MODULE 7 Module Title: Network Analysis – PERT/CPM

PROGRAM: BSMA Year Level: II Section ________

COURSE CODE: ACCT06 COURSE DESCRIPTION: Management Science

LEARNING OUTCOMES

At the end of this module, the students should be able to:

(1) understand and discuss the PERT-CPM network.

(2) construct a PERT-CPM network.

(3) determine the expected time for a PERT-CPM network

activity.

Prepared Reviewed and Checked

AFRO L. REYES, CPA, MBA

Instructor Program Head
Recommending Approval Approved

WILMA WENG P. CASALME, PhD

Vice President for Academic Affairs College Administrator

TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE
 LEARNING MODULE

Program: BSMA Topic: Network Analysis – PERT/CPM

Course: Management Science Instructor: Afro L. Reyes, CPA, MBA
Code ACCT06 Module #: 7 of 8 Weeks #: 5 #of 8
Pages:

I. Preliminaries
Introduction to the This module tackles the PERT-CPM network, including the emphasis in PERT and the
Module Objective emphasis in CPM. An illustrative problem is presented to enable the student to construct his
own network. Also tackled in this module is the computation for the expected time for
completion of an activity.

Selected exercises on the topics are included in the learning activities.

This module is intended for the fifth week, out of six weeks of meetings in midyear term.

Assessment/
Section Topics Learning Outcomes Evaluation Modality
Section 1: PERT-CPM Defined At the end of this module, the students The performance Visual and
should be able to: indicators will be auditory
Section 2: PERT vs. CPM
the scores modalities will be
(1) understand and discuss the achieved by the adopted thru in-
Section 3: Illustrative Problem
PERT-CPM network. students in the person meeting
written works and and on-line
Section 4: Dummy Activity (2) construct a PERT-CPM network. performance tasks. messaging.
These are detailed
Section 5: Expected Time for (3) determine the expected time for a further in section IV
an Activity PERT-CPM network activity. of this module,
below.

II. Instructions
KEYWORDS AND CONCEPTS

Content Lecture/ Discussion

In planning, organizing and controlling a project involving interrelated activities, management

invariably uses network analysis. The two best known network models are PERT (Program
Evaluation and Review Technique) and CPM (Critical Path Method).

network – a complicated intermingling of lines, passages, or the like (Lexicon Webster).

PERT-CPM Defined

PERT-CPM refers to network analysis systems used in planning, organizing and controlling
projects with the objective of optimizing efficiency in executing the projects.

The different activities involved, their sequence and performance time, the costs involved, and
possible tradeoffs are determined. “Bottlenecks” are pinpointed to foresee possible causes of
delays with emphasis on earliest completion time and minimized costs.

PERT-CPM is a dynamic process involved with adjustments and readjustments so that networks
are drawn and redrawn to reflect constant changes in plans for revisions are adopted to achieve
better performance under changing conditions.

performance time – the best estimate of how long it will take to complete an activity.
TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE
 bottleneck – any point at which movement or progress is slowed up because much must be
funneled through it.

PERT-CPM network – a visual chronological representation of the interrelated activities

comprising a project and their estimated completion time making use of arrows, nodes or circles
and dotted lines.

PERT vs. CPM

PERT was developed in the 1950s by the Special Projects Office of the United States in
coordination with the consulting firm of Booz, Allen and Hamilton. It was developed to meet the
challenge of producing the Polaris submarine in record time. PERT was therefore originally
developed to plan and control the time aspect of the project.

CPM was developed in 1957 by Du Pont and Remington Rand to determine the optimal tradeoff of
cost and time in projects such as construction work and plant maintenance. A major objective of
CPM is to determine which tradeoff should be made in order to complete the entire project on a
scheduled date at minimum cost.

The original versions of PERT and CPM differ in two most important ways, namely:

1. PERT makes use of the probability concept so that the “three-time-estimate” (optimistic,
most likely or best, and pessimistic) or BOP approach in estimating performance time of
an activity is observed. CPM assumes that activity performance times are deterministic,
that is, no uncertainty is involved.
2. PERT is concerned with the time aspect of a project. CPM gives dual emphasis to time
and cost.

Revisions to both PERT and CPM have made them so similar so that they are now
interchangeably being used although the term PERT is often used instead of CPM simply because
the former is being used more often in management science literature. To give credit to the two
different groups of parties who developed this network analysis model, the term PERT-CPM is
used in this module.

