COST EFFECTIVENESS AND CONTROL:LONG-TERM PROJECT MANA~EMENT USING PERT/CPM

Susan French and H. Gil PeachPacific Power &Light Company

Terry Oliver, Bonneville Power Administration

ABSTRACT

This paper addresses the use of PERT/CPM scheduling software as aworkable solution to the management and control of complex conservationprojects~ For the Hood River Conservation Project, using a PERT/CPM system,over 330 activities including project operations and fifteen research studieshave been optimally planned on the basis of time and resource logic overa three-year period~

A computerized system has enabled projections of different planningscenarios, comparison between potential schedules, and the successful

imination of a projected one-year Project overrun& In addition to planningand update capacity, the system offers several reporting functions includingdetailed graphics, status updating, time delay/benchmark contrast t andsegmented reporting by selected category~

Beyond project planning and control, the system is able to documentproject delays and detail activity componentsG This documentation (inaddition to time-frozen planning schedules) enables post-facto explanationand eval on of delays, and facilitates more accurate future planning inareas of program replication~

These and measures are explored in terms of efficiency, accuracyand cost-savings~ Several versions of PERT/CPM sch-duling software are

lable in both mainframe personal computers, and offer a usefulresource in the management complex conservation projects~

1-238

FRENCH, Al.

COST EFFECTIVENESS AND CONTROL:LONG-TERM PROJECT MANAGEMENT USING PERT!CPM

Susan French, H@ GIl Peach"Paclftc Power and light CompanyTerry OlIver, BonnevIlle Power AdminIstration

INTROD TION

The Hood RIver ConservatIon Project Is a three a half Iveconservation research project taking place in Hood RIver, Oregon@ ThIs projectIs the collaborative result several organizatIons involved in conservatIon orelectrIc energy plannIng and use. The Bonneville Power Administration ( A)contracted wIth Pacific Power and light Company ) manage admInIsterthe Project In areas weatherization, budget control, schedule and oersonnelmanagement, eval ion@

Ive, constsavings, program

evaluationof over fIfteen separateeva I ion, and penetratIon

severalInclusion of

rnan­entities working directlymarlaaemE~nT effort take

lon9 term work I and

Three the major stud beingvolve use complex state of thenewly IFinally,closely rei

a complex group of var acttvJties@process of planning and malntalnl

Ion schedule@ Unexpected and severescale project, as dead I Inas are

unforeseen problems In

conduct logical long range plannIng, the Hoodf turned to a PERT!CPM software package cal led Project 2@2

(s Program Eval ion and Review Technique, and CPM refers to CrItIcalthod0 Both of these systems are network sch ultng systems whIch were

loped in the late 19505, PERT In relat to the US Navy's Polaris system,and Mby the Sperry Rand Corporation In relation to chemIcal plant manage-

03 Until the development of computer software based upon these systems,

however, projects to be scheduled by hand, often a long and arduous process$

1-239

FRENCH, ET Al.

THE METHOD

CPM is based upon the logical order In whIch a sequence of events must beperformed. GIven the estimated duratIon of each actIvIty In a serIes, CPM soft­ware calculates the estimated duratIon of a project, and IdentIfies the acti­vitIes which control the overal I length of the proJecte

PERT accentuates CPM by allowing the user to Identify mIlestones or signff­Icant events, and project a schedule usIng both optImIstic and pessImistic dura­tions for an activIty. It Is then possible to determIne the earlIest possibleand latest possible completIon dates for a project.

