Project Mangement
Q1. Describe the CPM model. Briefly explain?
CPM model was developed for making risk free Projects. CPM approach is deterministic. In CPM analysis we work with single time estimates. The main focus on VPM analysis is on variations in activity times as consequences of changes in resource assignments. The major focus of CPM analysis is on time cost relationships and it seeks a project schedule that minimizes total cost.
Assumptions under lying CPM Analysis- 1. The costs associated with a project can be divided into two components. Direct costs and indirect costs. Direct costs are incurred on direct material and direct labor. Indirect costs consists of overhead items like indirect supplies, rent, insurance, managerial services, etc.2. Activates of the project can be expedited by crashing which involves employing more resources.3. Crashing reduces time but enhances direct costs because of factors like overtime payments, extra payments, and wastage. The relationship between time and direct activity cost can be reasonably approximated by a downward sloping straight line.
Direct cost of activity
Duration Crash Time Normal Time Activity
4. Indirect costs associated with the project increase linearly with project duration
Indirect cost of project
Procedure Duration Procedure Given above assumption, CPM analysis seeks to examine the consequences of crashing on total cost. Since the behavior of indirect project cost is well defined, the bulk of CPM analysis is concerned with the relationship between total direct cost and project duration. The procedure used in this is: 1. Obtain the critical path in normal network. Determine the project duration and direct cost.2. Examine the cost time slop of activities on the critical path obtained and crash the activity which has the least slope.3.Constrct the new critical path crashing as per step 3. Determine the project duration and cost.4.Repeat steps 2 and 3 till activities on the critical path are crashed.
CPM model was developed for making risk free Projects. CPM approach is deterministic. In CPM analysis we work with single time estimates. The main focus on VPM analysis is on variations in activity times as consequences of changes in resource assignments. The major focus of CPM analysis is on time cost relationships and it seeks a project schedule that minimizes total cost.
Assumptions under lying CPM Analysis- 1. The costs associated with a project can be divided into two components. Direct costs and indirect costs. Direct costs are incurred on direct material and direct labor. Indirect costs consists of overhead items like indirect supplies, rent, insurance, managerial services, etc.2. Activates of the project can be expedited by crashing which involves employing more resources.3. Crashing reduces time but enhances direct costs because of factors like overtime payments, extra payments, and wastage. The relationship between time and direct activity cost can be reasonably approximated by a downward sloping straight line.
Direct cost of activity
Duration Crash Time Normal Time Activity
4. Indirect costs associated with the project increase linearly with project duration
Indirect cost of project
Procedure Duration Procedure Given above assumption, CPM analysis seeks to examine the consequences of crashing on total cost. Since the behavior of indirect project cost is well defined, the bulk of CPM analysis is concerned with the relationship between total direct cost and project duration. The procedure used in this is: 1. Obtain the critical path in normal network. Determine the project duration and direct cost.2. Examine the cost time slop of activities on the critical path obtained and crash the activity which has the least slope.3.Constrct the new critical path crashing as per step 3. Determine the project duration and cost.4.Repeat steps 2 and 3 till activities on the critical path are crashed.