Project Management Handouts

Dawood College of Engineering AndTechnology, Karachi

Muhammad Ehsan08-Dcet-314

WorkBookOf

Management Of Engineering Projects

6TH Semester 3RD Year

Instructor: G. Sarwar Chandio


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Dawood College of Engineering & Technology,Karachi

Department: Industrial Engineering & Management

MANAGEMENT OF ENGINEERING PROJECTS

(6th Semester Batch 2008)

Sources for Reading:

Project Management. A systems Approach to Planning, Scheduling,and Controlling by Harold Kerzner, John Wiley.

Web material with references.

Notes / Handouts delivered by teacher.



Short History of Project Management: Lecture # 1 17/08/2010

As a discipline, Project Management developed from several fields of application includingconstruction, engineering, and defense activity. Two forefathers of project management areHenry Gantt, called the father of planning and control techniques, who is famous for his useof the Gantt chart as a project management tool; and Henri Fayol for his creation of the 5management functions which form the foundation of the body of knowledge associated withproject and program management. Both Gantt and Fayol were students of Frederick WinslowTaylor's theories of scientific management. His work is the forerunner to modern projectmanagement tools including work breakdown structure (WBS) and resource allocation.

Understanding Project Management:

PROJECT (Definition):A Project can be considered any series of activities & tasks that:

Have a specific objective to be completed within certain specifications. Have defined start & end dates. Have funding limits (if applicable). Consume human & non human resources. Are multifunctional (i.e., cut across several functional lines).

Project Management Further carry 2 major areas, i.e Project Planning and Project Monitoring

1. Project Planning; which includes– Definition of work requirements– Definition of quantity & quality of work– Definition of resources needed

2. Project Monitoring; which includes– Tracking Progress– Comparing actual outcome to predicted outcome– Analyzing impact– Making adjustments

Successful Project Management:It can be defined as having achieved the Project Objectives: Within time Within cost At the desired performance/ technology level While utilizing the assigned resources effectively & efficiently Accepted by the customer



Potential Benefits from Project Management: Minimizing the needs for continuous reporting Identification of time limits for scheduling Measurement of accomplishment against plans Early identification of problems so that corrective actions may follow Improved estimating capability for future planning Knowing when objective cannot be met or will be exceeded

Possible Obstacles to Project Management: Project complexity Customer special requirement or scope changes Organizational restructuring Project risks Changes in technology Forward pricing & planning

Possible Areas of Application of Project Management:40 years ago project mgt was confined to U.S. Department of Defense Contractors &Construction companies.But today, the concept behind Project Mgt is being applied in diverse industries &organizations as defense, construction, pharmaceuticals, chemicals, banking, hospitals,accounting, advertising, law, state and local governments.

Concluding Definitions of Project Management:– PM is the art of creating the illusion that any outcome is the result

of a series of predetermined, deliberate acts when, in fact, it was dumb luck.

– PM is the Planning, Organizing, Directing & Controlling ofCompany resources for a relatively short-term objectives that have been establishedto complete specific goals & objectives. Further more, PM utilizes the systemsapproach to management by having functional personnel (the vertical hierarchy)assigned to a specific project (the horizontal hierarchy).

Terminology concept:

Resources Managers: they are the line or functional managers which control the resources.

Line Managers: Beaurocratic type manager, top-down structure or vertically integrated mgrsFunctional Managers: Sectional/Departmental Managers.

Short-term project: Definition Criteria vary industry to industry but generally most accepteddefinition:



In engineering it is 6-24 months project. In construction it can be 3 – 5 years. For Nuclear components it can be of 10 yrs.

Classical Management versus Project Management:

Classical mgt is usually considered to have 5 functions i.e

Planning Organizing Staffing Controlling Directing

You will notice that, from defn2 of PM Staffing functions has been omitted. It is intentionallyb/c project manager does not staff the project. So staffing is the line responsibility.

Defining Project Manager’s Role:

A Project Manager is responsible for coordinating & integrating activities across multiple,functional lines. These activities include:

Integrating the activities necessary to develop a project plan. Integrating the activities necessary to execute the plan. Integrating the activities necessary to make changes to the plan.

