Ch 5.pptx IS ALL ABOUT PROJECT MANAGMENT AND EVALUATION

1
Chapter FIVE:
Network models

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Introduction
• Network models consists of a set of circles, or nodes, and lines,
which are referred to as either arcs or branches, that connect
some nodes to other nodes
• Networks are important tools of management science
• Not only can networks be used to model a wide variety of
problems, they can often solved more easily than other models
of the same problem, and they present models in a visual
format

3
NETWORK TECHNIQUES
PERT CPM
PERT(Program Evaluation and
Review Technique)
- Developed by the US Navy with
Booz Hamilton Lockheed on the
Polaris Missile/Submarine
program 1958
CPM (Critical Path Method)
-Developed by El Du Pont for
Chemical Plant Shutdown
Project- about same time as
PERT
 Similarity: Both use same calculations, almost similar
 Difference: Main difference is probabilistic and
deterministic in time estimation

History
PERT was developed by the US Navy for the planning and control
of the Polaris missile program and the emphasis was on
completing the program in the shortest possible time. In
addition PERT had the ability to cope with uncertain activity
completion times (e.g. for a particular activity the most likely
completion time is 4 weeks but it could be anywhere between 3
weeks and 8 weeks).
CPM was developed by Du Pont and the emphasis was on the trade-
off between the cost of the project and its overall completion
time (e.g. for certain activities it may be possible to decrease their
completion times by spending more money - how does this affect the
overall completion time of the project?)
4

5
PERT and CPM
• PERT and CPM are the two most widely used techniques for
planning and coordinating large-scale projects
• By using PERT and CPM, mangers are able to obtain:
1. A graphical display of project activities
2. An estimate of how long the project will take
3. An indication of which activities are the most critical to timely
completion of the project
4. An indication of how long any activity can be delayed with out
lengthening the project

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PERT and CPM
• PERT and CPM are best applied in Project Scheduling
• “A project is a series of activities directed to
accomplishment of a desired objective”
• “Schedule converts action plan into operating time table”

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PERT and CPM
In CPM activities are shown as a network of precedence
relationships using activity-on-node network construction
– Single estimate of activity time
– Deterministic activity times
Used in : Production management - for the jobs
of repetitive in nature where the activity time
estimates can be predicted with considerable
certainty due to the existence of past experience.

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PERT and CPM
In PERT activities are shown as a network of precedence
relationships using activity-on-arrow network construction
– Multiple time estimates
– Probabilistic activity times
Used in : Project management - for non-repetitive
jobs (research and development work), where the time
and cost estimates tend to be quite uncertain. This
technique uses probabilistic time estimates.

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Gantt Chart
• The Gantt Chart is a popular tool for planning and
scheduling simple projects
• It enables managers to initially schedule project
activities and, then, to monitor progress over time by
comparing planned progress to actual progress
• Even though Gantt Chart is simple to use, it may
delay the project completion time as activities could
not start until the preceding activity was completed.

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Originated by H.L.Gantt in 1918
Gantt Chart
Advantages
- Gantt charts are quite commonly used.
- They provide an easy graphical
representation of when activities
(might) take place.
Limitations
- Do not clearly indicate details regarding
the progress of activities
- Do not give a clear indication of
interrelationship between the separate
activities

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• Some objectives of project scheduling include:
– Completing the project as early as possible by determining an earliest
start and finish time for each of the activities
– Determining the likelihood a project will be completed within a certain
time period
– Finding a minimum cost schedule that completes the project by a
certain date
– Finding a minimum time to complete a project within budget
restrictions
– Investigating the results of possible delays in one or more of an
activity’s completion time
– Evaluating the costs and benefits of reducing the time of performing one
or more of the activities

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• Graphical portrayal of activities and event
• Shows dependency relationships between tasks/activities in
a project
• Clearly shows tasks that must precede (precedence) or follow
(succeeding) other tasks in a logical manner
• Clear representation of plan – a powerful tool for planning
and controlling project
Network

Example of Simple Network – Survey
13

Example of Network – More Complex
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Definition of terms in a network
• Activity : any portions of project (tasks) which required
by project, uses up resource and consumes
time – may involve labor, paper
work, contractual negotiations, machinery
operations
• Event : beginning or ending points of one or more
activities, instantaneous point in time, also
called ‘nodes’
• Network : Combination of all project activities and the
events
successor
activity
Preceding
Activity
Event
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Emphasis on Logic in Network Construction
• Construction of network should be based on logical or technical
dependencies among activities
• Example - before activity ‘Approve Drawing’ can be started the
activity ‘Prepare Drawing’ must be completed
• Common error – build network on the basis of time logic (a feeling
for proper sequence ) see example below
WRONG X
CORRECT

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Example 1- A simple network
Consider the list of four activities for making a simple product:
Activity Description Immediate
predecessors
A Buy Plastic Body -
B Design Component -
C Make Component B
D Assemble product A,C
Immediate predecessors for a particular activity are the activities
that, when completed, enable the start of the activity in question.