Involved with both of these systems Is PDM, or Precedence DIagrammIngMethod. This al lows the user to connect several actIvitIes which may occur Inparallel schedule paths. If two activities must each be completed before athird may begin, POM wfl I determIne the lag or slack time between the actIvitywhIch should finIsh first, and the thIrd activity whIch cannot start until thefirst two have been completed@ (See Figure 1 below)

CONCEPTS OF PERT!CPM

Some of the key concepts found In PERT/CPM are crItIcal path g float, andmilestones. , as previously mentloned g Is the IdentificatIon ofthe part lar chaIn of tlvltfes whose delay wll I cause an automatic length-ani of total Project timeltne. critical path may be descrIbed as

Ing which reaches from beginnIng to havIng several other looseconnected (but not pulled taut).

fJQat represents the amount of slack time exi In9 between activities~~~~~r'~ they become crltlcal@ If ivity 3 Is to take ten (10) days, actfv4, five (5) and both completed before actIvity 5 whIch wll Ion day actIvity 4 five (5) days free float. See fIgure 1•

5

.... _----*

85

.-....-ti Path I* J

(1) (2) 5(5)

(1)= Activity number5 = Duration (days) 4 (5 days Float)

FI 1e Example of Precedence Diagramming Method, varthe Critical Path wIthl" a schedule dlagram@

types of Float, and

1-240

FRENCH a Al@

Some activitIes are directly tied to actlv Jes on the critical path* Inthe case that they are delayed and use up all theIr float, they wll I become partof the crlt I path~ There are three types float@ Diract float shows whichactIvity controls its successor in the pr act schedule, involves theamount of Internal float an actIvity has before It begins to affect anotherrelated activity, and Iota I FIQat lIsts how much float exists between anactIvity and the critIcal path.

MII@5IQnft5 are the major events whIch occur In the course of most proJects@In the case of the Hood River Project, milestones Include contract deliverabledates, final copIes of reports, and weatherizatIon or equipment Installationdead If nas@

PROJECT 2 - HOW IT WORKS

One of the many PERT!CPM software scheduling systems onProject 2@4 This program utilizes components of PERTa C ; and P Into provIde as clear a pIcture of Project 2 as posstbJ It is necessary toline a few the primary concepts used in buIlding and maintaining a Projectschedule.

break it down Intoa tal I buildlng@ Though

as a whole, It can easily down' sma I ler partsmight be categorIes for masonry, electrical

work, framfng@ Th allows the user tomaintain the overal I perspective of Inter~

are call codes@

are broken down Into specff actfvltfes@ The(one c e)~ r mIght be broken down

tp cement, receIve cement, mIx concrete,I cure and· remove forms$ If

places, is process, or one similar to Ita~~~~~~~~ times, al I in the same code. See figure 2@

1Tasks

1Activities

ass

1Install 1st

floor windows

!list all

1st floorwindow measure­

ments~

Electrical

1Install

EXIT signs

LOrder 58

EXIT signs

Concrete

1Outside

concrete fixtures

1Pour front

sidewalk

2 breakdown of areas to codes and actlvitles@

1-241

FRENCH, ET ALe

The use of codes at lows for the defInItIon of basIc activIty categorres$lIkewise, the use of actIvitIes del fneates specific tasks, and usually ImplIeswhat party Is responsible for the completIon of each task. The primary struc­ture of Project 2 than, Involves codes (concrete work), tasks (pour concrete fornorth sIde), and finally, specIfIc actIvIties which make up the process (mixconcrete). .

Rata Bases

Project 2 provIdes the user wIth several data bases& These Include thePlannIng Schedule, Target Schedule, and Current Schedule@ The PlannIng Scheduleis the cornerstone of the Project Schedule. It reflects the user's conceptionof the activItIes Involved In the project, theIr probable duratIon, and theIrrelatIonshIps to each other in terms of precedence and orderlng@ Once the userhas Input this data, Project 2 wIll create a schedule whIch lists each actIvItyIn order of occurrence wIth Its early start date, late start date, early and lateffnlsh datess It also calculates the amount of float existIng for each activ­ity, and delIneates the critical paths Once this schedule has been developed(though It may be revised at a later date) the user knows when actIvItIes arescheduled to occur, how long the project is scheduled to last, and whIch activ-Ities are crItical and therefore must be watched in order to avoId tIme over­runss