Extra Extra Extra Extra

A project is a temporary endeavor, having a defined beginning and end (usually constrainedby date, but can be by funding or deliverables), undertaken to meet unique goals andobjectives, usually to bring about beneficial change or added value.Project management is the discipline of planning, organizing, and managing resources tobring about the successful completion of specific project goals and objectives. It is sometimesconflated with program management, however technically a program is actually a higherlevel construct: a group of related and somehow interdependent projects.

The primary challenge of project management is to achieve all of the project goals andobjectives while honoring the preconceived project constraints. Typical constraints are scope,time, and budget. The secondary—and more ambitious—challenge is to optimize theallocation and integration of inputs necessary to meet pre-defined objectives

As a discipline, Project Management developed from several fields of application includingconstruction, engineering, and defense activity. Two forefathers of project management areHenry Gantt, called the father of planning and control techniques, who is famous for his useof the Gantt chart as a project management tool; and Henri Fayol for his creation of the 5



management functions which form the foundation of the body of knowledge associated withproject and program management. Both Gantt and Fayol were students of Frederick WinslowTaylor's theories of scientific management. His work is the forerunner to modern projectmanagement tools including work breakdown structure (WBS) and resource allocation

The 1950s marked the beginning of the modern Project Management era. Projectmanagement became recognized as a distinct discipline arising from the managementdiscipline. In the United States, prior to the 1950s, projects were managed on an ad hoc basisusing mostly Gantt Charts, and informal techniques and tools. At that time, two mathematicalproject-scheduling models were developed. The "Critical Path Method" (CPM) wasdeveloped as a joint venture between DuPont Corporation and Remington Rand Corporationfor managing plant maintenance projects. And the "Program Evaluation and ReviewTechnique" or PERT, was developed by Booz-Allen & Hamilton as part of the United StatesNavy's (in conjunction with the Lockheed Corporation) Polaris missile submarine program;These mathematical techniques quickly spread into many private enterprises.

At the same time, as project-scheduling models were being developed, technology for projectcost estimating, cost management, and engineering economics was evolving, with pioneeringwork by Hans Lang and others. In 1956, the American Association of Cost Engineers (nowAACE International; the Association for the Advancement of Cost Engineering) was formedby early practitioners of project management and the associated specialties of planning andscheduling, cost estimating, and cost/schedule control (project control). AACE continued itspioneering work and in 2006 released the first integrated process for portfolio, program andproject management (Total Cost Management Framework).

The International Project Management Association (IPMA) was founded in Europe in 1967,as a federation of several national project management associations. IPMA maintains itsfederal structure today and now includes member associations on every continent exceptAntarctica. IPMA offers a Four Level Certification program based on the IPMA CompetenceBaseline (ICB). The ICB covers technical competences, contextual competences, andbehavioral competences.

In 1969, the Project Management Institute (PMI) was formed in the USA. PMI publishes AGuide to the Project Management Body of Knowledge (PMBOK Guide), which describesproject management practices that are common to "most projects, most of the time." PMIalso offers multiple certifications

The AAPM American Academy of Project Management International Board of Standards1996 was the first to institute post-graduate certifications such as the MPM Master ProjectManager, PME Project Management E-Business, CEC Certified-Ecommerce Consultant, andCIPM Certified International project Manager. The AAPM also issues the post-graduatestandards body of knowledge for executives.

APPROACHES:There are a number of approaches to managing project activities including agile, interactive,incremental, and phased approaches.Regardless of the methodology employed, careful consideration must be given to the overallproject objectives, timeline, and cost, as well as the roles and responsibilities of allparticipants and stakeholders.



The traditional approach:A traditional phased approach identifies a sequence of steps to be completed. In the"traditional approach", we can distinguish 5 components of a project (4 stages plus control) inthe development of a project:

Typical development phases of a project: Project initiation stage Project planning or design stage Project execution or production stage Project monitoring and controlling systems Project completion.