Illustrative Problem

The management of Golden Manufacturing Company has approved the nationwide promotion of
its new product “Safety Plus” and the following activity list has been prepared together with
prerequisite activities or immediate predecessors, and time estimates:

Activities Prerequisite Time Estimates

Activities (weeks)

Symbo Description to tm tp
l

A Develop advertising plan - 1 2 3

B Develop the plan for promotion and - 1 2 3

advertising materials

C Design training program for branch - 1 2 3

managers

D Schedule advertisements (radio, tv, dailies A 1 3 5

and other social media)

E Develop advertising materials A 1 4 13

TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE
 F Prepare promotion materials for use in in- B 4 7 10
branch introduction

G Prepare training materials for branch B 3 6 9

managers

H Conduct preintroduction campaign in the D, E 5 7 9

media

I Screen and select branch managers to be C 2 4 6

trained

J Conduct the training program G, I 2 3 4

K In-branch introduction of the product F, H, J 1 1 1

“Safety Plus”

to - most optimistic time, i.e., the shortest length of time to finish an activity.

tm - most likely time, i.e., the length of time it would most probably take to finish an activity.

tp - most pessimistic time, i.e., the longest length of time to finish an activity.

activity – the work required to complete a specific task. They are the components of a project.
Examples are assembling and finishing. Symbol used: arrow connecting nodes or circles. These
arrows are sometimes called branches.

The PERT network for the project “Safety Plus” must be as follows:

PERT Network for “Safety Plus”

Circles or nodes are used to indicate events. Thus, event 1 indicates the start of activity A and
event 2 indicates its completion.

event – an accomplishment or happening that occurs at a specific and recognizable instant in

time. Examples are start of and completion of activity machining.

TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE
 Dummy Activity

In the PERT network for “Safety Plus”, it may be noted that activity H cannot be started unless
both activities D and E are completed so that a dotted line is used to indicate the precedence
relationship. The PERT network may be modified by including dummy activity (or a networking
device to indicate the said precedence relationship) M as follows:

dummy activity – a networking device used to establish a precedence relationship and is not
assigned any completion time.

Expected Time for an Activity

Considering the three time estimates namely: optimistic (to), most likely (tm), and pessimistic (tp) for
the different activities involved in the project, the expected time for each is computed by applying
the following formula based on the distribution in a normal curve:

Expected time = (to + 4tm + tp) / 6

For project “Safety Plus”, the expected time for the different activities must be as follows:

Activities Symbol Time Estimates (weeks) Expected Time

Optimistic Most Likely Pessimistic
A 1 2 3 2
B 1 2 3 2
C 1 2 3 2
D 1 3 5 3
E 1 4 13 5
F 4 7 10 7
G 3 6 9 6
H 5 7 9 7
I 2 4 6 4
J 2 3 4 3
K 1 1 1 1

expected time for an activity – time calculated by means of the weighted average
[(to + 4tm + tp) / 6] based on the normal curve distribution.

The network with expected completion time for each activity would appear as follows:

TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE
III. Viable and Vibrant Activities

Learning Activities

Solutions to problems are to be submitted on or before the deadline set at the end of every
module.

Learning activities and other instructions will be made known to the students through the module
and group chat, many days before the deadline.

Submission on or before deadline earns credit; late submission (in spite of whatever valid reason)
loses the credit.

However, if the student fails to meet the deadline, the student is still required to submit the late
papers or else the student gets Incomplete grade, if the weighted average of the student is
passing.

Every student will be assigned portion of the module or solution to problem to present in class
through display screen. Questions and answers follow after the presentation.

The presentation must be in Microsoft .docx file. No need for PowerPoint.

Exercise
A project involves activities A to L and you are given the following information:

Most Most likely Most

optimistic time time (weeks) pessimistic
Activity (weeks) time (weeks) Predecessors Cost in ₱

A 1 2 3 None 10,000

B 2 4 6 A 8,000

C 2 6 10 A 6,000

D 6 8 10 B 15,000

TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE
 E 4 6 8 C 12,000

F 6 10 14 C 9,000

G 8 10 12 D, E 18,000

H 12 14 16 F 22,000

I 4 7 10 G, H 5,500

J 10 12 14 G, H 18,500

K 2 4 6 I 7,000

L 6 10 14 J, K 18,600

Instructions

1. Construct a PERT network.

2. Construct a table showing the expected time for the different activities from A to L.

3. Construct a PERT network, this time with expected completion time for each activity.

IV. Opportunity to reflect and articulate students’ acquired knowledge.

Purpose of the activity

It is hoped that the class activity involving student participation in the presentation of learning
material will reinforce the learning process for the student.

It is also hoped that doing the exercise activity will apply the student’s analytic ability, and
measure his learning outcome on the lesson on hand.

Criteria for Evaluation

Written Works (WW)

Participation in the presentation of learning material in class is categorized as Written
Works, (40%).

Performance Tasks (PT)

Attendance in meetings, (15%). Joining an on-going Google meet or joining an in-person
meeting will be denied for those coming late, more than 60 minutes after the official start
time of the meeting.
Punctuality in the submission of every task, attitude and behavior, and bonuses earned in
class, (25%).

Term Assessments (TA)

Midterm or final term examination, (20%).

TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE
 Term Grade (TG) = 40% WW + 40% PT + 20% TA
Semestral Grade = 60% Final Term Grade + 40% Midterm Grade

V. Textbooks and Other References

Mejorada, N.D. (2022 – 29) Management services. Quezon City: JMC. pp 329 – 334.

TANAUAN CITY COLLEGE COURSE CODE: MPRO02/MODULE NUMBER 7COURSE NAME: MANAGEMENT SCIENCE