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Network of Four Activities
1 3 4
2
A
B C
D
Arcs indicate project activities
Nodes correspond to the beginning
and ending of activities
The above graphical representation is referred to as the PERT/CPM network

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Sequence of activities
• One can start work on activities A and B anytime, since
neither of these activities depends upon the completion of
prior activities.
• Activity C cannot be started until activity B has been
completed
• Activity D cannot be started until both activities A and
C have been completed.

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Example 2
Develop the network for a project with following activities and
immediate predecessors:
Activity Immediate
predecessors
A -
B -
C B
D A, C
E C
F C
G D,E,F
Class Activity: Try to do network for the first five (A,B,C,D,E) activities

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Network of first five activities
1 3 4
2
A
B
C
D
5
E
We need to introduce
a dummy activity

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•Note how the network correctly identifies D, E, and F as the immediate
predecessors for activity G.
•Dummy activities is used to identify precedence relationships correctly and to
eliminate possible confusion of two or more activities having the same starting
and ending nodes
•Dummy activities have no resources (time, labor, machinery, etc) – purpose is to
preserve logic of the network
Network of all the Seven Activities
1 3 4
2
A
B
C
D
5
E
7
6
F
G
dummy

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Examples of the use of dummy activity
Dummy
RIGHT

1
1
2
Activity c not
required for e
a
b
c
d
e
a
b
c
d
e
WRONG X
RIGHT

Network concurrent activities
1 2 1
2
3
a
WRONG X
a
b
b
WRONG X
RIGHT 

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1 1
2 2
3 3
4
a d
b e
c f
a d
b
e
f
c
WRONG!!! RIGHT!!!
a precedes d
a and b precede e,
b and c precede f (a does not precede f)

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Scheduling with activity time
Activity Immediate Completion
predecessors Time (week)
A - 5
B - 6
C A 4
D A 3
E A 1
F E 4
G D,F 14
H B,C 12
I G,H 2
Total …… 51
This information indicates that the total time required to complete
activities is 51 weeks. However, we can see from the network that
several of the activities can be conducted simultaneously (A and B,
for example).

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Earliest Start (ES) and Earliest Finish time (EF)
• We are interested in the longest path through the network, i.e.,
the critical path.
• Starting at the network’s origin (node 1) and using a starting
time of 0, we compute an earliest start (ES) and earliest
finish (EF) time for each activity in the network. (Use forward
pass calculation for the rest activities towards the end)
• The expression EF = ES + t can be used to find the earliest
finish time for a given activity.
• For example, for activity A, ES = 0 and t = 5; thus the earliest
finish time for activity A is
EF = 0 + 5 = 5

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Arc with ES and EF time
1
2
A [0,5]
5
Activity
ES = earliest start time
EF = earliest finish time
t = expected activity
time

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Network with ES & EF time
1
3
4
2
5
7
6
A
[
0
,
5
]
5
B[0,6]
6
C
[
5
,
9
]
4
D[5,8]
3
E[5,6]
1 F[6,10]
4
G
[
1
0
,
2
4
]
1
4
H[9,21]
12
I[24,26]
2
Earliest start time rule:
The earliest start time for an activity leaving a particular node is
equal to the largest of the earliest finish times for all activities
entering the node.