Not all the projects will visit every stage as projects can be terminated before they reachcompletion. Some projects do not follow a structured planning and/or monitoring stages.Some projects will go through steps 2, 3 and 4 multiple times.Many industries use variations on these project stages. For example, when working on a brickand mortar design and construction, projects will typically progress through stages like Pre-Planning, Conceptual Design, Schematic Design, Design Development, ConstructionDrawings (or Contract Documents), and Construction Administration. In softwaredevelopment, this approach is often known as the waterfall model, i.e., one series of tasksafter another in linear sequence. In software development many organizations have adaptedthe Rational Unified Process (RUP) to fit this methodology, although RUP does not requireor explicitly recommend this practice. Waterfall development works well for small, welldefined projects, but often fails in larger projects of undefined and ambiguous nature. TheCone of Uncertainty explains some of this as the planning made on the initial phase of theproject suffers from a high degree of uncertainty. This becomes especially true as softwaredevelopment is often the realization of a new or novel product. In projects whererequirements have not been finalized and can change, requirements management is used todevelop an accurate and complete definition of the behavior of software that can serve as thebasis for software development. While the terms may differ from industry to industry, theactual stages typically follow common steps to problem solving — "defining the problem,weighing options, choosing a path, implementation and evaluation."

Critical Chain Project Management:Critical Chain Project Management (CCPM) is a method of planning and managing projectsthat puts more emphasis on the resources (physical and human) needed in order to executeproject tasks. It is an application of the Theory of Constraints (TOC) to projects. The goal isto increase the rate of throughput (or completion rates) of projects in an organization.Applying the first three of the five focusing steps of TOC, the system constraint for allprojects is identified as are the resources. To exploit the constraint, tasks on the critical chain



are given priority over all other activities. Finally, projects are planned and managed toensure that the resources are ready when the critical chain tasks must start, subordinating allother resources to the critical chain.Regardless of project type, the project plan should undergo Resource Leveling, and thelongest sequence of resource-constrained tasks should be identified as the critical chain. Inmulti-project environments, resource leveling should be performed across projects. However,it is often enough to identify (or simply select) a single "drum" resource—a resource that actsas a constraint across projects—and stagger projects based on the availability of that singleresource.

Extreme Project Management:In critical studies of Project Management, it has been noted that several of thesefundamentally PERT-based models are not well suited for the multi-project companyenvironment of today. Most of them are aimed at very large-scale, one-time, non-routineprojects, and nowadays all kinds of management are expressed in terms of projects.Using complex models for "projects" (or rather "tasks") spanning a few weeks has beenproven to cause unnecessary costs and low maneuverability in several cases. Instead, projectmanagement experts try to identify different "lightweight" models, such as Agile ProjectManagement methods including Extreme Programming for software development and Scrumtechniques.The generalization of Extreme Programming to other kinds of projects is extreme projectmanagement, which may be used in combination with the process modeling and managementprinciples of human interaction management.



Work Breakdown Structure WBS: Lecture # 2 24/08/2010

WBS (Definition):

In planning a project, the project manager must structure the work into small elements thatare:

Manageable, in that specific authority & responsibility can beassigned.

Independent, or with minimum interfacing with & dependence onother ongoing elements.

Interchangeable so that the total package can be seen. Measureable in terms of progress.

WBS Concept:

– The 1st major step in the planning process after project requirementsdefinition is the development of WBS.

– A WBS is a product-oriented family tree sub division of thehardware, services & data required to produce the end product.

– The WBS is structured in accordance with the way the work will beperformed & reflects the way in which project costs & data will be summarized &eventually reported.

WBS provides a common frame work form which:

– The total program can be described as a summation of subdividedelements.

– Planning can be performed.– Costs & budgets can be established.– Time, cost, & performance can be tracked.– Objectives can be linked to company resources in a logical manner.– Network construction & control planning can be initiated.– The responsibility assignments for each element can be established.

“The WBS acts as vehicle for breaking the work down into smaller elements, thus providing agreater probability that every major & minor activity will be accounted for”.


