Aivy I.
Sionzon
Masters in Business Administration
BA 304 - Production and Operations Management
Case Problem #3: PERT-CPM:
Scenario: A new office building construction in Olongapo City, Zambales.
Project Activities: Precedence Relationships:
A: Site Preparation (3 weeks) B follows A
B: Foundation (5 weeks) C follows B
C: Framing (6 weeks) D follows C
D: Roofing (4 weeks) E follows B
E: Electrical Wiring (4 weeks) F follows B
F: Plumbing (3 weeks) G follows E and F
G: HVAC Installation (5 weeks) H follows G and I
H: Interior Finishing (8 weeks) I follows D and C
I: Exterior Finishing (5 weeks) J follows H
J: Landscaping (2 weeks) K follows H and J
K: Final Inspections (1 week)
Activity Duration Information:
Duration estimates for each activity are assumed to be normally distributed (a pessimistic,
most likely, and optimistic duration estimate).
Example: Activity C (Framing) might have a pessimistic estimate of 7 weeks, a most likely
estimate of 6 weeks, and an optimistic estimate of 5 weeks. The expected duration is
then calculated using PERT’s formula: (optimistic + 4 * most likely + pessimistic) / 6.
Problem:
1. Construct a network diagram: Visualize the project as a network of activities and their
dependencies.
Network Diagram Construction
The network diagram (shown above) visualizes the sequence and dependencies of activities.
Each activity is represented as a node, and the arrows indicate the order in which tasks must
be completed. For example, Activity B cannot begin until Activity A is complete.
2. Calculate expected duration: For each activity, calculate the expected duration using the
PERT formula based on the provided duration estimates.
Using the formula:
TE = (O + 4M + P) / 6
Activity Optimistic (O) Most Likely (M) Pessimistic (P) Expected Duration (TE)
A 2 3 4 3.0 weeks
B 4 5 6 5.0 weeks
C 5 6 7 6.0 weeks
D 3 4 5 4.0 weeks
E 3 4 5 4.0 weeks
F 2 3 4 3.0 weeks
G 4 5 6 5.0 weeks
H 7 8 9 8.0 weeks
I 4 5 6 5.0 weeks
J 1 2 3 2.0 weeks
K 1 1 1 1.0 week
3. Identify the critical path: Determine the sequence of activities with the longest expected
duration, which determines the project's overall completion time.
The critical path is the longest path through the network and determines the minimum
completion time for the project.
Critical Path:
A→B→C→D→I→H→J→K
Project Duration: 34 weeks
4. Calculate earliest start and finish times: Determine the earliest time each activity can start
and finish without delaying the project.
Earliest Earlist
Activity
Start Finish
A 0 3
B 3 8
C 8 14
D 14 18
E 8 12
F 8 11
G 12 17
I 18 23
H 23 31
J 31 33
K 33 34
5. Calculate latest start and finish times: Determine the latest time each activity can start and
finish without delaying the project.
Activity Latest Start Latest Finish
A 0 3
B 3 8
C 8 14
D 14 18
E 14 18
F 15 18
G 18 23
I 18 23
H 23 31
J 31 33
K 33 34
6. Calculate slack (float): Determine the amount of time an activity can be delayed without
delaying the project.
Activity Slack
A 0
B 0
C 0
D 0
E 6
F 7
G 6
I 0
H 0
J 0
K 0
Activities on the critical path have zero slack.
Activities like E, F, G can be delayed slightly without affecting the overall project
timeline.
7. Analyze the probability of completion: Use PERT's statistical approach to assess the
probability of completing the project within a specific timeframe, considering the uncertainty
in activity durations. For example, if the expected project duration is 30 weeks, what's the
probability of finishing in 28 weeks or less?
Expected time (TE): 34 weeks
Sum of variances (σ²) along critical path = sum of (std dev)²
All std dev = 0.333 (except K = 0)
Variance = 6 activities × (1/3)² = 6 × 0.111 = 0.666
Standard deviation (σ) = √0.666 ≈ 0.816
Z = (Target time - Expected time) / σ
Z = (28 - 34) / 0.816 = -6 / 0.816 ≈ -7.35
Using the Z-table:
P(Z < -7.35) ≈ 0%
Almost 0% probability of finishing in 28 weeks.
8. Consider crashing: If the project needs to be completed sooner, analyze which activities
could be "crashed" (reduced in duration) and at what additional cost. This could involve
adding more resources or overtime.
Candidates: A, B, C, D, I, H, J, K
Most impactful: Crash H (8 weeks) or C (6 weeks)
H: Add labor teams to reduce duration from 8 to 6 weeks (may increase labor cost by 20%)
C: Prefabrication can cut 1 week with moderate equipment cost.
J/K: Minor time savings with limited impact
Cost-benefit analysis is needed before deciding.
9. Discuss potential risks and mitigation strategies: Identify potential risks that could affect the
project's timeline and costs, and propose mitigation strategies.
Potential Risks:
Delays due to weather or unforeseen site issues during site preparation.
Supply chain disruptions affecting materials for foundation or framing.
Labor shortages or strikes.
Design changes or regulatory issues during inspections
Mitigation Strategies:
Buffer planning: Incorporate contingency time for critical activities.
Supplier agreements: Secure reliable suppliers and track deliveries closely.
Flexible resource allocation: Cross-train workers or have standby crews.
Regular monitoring and communication: Keep all stakeholders informed to quickly
address issues.
Design review and compliance checks: Early coordination with authorities to prevent
delays at inspections.
