept E
is the sixth concept of the Group and it started business in 2001. It has more than 432 sto-
res in only 25 countries, mainly Spain. Their turnover is 305 million Euros. This concept
sells lingerie and woman's underwear and bathing suits during the summertime. Targeted to
all women, including a collection for little girls and babies. There are currently no stores for
this concept in the Czech Republic.
3.1.6 Concept F
was founded in 2003 and it now has 284 stores in 27 countries. Their turnover for the year
2010 was 294 million Euros. This concept specialises in home decor and linens. Its textile
collections for beds, tables, and bath linens are complemented by dishware, cutlery, glass-
ware and decorative accents, all of which are offered for a competitive price. There are no
stores in Czech Republic.
Project evaluation applying the PERT and the Critical Chain metods 40
3.1.7 Concept G
is the newest concept to be created by the Group in 2008. Nowadays, it has more than 80
stores in 16 countries with a turnover of 59 million Euros. This concept was born with the
clear idea to make accessories a must. In general this concept offers accessories such as
handbags, shoes, jewellery and sunglasses. More costly than the other concepts, except for
concept C, it stays within the price range of other big brands offering accessories in the
market. This concept is too new and costly to be in Czech Republic at this time.
3.1.8 Concept H
last but not least, concept H is the most important concept for the development of this
diploma thesis. Established in April 1998, this concept has the second largest number of
stores with precisely 720 in 50 countries around the World. Their turnover is the second
highest with 1.247 billion Euros.
Focused on hip teenagers with a passion for the latest trends. Stores of this concept
can be devoted to each product line. In front of the store is a product line suitable for
young ladies who are looking for the most fashionable clothes, night wear and casual
trends. This line is usually one of the more expensive for this brand. The second product
line for women is more colorful, sporty, and youthful. The youngest customers keeping an
eye on garments which can be seen on MTV, or movie stars and idols. Since 2002 they
have also sold men's wear. No doubt, the main articles are the jeans in all cuts, always in
line with the latest trends. Also, more sport and casual pieces of clothing are housed in this
brand for young males. Apart from a wide range of fashionable clothing, all of the lines
include a huge selection of accessories and shoes.
Concept H targets the young female and male market ages 13 to 25.
There are four stores of this format in Czech Republic, three of them in Prague and
only one in Brno.
In the Czech Republic company XY owns 16 shops, almost all of these stores are
concepts and they are located only in Prague and Brno. There are 13 shops in Prague and
three in Brno. This fact shows that the company is focused solely on building their
businesses in large cities. Further proof can be the distribution of stores in Hungary where
eighteen stores are in the capital Budapest, and only two shops in Debrecen. Slovakia has
Project evaluation applying the PERT and the Critical Chain metods 41
all six stores located in the capital Bratislava. In Austria the majority of the stores are
located in Vienna (11 stores), with two stores in Innsbruck and two stores in Gratz. This
inormation shows that Company XY has a clear policy on the location of it's businesses
and placing them in strong cities helps to ensure success. Of course it also depends on the
politics of business formats.
When Company XY enters a new market21, it always opens the flag ship brand first
in the capital of the country. If this store does well the Company will open other formats.
An exception may be the opening a new shopping center, where Company XY may open
more than one business concept at the same time. The last concept is an open concept
which is aimed at the wealthiest clientele.
The one exception to the rule is the home base of the company, Spain. Of the
5.022 stores worldwide, 1.925 are located in Spain. There are no rules to the placement of
stores in Spain, they just have to be successful.
Special rules for placement of Concept H stores
The idea of the concept H stores is to be spacious with cutting edge design. A must see
place for street fashion, music, and art. The stores are meant to be a meeting point for
young customers who can listen to loud music, watch videos with a fashion theme, and
read magazines on comfortable sofas. All the elemetnts in the stores are disigned by deco-
ration teams. Every season most of the elements change to match the collection, for exam-
ple, the style of music, wall-prints, and the decoration. The motto of the concept is: "Tur-
ning shopping into a fun experiance".
One main reason why Company XY pays such attention to all these rules is that the
stores, and the store windows are the best advertising campaign. The company spends al-
most nothing on advertising. No fotoshoot campaigns, no television commercials, and no
magazine ads. No special deals for regular customers and no membership clubs. The only
advertising is the stores themselves and satisfied customers.
