3/13/2012

Critical Path Method (CPM)

Critical Path Method was developed by Du Pont In Critical Path Method (CPM) the emphasis is on the trade-off between
the cost of the project and its overall completion time

Critical Path Methods

Presented by: Anupam Kumar Reader SMS Varanasi

e.g.
For certain activities it may be possible to decrease their completion times by spending more money How does this affect the overall completion time of the project?

Critical Path Method

In Critical Path Method (CPM) activities are shown as
a network of precedence relationships using activity-on-node network construction.

Illustration 1
A leading company has decided to bring about certain changes in its product design for which the time estimates are as follows. Estimate the time it would take to get the new design implemented. The activity precedence detail is: Activity number Activity number
must finish before 1 2 3 4 5,6 7 8 8 9,10 can start 3 4 5 6 7 8 9 10 11

CPM is used in Production management

for the jobs of repetitive in nature where the activity time estimates can be predicted with considerable certainty due to the existence of past experience.

CPM has
Single estimate of activity time Deterministic activity times

Illustration 1 (Contd.)
Activity No. 1 2 3 4 5 6 7 8 9 10 11 Activity Redesign Product Redesign Packaging Order & receive component for redesigned product Order & receive component for redesigned packaging Assemble Product Make up packaging Package redesign product Test Market redesigned product Revise redesigned product Revise redesigned packaging Present result to Board Time (in Weeks) 6 2 3 2 4 1 1 6 3 1 1 1 12 2 4

Illustration 2
The time estimates for completing the plant construction project is as shown.
Determine the critical path. How much slack time is available in the non critical path?

3 5 6

4 6

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Crashing CPM Networks

Project Timelines are crashed for due to urgent or contingent conditions. Crashing of CPM Networks is
The process to reduce the normal project duration to the desired shorter duration activities on the critical path are crashed by the use of additional resources / expenses.
Time-cost ratio = Increase in cost / Decrease in time = (crash cost normal cost) / (normal time crash time)
Activity Time in Weeks 1-2 1-3 2-4 3-5 4-5 6 4 3 8 7 Total Cost: 4 3 2 6 4

Illustration 3
Cost (Rs.) 10,000 14,000 5,000 4,000 7,000 8,000 5,000 8,000 Normal Crash Normal Crash

The network details for a small project is as given.

Draw a network diagram with the normal times. What would be the cost of the project if the noncritical path is to be converted to the critical path through project time crashing?

9,000 12,000 35,000 47,000

Illustration 4
A company received an order from a reputed customer.
As per the contract, from the day 15th the company will have to pay a penalty of Rs. 10 per day until job is completed. Indirect project costs per day is Rs. 200. The data on direct cost and activities are as follows.
Activity A B C D E F G H 4 7 5 6 3 11 4 3

Illustration 4 (Contd.)
Normal Time Normal Cost Crash time 1000 1400 2000 1200 900 2500 800 300 3 4 4 5 2 6 3 1 Crash cost Immediate Predecessor 1300 None 2000 None 2700 None 1400 A 1100 B 4000 C 1500 D, E 500 F, G

Draw project network diagram. What completion date would you recommend? Compute project cost after crashing.