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Levels (Types) of WBS:

A Variety of WB Structure exists, the most common is the six-level structure shown below:

Level 1 is the total program & is composed of set of projects. The summation of activities & cost associated with each project must equal the

total program. Each project, however, can be broken down into tasks, where thesummation of all the tasks equals the summation of all projects, which, in turn,comprises the total program.

Previous discussion can be summarized by this mathematical expression:

Resources taken by total program = ∑ Resources taken by all projects in total program.Resources taken by total program = ∑ Resources taken by all task in all projects.

The upper 3 levels of the WBS are normally specified by thecustomer as the summary levels for reporting purposes.

The lower levels are generated by the contractor for in-housecontrol. Each level serves a vital purpose:

– Level 1 is generally used for the authorization & release of all work.– Budgets are prepared at level 2.– Schedules are prepared at level 3.

Class of WBS Level Description1 Total Program2 ProjectManagerial Levels3 Task4 Subtask5 Work packageTechnical Levels6 Level of effort


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Characteristics of Levels of WBS:

1. Top 3 levels of WBS reflect integrated efforts & should not be related to one specificdepartment. Effort required by departments or sections should be defined in sub tasks& work packages.

2. The summation of all elements in one level must be the sum of all work in new lowerlevel.

3. Each element of work should be assigned to one & only one level of effort. E.g;construction of the foundation of a house should be included in one project (or task),not extended over two or three.

4. The level at which the project is managed is generally called the work package level.Actually, the work package can exist at any level below level one.

5. Work packages describe the work to be accomplished by a specific performingorganization, or a group of cost centers & services as a vehicle for monitoring &reporting progress of work.

6. Work package is a generic term used in the criteria to identify discrete tasks that havedefinable end results. Idea work packages are 80 hours & 2-4 weeks. However thismay not be possible on large projects.

7. The preparation of WBS is not easy. The WBS is a communication tool, providingdetailed information to different levels of mgt.

8. 8. WBS should follow specified criteria b/c although preparation of the WBS isperformed by the program office; the actual work is performed by the doers, not theplanners. Both the doers and the planners must be in agreement as to what isexpected.


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A Specimen of WBS For new Plant Construction & Startup:

Program New Plant construction & startup 01-00-00

Project 1 Analytical Study 01-01-00

Task1 Marketing/Production Study 01-01-01

Task2 Cost Effectiveness Analysis 01-01-02Project 2 Design & layout 01-02-00

Task1 Product Processing Sketches 01-02-01

Task2 Product Processing Blue Prints 01-02-01Project3 Installation 01-03-00

Task 1 Fabrication 01-03-01

Task2 Setup 01-03-02

Task3 Testing & Run 01-03-03Project 4 Program Support 01-04-00

Task1 Management 01-04-01

Task2 Purchasing & Raw Material 01-04-02


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Time Management: Lecture # 3 31/08/2010

Process required for the timely completion of project:a) Activity Definitionb) Activity sequencingc) Activity Duration Estimationd) Schedule Developmente) Schedule Control

a) Activity Definition:

INPUTs: OUTPUTs: TOOLs:Work breakdown Activity list DecompositionScope statement Supporting Detail TemplatesHistorical informationAssumption/ constraints

Work Breakdown Structures:A deliverable oriented grouping of project elements that organizes and define the total scopeof the project.


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Decomposition:

• Subdividing project elements into smaller more manageable components in order toprovide better management control.

• The final outputs are described as activities.

b) Activity Sequencing:

INPUTs: OUTPUTs:Activity list Project network diagramProduct description Activity list updateMandatory / Discretionary dependencies

TOOLs:Precedence diagramArrow diagramming methodNetwork templates

Mandatory / Discretionary dependencies:

Mandatory dependencies:– Inherent in the project; physical limitation, Also known as HARD LOGIC.

Discretionary dependencies:– Are defined by the project team.– Lesson learned, best practices are used to outline them.