Therefore, the Company applies the principles of its business philosophy to the
unique architecture of the shops. Stores should offer the customer original design and
permanent innovation, so the customer won' t ever be bored. Although sharing the same
rules, each store is unique and must adjust to different cultures and environments, while
Company XY was considering opening a new store of concept H in Brno. A store of this
concept is already open in Brno, in the shopping center Galerie Vankovka, and based on its
excellent results, they have decided to open another concept H store in Brno. According to
the above mentioned special rules regarding to the placement of retail stores in those
locations, the company needs to decide between the two variants. Both variants are
completely different and will be described in the following paragraphs.
This option allows for the reconstruction of the existing parts of a building on Masarykova
Street. This street is one of the busiest shopping streets in Brno, which leads to Svobody
square, and is the main square in Brno. Tourists pass down the street every day as well as
locals to the city of Brno, both of whom tend to shop.
The building is devastated, so it would need complete reconstruction, including
repairs to the adjacent sidewalk and the entrance to the cargo bay for receiving deliveries.
Company XY would become the owner of the premises which is intended for
business, and the rest of the house would still be owned by housing cooperatives. A
competitive women's fashion brand used to occupy the area where the store will be built.
It's a positive point that the space is alredy built for commercial use and will only need
minor adjustments to stay in line with company policy. On the other hand, the store could
be confused with the competition that previously occupied the space and their lack of
customer service.
The commercial space consists of parts of the basement, where a warehouse is
expected too be built. The warehouse would occupy most of the basement area. In
addition, facilities for employees, including a locker room area, bathroom with shower,
kitchen with common room, and safe rooms and utility rooms. An elevator would be built
into the basement to facilitate redistribution of the products when deliveries arrive.
Project evaluation applying the PERT and the Critical Chain metods 43
The ground floor is calculated with the main sales area which was designed for the latest
collections, including both product lines for women. When the customer enters the shop
they are drawn to the entertainment area. This area consist of comfortable sofas, where the
customer can read fashion magazines or just relax with friends. The motto, "turning
shopping into a fun experience" would be fulfilled.
The cash registers would be located to the left of the entrance, behind which there
is an administrative room and space for reservations.
Next to the cash registers would be the escalators that transport customers to the first
floor. Customers can also reach the first floor by using the stairs or the elevator. The
ground floor also offers changing rooms where customers can try on all the clothes. The
shoe area and accessories wall are also located on the ground floor.
Two major landmarks on the first floor are the men's wear collection and the older
women's collection. The customers can try on the clothes in changing room on this floor
as well.
There is no possibility of a parking lot since the store is located in a pedestrian
zone.
The plans of the shop may be found in Annexis 1-D, 2-D, 3-D.
The second project plan for the rebuilding of the retail units in shopping center Olympia.
The Olympia Shopping Center is located on the outskirts of Brno close to highway D2 in
the direction of Bratislava, near the D1 highway to Prague. The shopping centre has secu-
red sufficient parking capacity, as the parking areas adjacent to the barrier-covered garage
are connected directly to the trade center. Olympia operates a free bus line that connects
the city center of Brno with trade center. The bus runs at intervals of 7 minutes and the
journey takes approximately 10-15 minutes, depending on traffic. The strategic position
between Prague, Bratislava and Vienna, with a wide catchment area supports the percepti-
on of Olympia as an important regional shopping center with international clientele. As the
web site for the Olympia shopping center say:
Project evaluation applying the PERT and the Critical Chain metods 44
To plan the construction of the individual stores it is necessary to define the various
activities of both variants separately. The investment department provided a list of
activities for both stores. After thorough examination, I found that the lists for the two
variants do not correspond to Czech standards particularly in respect of the Building Act.
After that discovery, I approached the architect with whom I consulted all of the building
management issues. On his advice, I adjusted the duration of all the activities in the
Construction phase of the project. Next, I discussed the other activiteis for both projects with
the architecht, those activities were correct.
The list was missing data on the timeframe for constructing the elevator and escalator.
Therefore I decided to address OTIS, the leading manufacurer of elevators and escalators.
First I addressed the company as a student requesting help on my diploma thesis. After my
first request I had no response. I decided to address the company as a potential customer
and I received an absolutely comprehensive respose that same day.
Project evaluation applying the PERT and the Critical Chain metods 45
The Investment department has assigned various tasks to be performed by me, up until the
Equipment store phase. The two tasks following the Eqipment Store phase, Recruitment and
Merchandising, I was able to complete based on my experience. I have attended several store
openings as a Store Manager for Company XY, a position I have held for four years. One
of the duties of the store manager is recruiting new managers, so this phase of the project
is very familiar to me.