Typ Ily, more one plannl optIon may be offered$ Project 2 at lowsuser experiment with different scenarIos In order to arrive the most

flcJent order and mix of activIties possIble for the project as a whole@

In the course of developing the PlannIng schedule, It Is possIble to freezeschedules at different stages In the process. These schedules are referred toas , several may be saved in one data banke Thfs al lows theuser to "save" several planning opt for future comparlson$ These frozenschedules are stored by the system and may used as benchmark schedules incomparison wIth the final Planning schedule as it evolvess

the project actually begun, Project 2 becomes a management tooleIv occurs, I fInishes are recorded& These starts

9 In addft to any known delay information» are applied to the~~BI~~I~le by 2@ actual occurrence, or Current Schedyleg Is

calculated and compared to Planning Scheduls$ The Current Schedule presentsthe user with the actual progress versus planned progresse It del (nsates whIch

Ivltles are ahead schedule, which are behind, and how many days remaIn torthe on-tIme I ion actIvIties which are In process $ This data bank of

Progress may be updated at any time, usually In batch form.

PLANNING AND DIAGNOSTIC REPORTS

Project 2 offers varIous forms of output to aId the user In the process offng and maIntaining a project schedufe9 The two major output reports used

in the plannIng and dtagnost process are the PlannIng Schedule and the AnalyzeNetwork@

FRENCH, ET Al*

The Planning schedule provides (by code If specifIed) a listing of al IactivitIes Involved in the Project, theIr early and late start and fInish dates,their calendar and project-day number, their duration, codes, and succeedingactIvIties. These activities may be printed as one comprehensIve unit, or bro­ken down by code. This al lows the user to pinpoInt actual dates projected byProject 2, and to trace the chain of events withIn IndIvidual codes, and throughthe project as a whole@ This report also provides the chronologIcal If fng ofall activitIes occurrIng In the Project.

The Analyze Network accentuates the Planning Schedu providing the userwith a much more detailed account of al I precedences and successors for eachactivity In a network@ It also lists three types of Float related to each ac­tIvIty: dIrect float, free float and total float@ The first Involves how muchinternal float the actIvIty has (before It begins to affect another related ac­ttvlty)* The second detatls how much float remaIns before an activity affectson of Its successors, and the third lIsts how much float ext between an ac­tIvity and the critical path@

Each of is avaIlable for the PlannIng or schedules@This al lows the user to compare the actual float the planned float (critIcalpaths in Current schedules sometimes differ from those occurrIng In the Plannlschedule), and create Ie modff accordingly@ In additIon, activlrei lonships may expl and compared between the two types schedules rn

mal in a Ie which is as af ive as fble for user$

fl.~1l!!"'.eIlRI"'P Ia I toa049QllaT'sly serve as

~p~~~aA·~~~lons$ thesewhich provIde a clear p

Is for man-2 provides

Project sched-

MANAGEMENT

for several In Iva and I reportsIs the comparison between the Planning sched-

e~~~a~!Ulee is is avaIl Ie in prInted or hIe form$the overs I I tIme schedule with a mInimum of

Ive use the schedule Is the Current Statususer to request any period of tIme fn the future - the

next two weeks. a month, or of next yeare Project 2 wll I calculate awhich, accordIng to project logic, fal I Into three priorities

fod specif They are activItIes which ~~~~~~1§of such perIod .. mu~± ...be In gr.2gress, or may be In progress during

iod& This aJ lows a user to keep track of activitIes in severalareas over a I lcd of t al locate approprIate resources and prior-ItIes to

1-243

FRENCH, ET AL@

In addItIon to the Current Schedule reports g Project 2 offers several typesof graphs. These Include plots of the Planning, Target, or Current schedules,as a whole, or by code sectIons. Each of these reports may be prrnted wIth XXXson normal computer paper, or In clear, crIsp detail on a plotter. Project 2wll I also print out Its schedule logIc In standard PERT/CPM format wIth thecrItIcal path delIneated In red.