PLANNING & SCHEDULING PROJECTS

OBJECTIVES:

a) Cost (budget, labor, material, etc.)

b) Schedule (completion date, intermediate milestone,

Problem Budget & Schedule)

c) Performance (specifications, characteristics, measure,

Require tradeoffs)


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Scheduling Methods:

Gantt Charts Network methods

Gantt Chart:– Utilize a bar or milestone chart.– Similar to Gantt Charts Scheduling for intermittent process.

No. Activity 1 2 3 4 5 6 71 Dig Basement2 Pour Footings3 Lay Block Foundation4 Finish Below-Grade Work5 Install Main Floor6 Erect Frame7 Secure Outside Sheathing8 Install Roof Boards9 Install Windows10 Finish Rough-In-Frame

Week

Activity (Gantt Chart Project example) Milestone

Serial Activity

Parallel Activity

When and how long the activity takes place.

Disadvantages:

– Complex projects

– Does not show interdependencies and relationships between activities.

– Scheduling and rescheduling is difficult for complex projects .


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Network Method:– Arrows represents activities.– Milestones (events) shown in circles.

AOA = Activity On Arrow convention.

Arrows leading to an activity are called predecessors.Arrows leading out of the circle are called successors.

Predecessor activity must be completed before any succeeding activity can begin.

Constant Time Network:

Each activity is assumed to be a constant

Activity to be identified by its text and head number pair.Activity 1-2 identifies the activities or arrow going from event 1 & 2.


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a) Activities F and G have thesame predecessor (E) and the samesuccessor (H).

b) Activities A and B have acommon predecessor (E), but theyhave different predecessors (C andD).

c) Activities C and D have acommon successor (K), butdifferent successors (I and J).

Dummy Activities:

– Zero time– To indicate a precedence relationship only.

A dummy activity is needed if two activities have identical predecessor andsuccessor activities.


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Event Calculation:

Event time:tij = Time to complete activity from event 'i' to event 'j'Ej = Earliest time event j can occur based on completion of all

predecessor activities. (Calculated in a sequential fashion by starting atthe beginning of the network to the end).

Lj = Latest times event j can occur without delaying the project.

Forward computational for Earliest time:Ei = 0

Ej = maxi (E i + tij), where maximization occur over all event ‘i’ which are immediatepredecessors of event j.

Backward computational for Latest time:

Define Ln = En

Where, 'n' = Last event in the network.Li = minj(Lj - tij)


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– L4 = E4 = 8– L3 = L4 - t34 = 8 - 2 = 6– L2 = min(8-5,6-2) = 3– L1 = min(3-3, 6-2) = 0

Slack of event = Si = Li - Ei

Activity Calculation:

Activity starts and finishes times.Scheduling the activity (arrows).Calculate activity start and finish times.

ES(a) = Early start of activity 'a'EF(a) = Early finish of activity 'a'LS(a) = Late start of activity 'a'LF(a) = Late finish of activity 'a'

ES is the bigger of the preceding EF LF is the smaller of the precedingLS

Four schedule time for an activity.


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Slack:Total slack time = LS(a) - ES(a) = LF(a) - EF(a)Free Slack = min[ES(all successors of a)] - EF(a)

Total Slack: Time an activity duration can be increased without delaying the project.Free Slack: Time an activity can be increased without delaying the very next activity.

Forward activity pass:ES(a) = 0 , starting activitiesEF(a) = ES(a) + t(a)ES(a) = max[EF(all predecessors of 'a'

Where, t(a) = duration of activity 'a'

Backward activity pass:LF(a) = min[LS(all successors of a)]LS(a) = LF(a) - t(a)

Activity ES EF LS LF Total Slack Free Slack1-2 0 3 0 3 0 01-3 0 4 2 6 2 12-3 3 5 4 6 1 02-4 3 8 3 8 0 03-4 5 7 6 8 1 1

ACTIVITY TIMES

Precedence Diagramming Method:

– Arrows represent precedence relationship between activities– Activity on Node Representation– Correspond to the Gantt Chart


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Representation of time delays and precedence:

Example: Problem 14 Page 686Draw the network and identify the critical path. Also calculate the earliest-latest starting andfinishing times for each activity:

Activity Preceding activity Time (Weeks)

A - 4B - 6C A,B 7D B 8E B 5F C 5G D 7H D,E 8I F,G,H 4


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The AOA Network:

FORWARD PASS:

REVERSE PASS:


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The Network Diagram:

“The Critical Path isB-D-G-I

Time consumed is 6+8+7+4=25 weeks”.