After collecting all important informtion on both projects, it's time to create the
work breakdown structure (WBS) chart.
A WBS, as defined in the Kerzner (2003) is a deliverable-oriented hierarchical de-
composition of the work to be executed by the project team to accomplish the project ob-
jectives and create the required deliverables. It organizes and defines the total scope of the
project. Each descending level represents an increasingly detailed definition of the project
work. The WBS is decomposed into work packages. The deliverable orientation of the hie-
rarchy includes both internal and external deliverables.
When the WBS is created, there is a need to determine the duration of each activity
and to insure the continuity of time and an animation sequence of actions to themselves.
Each activity is attributed to the source. The source describes the needs for the
particular activity. Thus compiled tables found in Annex project Town 1-A and project
Mall 2-A.
Both of the Projects include milestones that serve to structure the project into
logical parts. Milestones are not shown in network graphs. The network graphs are
displayed only by the individual activities.
All activities are linked to each other by FS dependencies (Finish to Start), which
means a task cannot start before the previous task is finished. The order of tasks treats the
first as the predecessor, the second as the successor.
First phase in the project is Project Preparation by contracting authority. At this stage, the
design department is preparing the design of the store. The board of managers may require
some modifications in the shop plan. The board of managers approve the documentation
for the shop plan after all modifications have been made.
Another phase in the project is the Construction Project. This phase includes contacting
potential architects, evaluating their bids, and signing contracts with the selected architect.
The architect must then prepare the necessary documentation for the Planning permission
permission. After the Planning permission has been granted, the architect must prepare the
documentation to issue a building permit. Issuance of the building permit is generally ter-
med as the most critical phase of the project, for which the exact date of completion is not
likely to be determined. After successful issuance of a building permit, the architect must
prepare Implementation documents for the building company.
The third phase of the project, Project Implementation, includes all of the preparatory
activities up to the construction of the walls and stairs.
The fourth phase, Concrete Work, contains only two activities, pouring concrete for
the basement and Driveway.
The fifth, sixth and seventh phases (exterior finish, interior finish and utilities) are in the
duties of the contractor. All activities are included in the WBS chart
The eighth stage is called Elevator and escalator. This stage consists of a selection
process to ensure the external company who will produce and install the elevator
and escalator.
Between the eighth and ninth stages the final inspection of the shop must take
place. It is not milestone only simple activity. The final inspection is a critical
activity that must be completed successfully so that we may continue on to the next
task.
Equipment of the Store, the ninth stage, is directed by the Facilities Department, which
handle the equipment for the shop floor and stockroom . The technical department
is committed to providing cash registers.
The tenth stage of the project is Security System for the store. The Security Department
will address potential security companies, assess their the bids, and sign the contract
Project evaluation applying the PERT and the Critical Chain metods 47
with the choosen security company. The choosen security company will ensure
instalation of CCTV, gates, and Sensormatic system. This will be followed by the
hiring and training of the appropriate candidate for the security guard position.
The eleventh stage is called Recruitment and is the second most critical phase of the
project. At this stage it is necessary to find suitable candidates for managerial
positions and Sales assistants positions. Finding these candidates is very difficult
and we can hardly define the time the hiring process will take, especially for
managerial positions. Training the successful candidate for the position of manager
is fixed period of time and will take two months. This training is always conducted
abroad, with the belief that the manager will gaint the most from the experience
when placed in an alien environment. All managers start as a sales assistant and
progress through the positions until reaching the last phase of the training program,
studing the managerial responsibilities. Training of the sales assisntant is also a
fixed period and lasts 14 days. The sales assistants will spend their first seven days
in the training center acquiring the skills to work the cash registers and the
following week getting acquainted with general customer service.
The final stage is the Merchandising. Before this stage can be completed, all
contruction work must be completed, the store must be fully equipped, and all staff
must be trained. The product department will send a so called "Starting set" of
products. The logistic department is in charge of delivering the products to the
store. These products must be opened and repriced from Euros to Crowns. Some
goods may need an extra alarm, others are already fitted with an alarm tag from the
factory. Once the products are ready, they are passed to the visual marchendisers
for creating different collections. Each collection has its own name and a specific
theme it must fulfill. All collections are designed to appeal to young people.
Both versions of the projects are similar, but differ in key stages of construction and
especially in the length of almost all activities. This is evident from the table 1-A and 2-A.