ADVANTAGES

By breakIng an actIvIty down Into Its logIcal parts. several ends are meteResponsibIlity Is allocated - who performs this activity; and dates are set forcompletIons of drafts and revlews@ ThIs al lows resource plannfng; and earlywarnIng for partIes who wfl I be expected to perform a revlew@ It also presentsthe research team with a tangIble lIst of events whIch need to occur, and theIrorder of priority@

In the case of equipment orders, when delays occur, they may be documentedin terms of the exact location of the delay~ This creates an early warningsystem for researchers who may develop contIngency plans when needed equipmentis delayed@ ThIs facility Is especially Important when admInisterIng a projectin the context of one or more large organlzatJons$ Due to the special lzatfonvarious Internal departments, communicatIon is Inhibited, I may

be routinely flagged@

CAUTIONS

In lIght of all 2 can do, it Is easy to assume that its mafn-_sn~u~.~ will become someone's ful I time Job over an extended perIod of time@

Hood River I Ion team found that this is only the outset ofProject schedull The complex log and Jculatfon of a schedule wll J takesome time in nlttal stages developing a project schedu However, oncethe initial planning been campi and al I necessary data Input,

process of report I progress creating reports Involves between one andtwo

however, some tal lems which accompany Project 2's useIt is important not to overburden the system by breaking activ-mi parts$ It is best maIntain a comparable level of

the activities catalogued In Project 2@ The more activitiesmore logical precedences and successors Involved, the more

becomes to make changes and diagnose critical path elements.

It also essential to keep in mInd the fact that Project 2 is a sched-that reflects logIc It has been givenG Users may be tempted to

by placJ actIvItIes in the order which best suits the internalthe proJect b rather than in the logical order In which they must be

letedw Project 2 does not correct these sequences, nor wi I I It completelogIc sequences which have only been partIally articulated by the user@ Flnal-

FRENCH, ET ALe

Iy, Project 2 Is a computer software system, not a reasoning staff member. Theschedule It has created Is a product of program Input, and_Garbage In wit I equalGospel Out.

Therefore, the products of Project 2 must be examIned In those terms. Thepriority gIven certaIn actIvIties Is often a reflectfon of Initial planningrather than actual realIty. LIkewIse, It Is necessary to periodically reassessthe reasonIng behind the orIgInal Planning schedule In order to assure thatProject 2'5 schedules are as reflectIve of actual Project occurrences aspossible.

IMPLEMENTATION: THE HOOD RIVER CONSERVATION PROJECT

How has Project 2 worked within the Hood RIver ConservatIon Project? Inless than one year of utilIzation, Project 2 has been Instrumental in the crea­tIon of a Project schedule, the reductlon of a signifIcant projected time over-run, and the day to day management and documentatIon of Project.

SchftoYlft ConstructIQo

In the construction of a Project schedule the Hood River Project,lvitles were broken down r 18 codese These fneluded separate codes for

of the las, categories for internal management, both fnI Headquarters Hood River fIeld office fInal 'Ye data col-ion weatherl Ivlt wh are tIed to the various studJese

The Hood RIver Project schedule consJ of over 300 different tasks con-nected by over 400 precedence/successor relationship tles@ In the process ofplannIng the Project, through the early months of ImplementatIon, these

IvltJes were clarified and reworked to best actual workings

Typical examples ofreviewing e or the

r

include the process drafting and, receipt and Instal latfen of research

writJ a particular study Is defined by one codethe study is broken down into actIvities detaIl ing data

revIew by PPl and/or the SPA, revlsfon; final re­Jpment orders are sImIlarly handled, dIvided 'nto actl-

and fppJng of material, its testIng, and finally,

Hood River Project contract was orIgInally set for a tIme period of1300 days$ By the sixth month the Project, delays In the shipping of equfp-

~245

FRENCH» ET Ale

ment and various contract negotiatIons had caused a change In the entIre re­search plan which would mandate the addition of a'imost a yea_r to the projectttmellne In order to compensate for lost data col lectJon time.

