Recapitulation of Concepts.

PERT Model was developed for projects characterized by uncertainty.

CPM Model was developed for projects which are relatively risk free. (This does not esti ation". ean that in CPM analysis we work with sin!le ti e

PERT approach in #probabilistic$ and #CPM$ approach in #deter inistic$.

The principal focus of CPM analysis is on variation in activity ti es as a chan!es in resource assi!n ents.

The

ain thrust of CPM analysis is on ti e%cost relationship and it ini ises total cost.

seeks to deter ine the project schedule which

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Assumptions The usual assu ptions underlyin! CPM analysis are& i" The cost associated with a project can be divided into two co ponents& direct costs and indirect costs. 'irect costs are incurred on direct aterial and direct labour. (ndirect cost consists of overhead ite like indirect supplies) rent) insurance) Mana!erial services) etc. ii" *ctivities of the project can be e+pedited by crashin! which involves e ployin! ore resources. iii" Crashin! reduces ti e but enhances direct costs because of factors like overti e pay ents) e+tra pay ents and wasta!e etc. * typical cost ti e line is shown below&

iv" (ndirect costs associated with project increase linearly with project duration. * typical relationship for indirect costs is shown below&

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Procedure: ,iven the above assu ptions) CPM analysis seeks to e+a ine the conse-uences of crashin! a total cost (direct cost . indirect cost". /ince the behaviour of indirect project cost is well defined) the bulk of CPM analysis is concerned with the relationship between total direct cost and project duration. Steps 0. 1btain the critical path in the nor al network. 'eter ine the project duration and direct cost. 2. E+a ine the cost ti e slope of activities on the critical path obtained and crash the activities which has the least slope. 3. Construct the new critical path after crashin! as per step 2. 'eter ine project duration and cost. 4. Repeat steps 2 and 3 till all activities on the critical path (which ay chan!e every ti e" are crashed.

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CONCLUSION
(f the objective is to ini ise the total cost of the project) the pattern of crashin! su!!ested by sl.no.5 is opti al. (f the objective is to ini ise the project duration then the pattern of crashin! su!!ested at sl.no.6 is opti al. (n real life situations) however) both the factors ay be i portant. (n addition) factors like strain on resources and de!ree of Mana!eability are also i portant. The final decision would involve a careful wei!hin! and balancin! of these diverse factors) so e -ualitative and so e -uantitative. (n any case) infor ation alon! the line provided in project duration and total cost table provides useful input for decision akin!.

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NORMAL AND CRASH IM! " COS

Acti#it$ ime in %ee&s Normal Cras* . 4 5 3 4 0 2 +1 5 otal Cost (Rs.) / 0 2 4 + -.4 3 4 Cost in Rs. Normal Cras* 0111 /111 /111 -111 .111 +1111 /111 2111 /-11 /4-11 2111 .111 4411 0-11 +-111 ++-11 2.11 .311 5111 31/11 Cost to !'pedite per %ee& (Rs.) 341 -111 411 +211 +111 -/11 311 511 +-11 ,

+,+,0 -,/ 0,4 -,4 /,2 4,2 2,3 4,3

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PRO6!C DURA ION AND O AL COS

Sl. No. + 0 / 4 2 3 Acti#ities Crus*ed None (-,/) (-,/) " (4,2) (-,/)8 (4,2) " (+,-) (-,/)8 (4,2)8 (+,-) " (2,3) (-,/)8 (4,2)8 (+,-)8 (2,3) " (0,4) (-,/)8 (4,2)8 (+,-)8 (2,3)8 (0,4) " (/,2) Pro7. Duration in %ee& 01 -5 -3 -/ -+ -1 +5.4 otal Direct Cost(Rs.) /4-11 /2311 /5411 4-411 44-11 42/11 43211 otal Indirect Cost(Rs.) 21111 4.111 4/111 /.111 /-111 /1111 05111 otal Cost (Rs.) +14-11 +1/311 +10411 +11411 53-11 52/11 52211

7ro the above table we find that the total cost is ini ised for the project schedule) represented in /l. 8o. 5) in which activities crashed are (-,/)8 (4,2)8 (+,-)8 (2,3) " (0,4). *e information a9o#e is useful for
decision ma&in:.

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NORMAL AND CRASH IM! " COS AR! SHO%N ;!LO%:

Acti#it$ +,-,/ +,0 0,/ /,3 0,4 2,3 3,5 4,5 ime in %ee&s Normal Cras* 4 2 0 / 3 / 5 4 +0 3 / 2 / +3 Cost in Rs. Normal Cras* 2111 5111 3111 +1111 +111 -111 /111 .111 2111 5-11 +2111 +5211 /111 /511 0111 /-11 /111 .411

a) Dra< t*e net<or& dia:ram 9) =ind out t*e cras*in: costs for eac* acti#ities. c)Determine all normal and critical pat* d)=ind t*e minimum cost pro7ect sc*edule if t*e indirect costs are Rs. +111.11 per <ee&

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