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Activity, Duration, ES, EF, LS, LF
2
3
C [5,9]
4 [8,12]
Activity
ES = earliest start time
EF = earliest finish time
LF = latest finish time
LS = latest start time

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• To find the critical path we need a backward pass calculation.
• Starting at the completion point (node 7) and using a latest
finish time (LF) of 26 for activity I, we trace back through the
network computing a latest start (LS) and latest finish time
for each activity
• The expression LS = LF – t can be used to calculate latest start
time for each activity.
• For example, for activity I, LF = 26 and t = 2, thus the latest start
time for activity I is:
LS = 26 – 2 = 24
Latest Start (LS) and Latest Finish (LF) time

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Network with LS & LF time
1
3
4
2
5
7
6
A
[
0
,
5
]
5
[
0
,
5
]
B[0,6]
6[6,12]
C
[
5
,
9
]
4
[
8
,1
2
]
D[5,8]
3[7,10]
E[5,6]
1[5,6]
F[6,10]
4[6,10]
G
[
1
0
,
2
4
]
1
4
[
1
0
,
2
4
]
H[9,21]
12[12,24]
I[24,26]
2[24,26]
Latest finish time rule:
The latest finish time for an activity entering a particular node is
equal to the smallest of the latest start times for all activities
leaving the node.

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Slack or Free Time or Float
Slack/Free Time/Flot is the length of time an activity can be delayed
without affecting the completion date for the entire project.
For example, slack for C = 3 weeks, i.e Activity C can be delayed up to 3 weeks
(start anywhere between weeks 5 and 8).
ES
5
LS
8
EF
9
LF-EF = 12 –9 =3
LS-ES = 8 – 5 = 3
LF-ES-t = 12-5-4 = 3
LF
12
2
3
C [5,9]
4 [8,12]

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• Activity start time and completion time may be delayed
by deliberate reasons as well as by unforeseen reasons.
• Some of these delays may affect the overall completion
date.
• The effects of these delays can be determined by the slack
time, for each activity.
Summary of Slack Times
Slack time for an activity = LS-ES or LF-EF

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The Critical Path
The activities with 0 slack time form at least one Critical Path of
connected activities, each of which is an immediate predecessor for
another activity on the path from the beginning (time = 0) to the
end (the completion time of the project).
– Critical activities must be rigidly scheduled.
• Any delay in a critical activity will delay the entire project.
– The critical path is the longest in the network
Sum of the completion times of activities on a critical path
=
Project completion time

Activity schedule for our example
Activity Earliest
start (ES)
Latest
start (LS)
Earliest
finish (EF)
Latest
finish (LF)
Slack
(LS-ES)
Critical
path
A 0 0 5 5 0 Yes
B 0 6 6 12 6
C 5 8 9 12 3
D 5 7 8 10 2
E 5 5 6 6 0 Yes
F 6 6 10 10 0 Yes
G 10 10 24 24 0 Yes
H 9 12 21 24 3
I 24 24 26 26 0 Yes
Last EF= The project duration
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Important Questions
• What is the total time to complete the project?
– 26 weeks if the individual activities are completed on
schedule(Last ES).
• What are the scheduled start and completion times for each
activity?
– ES, EF, LS, LF are given for each activity.
• What activities are critical and must be completed as
scheduled in order to keep the project on time?
– Critical path activities: A, E, F, G, and I.
• How long can non-critical activities be delayed before they
cause a delay in the project’s completion time
– Slack time available for all activities are given.

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Importance of Float (Slack) and Critical Path
1. Slack or Float shows how much allowance each activity
has, i.e how long it can be delayed without affecting
completion date of project
2. Critical path is a sequence of activities from start to
finish with zero slack. Critical activities are activities
on the critical path.
3. Critical path identifies the minimum time to complete
project
4. If any activity on the critical path is shortened or
extended, project time will be shortened or extended
accordingly

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5. So, a lot of effort should be put in trying to control
activities along this path, so that project can meet due
date. If any activity is lengthened, be aware that project
will not meet deadline and some action needs to be taken.
6. If can spend resources to speed up some activity, do so
only for critical activities.
7. Don’t waste resources on non-critical activity, it will not
shorten the project time.
8. If resources can be saved by lengthening some activities,
do so for non-critical activities, up to limit of float.
9. Total Float belongs to the path
Importance of Float (Slack) and Critical Path

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Example (CPM)
• Assume that ABC Computers manufactures computers.
• It is about to design, manufacture, and market a new
model computer.
• In broad terms, the three major tasks to perform are to:
– Design and manufacture the computer
– Train staff and vendor representatives on the features and
use of the computer
– Advertise the computer

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Activity Description
A Prototype model design
B Purchase of materials
Manufacturing C Manufacture of prototype model
activities D Revision of design
E Initial production run
F Staff training
Training activities G Staff input on prototype models
H Sales training
I Pre-production advertising
Advertising activities campaign
J Post-redesign advertising
campaign
Detailed Activities