The Plannfng schedule for Project 2 had gone from a tIdy 1300 days to a1631 day schedule - almost a year overrun. Using the various tools provIded byProject 2; the research and evaluatIon staff began to re-examfne some of theunderlying assumptions behInd the PlannIng schedule. The goal in this processwas to create a Project schedule as close as possible to the origInal 1300 dayschedule without placIng ImpossIble tIme constraInts on crucIal actIvities.

A good example of the type of cost and resource effectIve trImmIng thatoccurred is the report review process. In the orIginal schedule, most reportsconsisted of a draft, two consecutive revIews, revIsIon, two consecutIve finalrevIews, and two consecutIve approvals, one by the contractee (SPA), the otherby the contractor (PPL). In the process of economizIng the time available, thereport revIews were made concurrent. GIven two thIrty day review perIods perparty, thIs reduced the total review time from 120 days to 60@

Other changes Included the matching of work to be completed to resourcesavailable@ For Instance, two major dellverables to be completed by one subcon­tractor had been placed consecutIvely so as not to overburden theIr staffe Itbecame apparent that there was ample human resource to complete both reportssImultaneously. Because these reports were both on the Project schedule'scrit I path, Is change sfgnlft Iy reduced the overall Project tImet fns@

An Important Project 2 facility has been essential In many of thesechanges@ This Is the abIlIty to overlap activities fn cases where the firstneed not be fully completed before the second may begtne In the case of datacollection and report draftlng g the draft may gin up to 60 days before al Idata have been collected. This functIon was used to recover a time savIngs of60 days In several Project research studles@

In retrospect, many of these modifications seem Obvtou5@ However, It Iscumul tve effect of at I changes whIch enabled such drastic reduction

In the overall Project schedule. After periodIc revIsions such as these over a, of four months, the project tlmel Ina had been reduced from 1631 days backthe original 1300. This with no loss of qualIty "'n reports due, andmaIntenance a Ie timeframe each Project dellverable@

It is likely that is modlficatfon could not have occurred wIthout the aidof a sophi leated software program. Using the PlannIng schedule, varIous op­tions and "what-If" scenarios were charted out and calculated by the systemwithin mInutes where It would have taken hours manually. The dIagnostIc tools

ided by Project 2 at lowed for the sImple IdentifIcatIon of crItIcal actl­vitfes which II ruminated those areas most In need of reduced time al locations.

1-246

FRENCH» ET Al@

ProJect Management WIth p/2

Once the schedule seemed reasonably close to its fInal version, it becameappropriate to report Progress In order to ascertain exactly how close actualProject actIvIties were to the PlannIng schedule timelfns. The reportIng ofprogress every two weeks at lows for several types of management control.

InitIally, there is the enforced necessIty of becomIng Informed aboutproject activitIes whIch are not directly connected to onets area of work e yetmay potentIally influence ft. Project 2 provIdes the user wI a prIntout whichlIsts al I actIvities which have not yet been started and their scheduled startdates. These may be broken down Into the code categorIes dIscussed earl'er~

BrIef phone cal Is to al I those people responsIble for certaIn actIvitIes al lowthe user to gain a clear understanding of any potential delays. Given an earlywarning of a potentIal delay, It Is possible to run a projected scenario usIngProject 2@ What wIll be affected If this equIpment arrIves six weeks late?This InformatIon makes It possIble to trouble shoot In antIcipatIon of potentialproblems, rather than relying upon patchups once the damage has occurred@

One of the most relevant purposes behind Progress ReportIng Is the controlInformatIon provided by the software system. The Project 2 Progress reportsmentioned earlier are the Current Status Report, and the comparison of PlanningSchedule to actual project occurrence (dIscussed above)@

If al I actfv Iss which should be occurrIngfng fc@ ThIs report has been used by the research

evaluatIon team g shared with other participants In the ProJect g and used byi I management as an , ion of project and a tool for prlor-itf Ion of tasks~