Activity ES EF LS LF Total slack Free SlackA 0 4 6 10 6(6-0) 6(10-4)B 0 6 0 6 0(0-0) 0(6-6)C 6 13 10 17 4(10-6) 4(17-13)D 6 14 6 14 0(6-6) 0(14-14)E 6 11 9 14 3(9-6) 3(14-11)F 13 18 17 22 4(17-14) 4(22-18)G 14 21 15 22 1(15-14) 1(22-21)H 14 22 14 22 0(14-14) 0(22-22)I 22 26 22 26 0(22-22) 0(26-26)


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PERT (Program Evaluation and Review Techniques):Statistical approach to activity and project durations, Unfamiliar or experimental projects Optimistic, most likely, pessimistic

Practice Vs Theory:– Difficulty in defining end points of activities.– New technologies used in R & D.– Activities are not always completed successfully the first time.– Time estimates are largely subjective evaluations.

PERT Networks:R & D projects,Polaris submarine,

Three time estimates for each activity:To: optimistic time estimateTp: pessimistic time estimateTm : most likely time estimate

Time estimates often exceeds most likely time or best estimate Assumes actual activity times are Beta distribution Skewed to the right ---- most likely to exceed the average Te = (To + 4Tm + Tp)/6 Assumed to be the constant time Can be used to calculate critical path and Te to evaluate the project

Vari (activity i ) =[( Tp - To)/6]2 = 6 standard deviation

Project complete time TE(T) = Te

critical path

Var [T] =Var(i)critical path

PERT Activity Times:


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CPM (CRITICAL PATH METHOD):

A graphical version of the activity and restrictions lists. Products are complex. Start and delivery schedules are difficult to predict. Design and manufacturing groups work as teams. Material for each product is ordered individually. Manufacturing and tooling vary from one product to the next. Costs of workforce and rework are high.

Critical Path Method:

– Developed by E.I.du Pont to schedule startup and shutdown of major plants.– Assumes time cost trade off total project cost versus total project time.– Require time -cost function.– Assume linearity.

Allocations can be evaluated by linear programming to find minimum cost

Cost per day = (Crash cost - Normal cost) / (Normal time - Crash time)= (100 - 50 )/ (3-1) = $ 25/day


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Path Analysis: Calculate normal project time & cost?

1. Compute normal completion time using forward pass.2. Normal project cost = sum of all activities cost = 330.3. Project can be reduced to 6 days by crashing 1-2 & 2-4.

It cost $20/day to crash 1-2 & $25/day for 2-4; choose 1-2.

Large Scale Operations With PERT/CPM and LOB:Path Analysis:


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Path Path TimeNumber Paths in days

1 1-2-3-6-8-9-10-11-12-16-18 292 1-2-3-6-8-9-10-11-12-16-13-18 303 1-2-3-6-8-9-10-12-16-18 284 1-2-3-6-8-9-10-12-16-13-18 295 1-2-3-6-8-9-10-13-18 286 1-2-3-6-7-8-9-10-11-12-16-18 327 1-2-3-6-7-8-9-10-11-12-16-13-18 338 1-2-3-6-7-8-9-10-12-16-18 31 Nearly critical9 1-2-3-6-7-8-9-10-12-16-13-18 31 paths10 1-2-3-6-7-8-9-10-13-18 3111 1-2-3-4-7-8-9-10-11-12-16-18 3312 1-2-3-4-7-8-9-10-11-12-16-13-18 34 Critical Path13 1-2-3-4-7-8-9-10-12-16-18 3214 1-2-3-4-7-8-9-10-12-16-13-18 33 Nearly critical15 1-2-3-6-7-8-9-10-13-18 32 paths16 1-2-3-4-5-14-15-17-18 2617 1-2-3-15-17-18 14