The Mall project contains 11 milestones and one activity is designated as the general task of
the project.
Project evaluation applying the PERT and the Critical Chain metods 48
The First phase, Project preparation by contracting authority, has same tasks as the first
project, but the duration differs by about 7 days. The reason for the difference is
that the Design department doesn't need 21 days to create the shop plan, they can
handle it within 14 days.
Of all fourteen phases, the second phase differs the most from the first project.
While the first project needs 242 days, the second project needs only 123 days to
successfuly fulfil the conditions of each activity. Due to the fact that this is a
business unit in an existing shopping mall we do not need to apply for Planning
permission. Thus we also eliminates the phase of elaboration of documentation for
Planning permision. The Building permit is not needed nither, only a permit
bearing the name "Decision on alteration of a sturcture and on alteration of the
impact of a structure on use of the area", which only takes a few weeks to obtain as
the process of applying for this type of permit is much easier. The length of project
implementation has been reduced almost by half.
The third phase of Project implementation doesn't require building stairs, therefore, the
length of all activities have been reduced significantly.
There is no need for any concrete work.
The activities of the fourth phase, Exterior, differ from those of the first project.
The two activities for this phase are the installation of the shop window and
entrance gate.
The fifth phase, Utilities, has the same activities but with a considerably different
timeframe. This is understandable since the shopping mall has already prepared all
the necessary unitilies, the only thing the construction company must do is connect
everything according the documentation.
The longest activity in the sixth phase, Interior finish, is hanging drywalls. It will take
about 13 days.
The seventh phase, Equipment of the store, is shorter in the second project by about x
days. Because the space is smaller, the facilities department doesn't need much time
for the selection of the equipment and the supplier needs less time to deliver the
equipment.
Project evaluation applying the PERT and the Critical Chain metods 49
The only difference in the eighth phase is the installation of the CCTV system. The
difference is 1 day, because, for obvious reasons, the smaller space requires less
cameras.
In the Recruitment phase the length of the training for managers and for sales
assistants has to stay fixed. The recruitment of sales assistants has a shorter
duration because the store in the shopping mall is smaller and doesn't require as
many sales assistants to cover the store. The duration for the recruitment of
managers remains the same as in the first project, the number of mangers needed
to manage the store is the same.
The last phase of opening the store is Marchendising, all activities included are
shorter due to the smaller space.
Project evaluation applying the PERT and the Critical Chain metods 50
MS Project was used to calculate both projects using the PERT method, which is described
in more detail in Chapter 2.5.2. This chapter also indicated a toolbar designed especially for
the PERT method; the toolbar is shown on xy image. Scales set by comparison leave the
default format. Each activity can be individually set as an optimistic, pessimistic, and the
most likely variant. Detailed tables are listed in the Annex 1-B a 2-B. The results of the
calculations for both projects are presented below.
After calculating the median duration of all activities the MS Project will find the new
Critical Path automatically. In the case of Project Town, the original Critical Path is
consistent with the Critical Path after the PERT calculation method. Network diagram with
marked critical path is shown in Annex 5-A. Project Town will start at 1.9.2011 and finish
1.8.2013, the total duration for whole projest is 500 days. All this information proves the
PERT method.
MS Project is not able to calculate probabilities, but will provide us with sufficient
information to be able to calculate the standard deviation according the formula 3.2. In
table placed in Annex 1-B and 2-B are information about optimistic, pessimistic, and most
likely durations and expected durations (calculating from formula 3.1), The last
information in Annex 6-B is the variance which is given by formula 3.3. The standart
deviation for Project Town is almost 12 days and total duration is 500 days.
For calculation of the PERT method in case of the Mall Project we will use the same
procedure as for the project TOWN. Each activity assign to a particular activity otimistic,
Most likely, and pessimistic durations by consulting with an architect. These add value to
MS Project, it turns out that
After calculating the median duration, the MS Project automatically calculates the new
Critical Path for the project. The original calculation of the Critical Path by PERT method
had a different shape than the Critical Path after PERT calculation. The difference is the
substitution of one activity for another one. Install trim activity ID numer 33 was the activity
included in Critical Path before calculation. After Calculation this activity become non-
critical and was replaced by activity ID 34 Install lightening. Network diagram with the
original critical path is available in Annex 6-A. Network diagram after PERT calculation
with marked change is shown in Annex 5-B.
PERT calculation showed that project Mall with staring day at 1.9.2011 will have duration
294 days and ends at 16.10.2012.