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Precedence Relations
Activity Immediate Predecessor's)
Starts
after
Completion
Days
A-Prototype Design NONE 90
B-Purchase Materials A-Prototype Design
Starts
After
15
C-Manufacture Prototypes B-Purchase Materials
Starts
After
5
D-Design Revision
C-Manufacture Prototypes and
G-Staff Input
Starts
After
20
E-Initial Production Run D-Design Revision
Starts
After
21
F-Staff Training A-Prototype Design
Starts
After
25
G-Staff Input
C-Manufacture Prototypes and
F-Staff Training
Starts
After
14
H-Sales Training D-Design Revision
Starts
After
28
I-Pre-Production Advertising A-Prototype Design
Starts
After
30
J-Post Redesign Advertising
D-Design Revsion and
I-Pre-Production Advertising
Starts
After
45

42
G
14
C
5
The CPM Network
J
45
H
28
E
21
A
90
D
20
B
15
I
30
F
25

43
Earliest Start and Finish Times
• We enter these as (ES,EF) above each node.
H
28
E
21
G
14
J
45
A
90
B
15
D
20
I
30
F
25
C
5
90
90)
(0,
(90,
(90,
(90,105)
15
25
115)
30
120)
(105,
5
110)
(115,
14
129) (129,
20
149) (149,
(149,
21
170)
28
177)
(149,
45
194)
Earliest Project completion time = MAX(EF) = 194
MAX(120,149)
MAX(110,115)

44
H
28
E
21
G
14
J
45
A
90
B
15
D
20
I
30
F
25
C
5
90)
(0,
(90,
(90,
(90,105)
115)
120)
(105,110)
(115,129) (129,149) (149,
(149,170)
177)
(149,194)
Latest Start and Finish Times
• We enter these as (LS,LF) below each node.
90
15
25
30
5
14 20
21
28
45
194)
194)
194)
(173,
(166,
(149,
149)
(119,
149)
MIN(173, 166, 149)
(129,
129)
(115,
115)
115)
(110,
(90,
110)
(95,
MIN(95, 90, 119)
90)
(0,

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Slack Time Calculations
• Slack time = LS - ES
LS
Activity ES
- = SLACK
119
I 90
- = 29
90
F 90
- = 0
129
D 129
- = 0
0
A 0
- = 0
95
B 90
- = 5
110
C 105
- = 5
173
E 149
- = 24
115
G 115
- = 0
166
H 149
- = 17
149
J 149
- = 0
Critical
Activities
Critical Path
A F G D  J

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The Critical Path
H
28
E
21
G
14
J
45
A
90
B
15
D
20
I
30
F
25
C
5
90)
(0,
(90,105)
(90,115)
(90,120)
(105,110)
(115,129) (129,149)
(149,170)
(149,177)
(149,194)
194)
(173,
194)
(166,
194)
(149,
149)
(119,
149)
(129,
129)
(115,
115)
(110,
115)
(90,
110)
(95,
90)
(0,

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Possible Delays
• There could be a delay in just one activity.
– Any delay more than the slack time for the activity will delay
the entire project by the difference between the activity delay
and the slack time
• There could be delays in more than one activity.
– If activities are on different paths or on the same path but
separated by a critical activity, each of the delays is evaluated
separately. The project delay = max (these delays –
corresponding slack).
– Activities on the same path which are not separated by a
critical activity share the slack. Both will have the same value
for the slack and any combined delays in these activities that
exceed this common slack results in a project delay equal to
(total activity delay) – (common slack).
– Usually with multiple delays the model is simply re-solved!

48
Examples of Activity Delays
• Activity G is delayed 5 days
– G is on the critical path (has 0 slack) so the project will be delayed
5 days.
• Activity E is delayed 15 days
– E has 24 days of slack so the project will not be delayed
• Activity B is delayed 15 days
– B has 5 days of slack so the project will be delayed 10 days
• Activity E is delayed 30 days and Activity I is delayed 30 days
– E and I are on different paths. E has 24 days of slack which could
cause a 30-24 = 6 day delay; I has 29 days of slack which could
cause 30-29 = 1 day delay. The project is delayed by the
MAX(6,1) = 6 days.

49
Examples of Activity Delays
• Activity B is delayed 4 days and Activity E is delayed 4 days
– B and E are on the same path but are separated by critical
activities (G and D). This is the same as the case above. B
has 5 days slack so delaying it 4 days would not delay the
project; E has 24 days of slack so a 4 day delay will not
delay the project – Net effect– No delay.
• Activity B is delayed 4 days and Activity C is delayed 4 days
– B and C are on the same path with no critical activity in
between. They share the same 5 days of slack. So sense
both are delayed 4 days for a total of 8 days, the project is
delayed 8 – 5 = 3 days.