In Is Is a IItvltJes are as of the

~~~p~M~~laJ and a clearof ti I Ina

how much ahead or behInd scheduleThis at lows for earlyhow critical these del

design as a whole@

Progress t also allows user to document al I delays and theirWhen lookIng certaIn aspects of a long-term project such

fng of various delays wIll be essentIal Inreplication of a major research effort@ A brief updateallows for the segmented understandJng of delays, rather than a

~~ln~~~~&!I~~fon of what occurrede

2 provides a documentatIon function which al lows the user to listivttfes or relevant Information alongside the pertInent activIties In the

schedulee This II Ing need not be prInted on any of the Project 2other than those documents befng used Internally for Project documen-

1-247

FRENCH, ET Al@

The organIzation of a project schedule by code, task and activIty facIli­tates a Jevel of documentation which takes each pIece of the process Intoaccount. The maIntenance of such detal' wll I al low for a clear and organfzedpJcture of whIch parts of the project worked smoothly, whIch were delayed, andperhaps, which were unreallsttcal Iy planned. Thfs type of evaluatIon wll I beessentIal to the user and other potential users for the future planning ofsImIlar projects.

CONCLUSION

In communications wIth various research subcontractors g Project 2 hasprovIded an easily understood and uncomplicated plannIng tool@ It Is possibleto select any activities In the schedule In the constructIon of a report. Thisal lows for the Isolation of al I actIvities pertaIning to a certain researchstudy. Shared wIth the appropriate subcontractor, a clear and tangIble under­standing of the expected schedule Is reInforced. This removes any ambIguItyfrom expected deliverable dates, and al lows the subcontractor to place theIrwork In the context of a larger schedule whose maintenance depends upon theIrtlmellness@

is discussion has focused upon the uses of PERT/CAM software in theplanning and management of a complex, long-term conservatIon research proJect@Project 2 provIdes an easIly managed form of PERT!CPM to enable accurate pro­jected schedulfng e early warnIng for delays, experImentatIon for the optimumschedule» progress documentatIon and recordkeeptng$ and finally, a series ofgraph and reports useful to fntarnal staff, management, and external sub­contractors@

ACKNOWLEDGMENT

Research supported by the Bonnevrl Ie Power AdmInIstratIon, U.S@ DepartmentEnergy, under A ntract No@ DE-AC79-83 11287@ The vIews and conclusIons

fned in this document are of the authors and should not be Inter-preted as necessarll representt offIcIal pol feJes, either express orimplied, U@S~ Hood River nservatlon Project Is spon-sored by the Bonnevtl Ie Power AdministratIon, U@S. Department of Energy Incooperation with PacifIc Power &Lf and the Hood River ElectrIc Cooperatlve~

~248

FRENCH, ET Al.

REFERENCES

1) Carlotta Collete, "Yesterday's Homes Meet Tomorrow's Technology$" NorthwestEnergy News, March/April 1984, p. 25.Terry Olivera He Gil Peach, Don Peters and DanIel Ie Engels, "MeasuringConservatIon: A Report on Instrumentation In the Hood RIver COnservatIonProject." Presented at ACEEE 1984 Summer Study on Energy Efficiency InBuildings, pe 4-7.

2) Project 2 Is a product of Project Software and Development, Ince, 14 StoryStreet, Cambridge, Mass. 02138. The prImary resource used hereIn Is the"Project 2 Basic Manual," third editIon, September, 1980.

3) Richard E@ Trueman, "An IntroductJon to QuantItative Methods for Decisionklng@" It, Rinehart and WInston, Ine@ New York, 1974, p. 341@ Also,

"Project 2 BasIc Manual." ibId. p@ 1@03@

4) Though thIs discussion largely use of Project 2software, It Is I that there are several sImi lar systemsavailable a varIety of computer appllcatlons@ Project 2 Is presentlyavaJ lab!e on iBM i wi II soon avai I Ie for IBM

such as PMS-I IDIg I Marketing, the

Apple systems, Vfstschedu from'lariat on CPM/PERT theme

!-249