Chapter 4

4.1

What is PERT and what is CPM?

PERT is a Program Evaluation and Review Technique. CPM is the Critical Path Method. PERT and
CPM were developed independently in the later part of 1950's. These two are networks. A techniques,
used for planning and coordinating large scale projects.

The use of PERT began in 1958 through the joint efforts of the Lockheed Aircraft, the U.S. Navy
Special Project Office and the consulting firm of Booz, Allen & Hamilton in the efforts of the U.S.
government to speed up the Polaris Missile project.

The U.S. government's apprehension that the Soviet Union, might gained nuclear superiority
over the U.S., early completion of the project was given top priority. A special operations research team
was directed to formulate a new approach considering that the management concepts and methods at
that time were not adequate. The concept was formulated by the research team and is then called
Program Evaluation and Review Technique, which is simply called PERT.

The Polaris Missile project is a large one involving over 3,000 contractors and 11,000 sub-
contractors with several thousands of work activities. The use of PERT in this large scale project was
proven successful in shortening the length of the project completion time.

In 1956, prior to the development of PERT, the Critical Path Method which is simply called CPM
was developed by J.E. Kelly of the Remington Rand Corp. and M.R. Walker of Du Pont in an effort by
commercial industry to make an advanced scheduling and cost control methods. By April 1958, CPM in
application was demonstrated in a real success.

CPM was designed as a tool for planning, scheduling, and control of construction work. Its
emphasis was on the work or activities to be managed. The network diagram defined and focused
attention on the job to be accomplished. The schedule derives the earliest and the latest times for their
start and finish.

PERT was developed as a result of looking for an improved method of planning and evaluating
progress of a large-scale research and development program. It was designed to provide the
management a periodic reporting of current status and an outlook for the future on meeting approved
plans and schedules. It answers the questions such as: "Is this a feasible schedule? And what are the
probabilities of making it?

Although PERT and CPM were developed independently, yet, they have a great deal in common.
Users adopted certain features from one technique for use with the other.

For instance, PERT originally stressed probabilistic activity time estimate because the field in
which it was developed was typified by high uncertainty. In contrast, CPM originally made no provisions
for variable time estimates. However, from a conceptual analysis, most of these differences were
relatively minor. For practical purposes, the two techniques are the same. Thus, comments and
procedures described will apply to both PERT and CPM project analysis.
 PERT/CPM is a control tool for defining the parts of construction job and then putting them
together in a network form. It serves as an aid to the construction manager but it does not make
decision for him nor does it guarantee good management. PERT/ CPM only serves the project manager
to see the whole picture of the entire job. It encourages periodic re-evaluation and providing an
accurate measure of progress. Thus, a person in charge of each work and the project manager knows
what is supposed to happen and when it is supposed to happen.

4-2 PERT/CPM Project Requirements

Today, ether of the two techniques can be used with deterministic or probabilities of time. The
remarkable historical record of PERT and CPM on large scale projects accomplishment has gained
worldwide acceptance. In all major projects of the government, PERT and CPM network is a mandatory
requirement.

Under Presidential Decree (PD) 1594, Prescribing Policies, Guidelines, Rules and Regulations for
government infrastructure contracts provides that:

"The program of work shall include, among others things, estimates of the work items,
quantities, costs and a PERT/CPM network of the project. activities... in the preparation of the bidding
documents, the government shall make and estimate of the actual number of working days required to
complete the project through PERT/CPM analysis of the project activities and corrected for holidays and
weekends."

On January 27, 1968, president Ferdinand E. Marcos issued Memorandum Circular No. 153
which provides that:

"In order that the performance discipline on the field could be controlled and easy reporting
system could be made to facilitate the monitoring, evaluation, inspection completion of infrastructure
projects, all heads of departments and chief of bureaus and offices concerned are hereby required to
change the old system of preparing the work programs of said projects from the Gantt Chart (Bar Type)
to the PERT/CPM network. Strict compliance herewith is enjoined."

On June 19, 1968, the Executive Committee for Infrastructure Program implemented the
Presidential Order in a letter to all implementing agencies to wit:

"Your attention is invited to a Presidential Order requiring the preparation of a PERT/CPM

Section 6 of R.A 5979 requires the application of PERT/ CPM technique to all projects with an
estimated cost of P100.000 or more. Thus, PERT/CPM now has become an integral part as requirement
of project construction management.

With the use of PERT/CPM, the project manager can easily obtain the following informations:

I. The graphical display of project activities

2. An estimate of how long will the project last

3. Determine which activities are the most critical to timely project completion.

4. Determine how long any activity can be delayed without lengthening the project.
4-3 Three Phases of PERT/CPM

The three phases of PERT/CPM are:

1. Planning

2. Scheduling

3. Control-Monitor

Planning

Planning is defined as determining the relationship between the work operation and the sequence in
which they are to be per- formed. Scheduling or sequence involves distribution of work time to each
work operation and determining when to start and when to finish.

Each work operation can be performed in different ways at different costs and in different time
duration. Most construction projects have specified time of start and time of completion. When the
contract time is less, in effect it requires higher indirect costs. Thus, in order to catch-up with the
allotted time, some of the operations must be speeded-up. Consequently, to speed up construction
work requires higher direct cost because of overtime, shift of work, additional manpower and
equipment and various expensive methods which are not done on normal construction operations with
sufficient time duration.