The following information is given in Annex 6-B. The last column shows the variance
counted according the formula 3.3. The standart deviation for Project Mall is 6,05 days and
total duration 294 days.
To be able to calculate the Critical Chain we have to follow all the Procedure mentioned in
paragraph 2.4.
We have already constructed a WBS for both projects to use them during calculation of the
PERT method. The WBS is the cornerstone of the calculation. In addition, we need to
construct a list of resources for each activity, this is the key chain for Critical Chain.
The program MS Project can not calculate the Critical Chain without an additional tool in
form of CCPM+ program. This special tool is briefly described in Chapter 2.5.3.
The resource page of the Town project is secured by 56 resources. 31 Resources are
materials and the other 25 resources are labor. The most important resources in the
project, which are also those most critical, are Planning permission, Building Permition,
Final Inspection. Without obtaining a building permit the project can not continue.
The information obtained in the WBS and material resources list are used to construct the
network diagram. In this diagram we have to find the Critical Path. After this step all
activities will be reduced by half according to the Critical Chain approach. When finding
Critical Path, calculate the median duration for each activity that belongs to the Critical
Path. Based on the calculation of the median duratio we can now calculate the size of the
Project and Feeding Buffers. Table with the calculation of Project Buffer is located in the
Annex 1-C, because of the bulkiness of the table. Calculation of Feeding Buffers is shown
in the table 6 below.
Feeding Buffer 1
Tasks 42 43 44 45 46 48 49
Median Duration 7 2,5 5 7 30 7 3,5 62
FB_1 31
Feeding Buffer 2
Tasks 42 43 44 45 47 50
Median Duration 7 2,5 5 7 30 7 58,5
FB_2 29,25
Feeding Buffer 3
Tasks 68 70
Median Duration 15 30 45
FB_3 22,5
Feeding Buffer 4
Tasks 69 74
Median Duration 10,5 7 17,5
FB_4 8,75
Feeding Buffer 5
Tasks 32 34 64
Buffer 5 10,5 1 16,5
FB_5 8,25
Feeding Buffer 6
Tasks 33 34 65 66
Median Duration 5 10,5 1 7 23,5
FB_6 11,75
Feeding Buffer 7
Tasks 54 57
Median Duration 7 3,5 10,5
FB_7 5,25
Feeding Buffer 8
Tasks 55 56
Median Duration 7 5 12
FB_8 6
Project evaluation applying the PERT and the Critical Chain metods 54
Feeding Buffer 9
Tasks 32 34 39 40
Median Duration 5 1 4 1 11
FB_9 5,5
Feeding Buffer 10
Tasks 27 28 29
Median Duration 2,5 3,5 1 7
The location of Project Buffer and Feeding Buffers in the project are shown in Gannt
Chart, this chart is presented in Annex 3-C. Feeding Buffers have red colours, Project
Bufer has pink colour, all the other tasks have blue colour.
After determining the size and insertion of Feeding Buffers and Project Buffer, we need to
make sure the project does not have any critical resource, which rely in the critical path.
After examining the network chart there is no critical resource we can draw results from.
Duration of the Town Project according to the method of Critical Chain would take 327
days and would be completed at 3.12.2012, while the staring day would be the same like for
all projects 1.9.2011.
The decision procedure for project Mall is the same as the procedure for project Town.
Again starting from already designed WBS, which contains all the necessary information
about the Mall project. The WBS is presented in Annex 2-A.
Resource page of the Mall project is secured by 48 resources. 23 Resources are
materials and 25 resources are labor. Resource lists for Mall project is presented in the
Annex 6-C. The most critical resource is once again the building permit. The second most
critical resource is the training of managers.
The following step is to find the critical path in project, the longest path in the
network. The network diagram is the critical path shown in red, this diagram is located in
Annex 4-C.
Feeding Buffer 2
Tasks 46 47 48 50
Median Duration7 3,5 3,5 1 15
FB_2 7,5
Feeding Buffer 3
Tasks 46 47 48 50 51
Median Duration7 3,5 3,5 1 7 22
FB_3 11
Feeding Buffer 4
Tasks 53 55
Median Duration15 30 45
FB_4 22,5
Feeding Buffer 5
Tasks 54 56
Buffer 7 7 14
FB_5 7
Project evaluation applying the PERT and the Critical Chain metods 56
Feeding Buffer 6
Tasks 25
Median Duration2,5 2,5
FB_6 1,25
Feeding Buffer 7
Tasks 34
Median Duration1,5 1,5
FB_7 0,75
Feeding Buffer 8
Tasks 39 42
Median Duration7 2,5 9,5
FB_8 4,75
Feeding Buffer 9
Tasks 40 43
Median Duration7 1 8
FB_9 4
The following section will compare the outcomes of both methods, the comparison is also
depicted in Table 8.