50
PERT For Dealing With Uncertainty
• So far, times were estimated with relative certainty/confidence
• For many situations, however, this is not possible, e.g Research,
development, new products and projects etc.
• In PERT we use 3 time estimates:
m= most likely time estimate, mode.
a = optimistic time estimate, and
b = pessimistic time estimate
Expected Value (TE) = (a + 4m + b) /6
Variance (V) = ( ( b – a) / 6 )2
Std Deviation (δ) = SQRT (V)

51
Precedences and Project Activity Times
Immediate Optimistic Most Likely Pessimistic EXP Var S.Dev
Activity Predecessor Time Time Time TE V 
a - 10 22 22 20 4 2
b - 20 20 20 20 0 0
c - 4 10 16 10 4 2
d a 2 14 32 15 25 5
e b,c 8 8 20 10 4 2
f b,c 8 14 20 14 4 2
g b,c 4 4 4 4 0 0
h c 2 12 16 11 5.4 2.32
I g,h 6 16 38 18 28.4 5.33
j d,e 2 8 14 8 4 2
Example (PERT)

52
The complete PERT network
2 6
1 3 7
4 5
a
(20,4)
d
(15,25)
e
(10,4)
f
(14,4)
j
(8,4)
i
(18,28.4)
g
(4,0)
h
(11,5.4)
c
(10,4)
b
(20,0)

Critical Path Analysis (PERT)
Activity LS ES Slacks Critical ?
a 0 0 0 Yes
b 1 0 1
c 4 0 4
d 20 20 0 Yes
e 25 20 5
f 29 20 9
g 21 20 1
h 14 10 4
i 25 24 1
j 35 35 0 Yes
53

54
The complete PERT Network
2 6
1 3 7
4 5
b
(20,0)
d
(15,25)
e
(10,4)
f
(14,4)
j
(8,4)
i
(18,28.4)
g
(4,0)
h
(11,5.4)
c
(10,4)
Critical Time = 43
EF=20 35
43
24
10
20
a
(20,4)

55
Assume, the Project Manager promised to complete the project in 50 days.
Question: What are the chances of meeting that deadline? (Determine P)
Calculate Z, where
Z = (D-S) / V
Example,
D = 50 (specified date);
S = 20+15+8 =43 (Scheduled date);
V = (4+25+4) =33 (Variance of the critical path);
Z = (50 – 43) / 5.745
= 1.22 standard deviations.
The probability value of Z = 1.22, is 0.888 (Table value);i.e., the chance of
meeting the deadline is 0.888)
1.22

56
Question: What deadline are you 95% sure of meeting? (Determine D)
D = S+ZV……….. (From previous formula)
Z value associated with 0.95 is 1.645 (Table value)
D=S + 5.745 (1.645)
= 43 + 9.45
= 52.45 days
 Thus, there is a 95 percent chance of finishing the
project by 52.45 days.

Comparison Between CPM and PERT
CPM PERT
1 Uses network, calculate float or slack,
identify critical path and activities, guides
to monitor and controlling project
Same as CPM
2 Uses one value of activity time Requires 3 estimates of activity time
Calculates mean and variance of time
3 Used where times can be estimated with
confidence, familiar activities
Used where times cannot be estimated
with confidence.
Unfamiliar or new activities
4 Minimizing cost is more important Meeting time target or estimating percent
completion is more important
5 Example: construction projects, building
one off machines, ships, etc
Example: Involving new activities or
products, research and development etc
57

58
Benefits of CPM / PERT Network
Consistent framework for planning, scheduling,
monitoring, and controlling project.
• Shows interdependence of all tasks, work packages,
and work units.
• Helps proper communications between departments
and functions.
• Determines expected project completion date.
• Identifies so-called critical activities, which can
delay the project completion time.

59
• Identified activities with slacks that can be delayed for specified
periods without penalty, or from which resources may be
temporarily borrowed
• Determines the dates on which tasks may be started or must be
started if the project is to stay in schedule.
• Shows which tasks must be coordinated to avoid resource or
timing conflicts.
• Shows which tasks may run in parallel to meet project
completion date
Benefits of CPM / PERT Network

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