However, there is a danger that shortening a single operation may only increase project cost but
may not shortened construction time considering that other operations have not been shortened. On
the other hand, shortening all operations at the same time may only increase project cost more than
what is necessary to obtain he desired decrease of construction time.

The Critical Path Method (CPM) offers the solution through

systematic approach. The specific information provided by the

CPM are enumerated as follows:

1. PERT/CPM pinpoints the particular work operations whose completion times are responsible for
controlling the complete date.

2. It provides a means of speeding up a project without excessive costs for overtime. Without the use of
PERT/CPM when speeding up the project overtime expenditures may be in total waste.

3. It gives a time leeway or float available for each of the non-critical work operations. The information
on float time will give the project manager that opportunity to maneuver in their planning and control of
the operations.

4. It establishes time boundaries for operations with possibilities of shifting resources, equipment and
manpower to meet time requirements
5. PERT/CPM indicates the earliest starting date for each work operations and sub-contracts for supply
and delivery of materials.

6. It shows the most advantageous scheduling for all operations. This gives planning information as to
time and cost in choosing methods, equipment, crew and work hours.

7. It offers a means of assessing the effect on the overall project variations in one operation such as
change orders.

8. In case of change order where the owner would not want to extend the contract time, PERT/CPM
offers a means of re-scheduling the operations but still to be completed at the least increase in cost.

9. With the critical path schedule as revised to reflect the change order, any claim if any, for additional
payment will be understood both by the owner and the contractor.

10. In case of serious delay due to weather, late material or equipment delivery, the network can be
revised at that stage and new computation is made to determine the new critical operation if any and
revised float times determined for the non-critical operations.

In any project construction undertakings, planning is the most important consideration which includes:

1. Gathering of all the necessary input data to make the PERT/CPM works.

2. Planning phase is the main work of the contractor for being familiar and knowledgeable of his costing
methods of doing

3. The contractor can seek assistance for the accomplishment of his work particularly the gathering of
data, but his basic responsibility on this matter cannot be delegated to any outsider group.

4. The contractor has the complete perception, experiences, resources, and interest in getting the
project done in the best possible time and cost.

5. The planning stages give the contractor a "Dry Run" on the construction of the project.

6. If the contractor wants an effective approach and use of the construction management, he must do it
himself.

7. By performing the work personally, one obtains intimate first-hand knowledge of the job and gain
insight and details of anticipated problems.

SCHEDULING

In PERT/CPM, Scheduling is defined as the process of translating the arrow diagram into time
table of calendar days. This is done by the day date table converting working days into calendar days
which permits the inclusion of weekends, holidays, weather and other time lost.

The PERT/CPM schedule shows the relationships between the operations and the leeway
limitations. All activities should be checked with the day-to-day table. All crew and management
restraints along the critical path should be verified and the restraints should be adjusted to give
satisfactory project completion. Non critical activities can be scheduled to more efficiently utilize
manpower and available resources

Job control through the use of PERT/CPM gives the management a reliable system identifying
job problems within days instead of months. Progress along the arrow diagram should be updated for
immediate references. The diagram must show the status of the project at any time and indicate which
activities can be started and to pinpoint the cause of the delay.

The PERT/CPM diagram should be updated periodically to account for:

1. Time discrepancies

2. Deliveries

3. Weather

4. Change orders

5. Unexpected events or conditions.

Updating of the diagram is based on the number of days the project is out of schedule.

CONTROLLING AND MONITORING

Flexibility and updated re-computations brought about by changing conditions is the key to a
successful network programming. To keep the schedule more up to date and meaningful, it can be done
by hand but is easier and less in cost if it is done with the assistance of computer to have the following
output.

1. The contractor is supplied with time status reports showing the overall status of the project in general
and in particular.

2. The contractor is provided with revised schedules which reflect the actual work conditions and the
project status.

3. The contractor is supplied with cost status reports showing how much money is being disbursed for
what type of expenses.

4. The contractor should be supplied with those reports as frequently as desired or required to maintain
control over the project.

In the Planning Phase, there are five inputs that can be obtained:

1. A network diagram defining the activities in the project.

2. The duration of activities

3. Cost estimates of the activities for monitoring cost, cash flow requirements

4. Resource estimates

5. Trade indicators (responsibility) for activity grouping.

obtained:

1. The schedule of activities in the network showing the following

a. The Critical Activities

b. The Earliest Start date for each activity

c. The Earliest Finish date for each activity

d. The Latest Start date for each activity

d. The Latest Finish date for each activity

e. The Float which refers to the amount of extra time available for an activity.

2. A Bar Chart or a Time Scaled Network (arrow diagram network for the project).

3. A. Resource Analysis showing the number and kind of resources, man power, equipment and others
that are required for each day of the project.

4. A Cash Requirement prediction indicating how much cash to be disbursed for the job and the amount
of money that will be collected as a result of work accomplishment.

The Control Monitor Phase uses actual data which includes:

1. Additions to the project - This refers to the new activities.

2. Deletion from the project

3. Changes as to duration, description, trade indicators, cost estimates or resource estimates.

4. Actual starting dates

5. Actual finishing dates.

The Output Phase consists of the following:

1. Time status report

2. Revised schedules

3. Revised Bar Charts/ Arrow Diagram or Network

4. Revised resource analysis

5. Revised cash flow predictions

There are three major reasons for construction failure:

1. Unbalanced organization due to lack of planning and scheduling.

2. Lack of financial planning

3. Poor cost control.