Project Method Duration Start Finish
Project Town PERT 500 1.9.2011 1.8.2013
CriticalChain 327 1.9.2011 3.12.2012
Project Mall PERT 294 1.9.2011 16.10.2012
CriticalChain 199 1.9.2011 6.6.2012
According to calculations made by PERT the project Town lasted 500 days and ended on
August 1, 2013 with a standard deviation of 12 days. By Contrast the Critical Chain
calculated for the construction of only 294 days with the expected end on October 16,
2012. The difference between the methods is significant, more than 100 days. This
difference can be attributed to the philosophy of the Chritical chain approach. Not all
activities can be reduced by 50% so that there were no overall effects on the project. We
already took into account the very critical resources such as Planning permission, Building
Permition, Final Inspection. To shorten the three critical resources by half seems highly
unlikely and not even the Project buffer would be enough to absorb the possibility of an
overrun of these three critical activities. The total duration of the project calculated using
the PERT method seems much more realistic. 500 days of reconstruction seemed to be
very likely to the architect as well.
This option offers the following results. Project Mall will start at 1.9.2011 and finish
16.10.2013, the total duration for whole projest is 294 days with the standard deviation of 6
days. All of this information proves the PERT method. Contrary to the Duration of the
Mall project, the method of Critical Chain would take 199 days to complete. The project
would start at 1.9.2011 and finish 6.6.2012. Again, a significant difference in the methods
of more than 100 days is highly unlikely. To build the store in a shopping mall within 200
days is unrealistic. On the contrary, a duration of 327 total days for constructing the store
in a shopping mall seems to be very ralistic.
Most shops in the center of Masarykova street have the following opening
hours:
Monday - Friday: 9.00 to 19.00 hours
Saturday: 9.00 to 15.00 or 17.00 hours
Sunday: Closed
Thus, the net working time of businesses located in the city center is 56 hours
per week. During the Bank holidays the city center is closed. In contrast, the
opening hours in Shopping Mall Olympia are as follows:
Monday - Friday: 10.00 to 21.00 hours
Saturday and Sunday: 9.00 to 21.00 hours
Including all public holidays except December 25 and January 1. The net
working hours of the shopping center in a week is 79 hours. That is a difference
of 23 hours a week. These 23 hours each week, make a huge difference in the
sales of the store. Of course, taking into account the costs that must be coverd it
is still worthy.
In terms of presentation of the brand, the Town project appeared to be
the better option. As already mentioned the XY Company does not have any
advertising only the stores by itself. Opening a new, breathtaking, modern store
would be a great advertisement for H. Concept. If XY Company became the
owner of only the commercial area of a house and this house is in very bad
condition, the question is of sufficient representation to the brand.
Another aspect regarding the location of stores is the total size of the city
and its population. H Concept opens its stores in only major cities. Prague as a
capital does not have any store of Concept H in the city center. In Prague, there
are 3 stores of Concept H and all are located in shopping centers. This would be
another argument why the project Mall is the better variant.
Another aspect could perhaps be so-called Cannibalism. A shop in the
city center would be very close to the shopping center Vakovka, where a store
of Concept H is already open. The two businesses would largely share the same
customers and would cannibalize each other on a much larger percentage than
Project evaluation applying the PERT and the Critical Chain metods 60
6 Conclusion
The aim of this thesis was to use two methods of network analysis, namely
PERT analysis and Critical Chain, to calculate the actual project in real practice,
and to compare the results of both methods and the conclusion drawn from
them, which would assist in an important strategic choice.
A detailed description of the PERT method, is in the pharagraph and Critical
Chain, this method is described in pharagraph. MS Project allowed me to achie-
ve the results, but it had two weaknesses. MS Project has PERT Analysis tools to
be able to calculate the method but doest allow calculation of the probability.
The program MS Project can not calculate the Critical Chain without an additio-
nal tool such as CCPM+ program. To be able to manage the MS Project is great
Advantage for my future professional life.
7 Bibliography
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20%20-%201.>
A Annex
B Annex
C Annex
D Annex