Critical Path Analysis (HL IB Business Management)

• Critical path analysis is a project management tool that uses network analysis to plan complex and time-sensitive projects 
  
  
• It involves the construction of a visual model of the project that includes key elements
  • A list of all activities required to complete the project
  • The time (duration) that each activity will take to complete
  • How each project activity depends on others
     
• Critical Path Analysis shows
  • The order in which activities must be completed
  • The longest path of project activities to the completion of the project
  • The earliest and latest that each project activity can start and finish without delaying completion of the project as a whole
  • Activities within a project that can be carried out simultaneously are identified
  • The critical project activities which if delayed will cause the project as a whole to over-run
  • Those project activities where some delay is acceptable without delaying the project as a whole
  • The shortest time possible to complete the project
     
• It allows managers to identify the relationships between the activities involved and to work out the most efficient way of completing the project
  • Resources such as raw materials and components can be ordered or hired at precisely the right time they are needed
  • Working capital may be managed efficiently
  • Where delays occur managers can identify the implications for the project’s completion and redirect resources if required 

A Network Analysis Diagram

An example of a simple network diagram showing key elements

• A network diagram must always start and end on a single node
• Lines must not cross and must only be assigned to activities
   

Explaining the Elements of a Network Diagram

• Working forwards from Node 1 it is possible to calculate the Earliest Start Time for each activity by adding the duration of each task
  

An example of a simple network diagram showing Earliest Start Times
 

Network Diagram Analysis

• The EST for each activity  is placed in the top right of each node
  • Node 1 is the starting point of the project and where both Activity A and Activity B begin
  • Activity A and Activity B are independent processes
  • Activity A has a duration of 2 days and its earliest start time (EST) is 0 days
  • Activity B has a duration of 3 days and its EST is also 0 days
  • Activity C and Activity D both begin at Node 2 and  are dependent upon the completion of Activity A but are independent from each other
    • Activity C has a duration of 3 days and its EST is 2 days 
    • Activity D has a duration of 5 days and its EST is also 2 days

• • Activity E begins at Node 3
    • Activity E has a duration of 4 days and its EST is 3 days
  • Activity F begins at Node 4
    • Activity F has a duration of 2 days and its EST is 5 days
  • Activity G begins at Node 5
    • Activity G has a duration of 1 day and its EST is 7 days
  • Activity H begins at Node 6
    • Activity H has a duration of 3 days and its EST is 7 days
      
      
• Node 7  is the end point of the project

• Working backwards from Node 7 it is now possible to calculate the Latest Finish Time (LFT) for each activity by subtracting the duration of each task

An example of a simple network diagram showing Earliest Start Times and Latest Finish Times

Network Diagram Analysis

• The LFT for each activity  is placed in the bottom  right of each node
  • Node 7 is the end point of the project which has a latest finish time of 10 days
  • Activity H has a duration of 3 days
    • The LFT in Node 6 is 7 days (10 days - 3 days)
  • Activity G has a duration of 1 day
    • The LFT in Node 5 is 9 days (10 days - 1 day)
  • Activity F has a duration of 2 days
    • The LFT in Node 4 is 8 days (10 days - 2 days)
  • Activity E has a duration of 4 days
    • The LFT in Node 3 is 3 days (7 days - 4 days)
  • Activity D has a duration of 5 days
    • The LFT in Node 2 is 4 days (9 days - 5 days)
  • Activity C has a duration of 3 days
    • The LFT in Node 3 is 4 days because Activity D is the more time-critical of the two activities that are dependent upon the completion of Activity A and so its LFT is recorded
  • Activity B has a duration of 3 days
    • The LFT in Node 1 is 0 days (3 days - 3 days)
  • Activity A has a duration of 2 days
    • The LFT in Node 1 is 0 days because Activity B is the more time-critical of the two starting activities and so its LFT is recorded

• The LFT in Node 1 is always 0

• The critical path highlights those activities that determine the length of the whole project
• • If any of these critical activities are delayed the project as a whole will be delayed
    
    
  • The critical path follows the nodes where the EST and LFT are equal
    • In the diagram below nodes 1 3 6 and 7 have equal ESTs and LFTs
    • Activities that determine these nodes are B E and H
    • These activities are marked with two short lines
    • The critical path is therefore BEH

An example of a simple network diagram showing the critical path BEH

• Float time exists where there is a difference between the Earliest Start Time (EST and the Latest Finish Time (LFT)
• Where float time is identified managers may
  • Transfer resources such as staff or machinery to more critical activities
  • Allow extra time to complete tasks to improve quality or allow for creativity

An example of a simple network diagram showing float nodes (4 and 5) and a critical node (6)

Float Time Analysis

• The total float refers specifically to spare time that is available so that the overall project completion is not delayed
• The total float for a specific activity is calculated by
   

LFT for the activity - Duration of the activity - EST for the activity

• Using the diagram above the following total float times can be calculated for Activities A to H

• The critical activities B E and H each have a total float of 0 days

• Although Critical Path Analysis can be useful in project planning the method has some limitations

Evaluating Critical Path Analysis as a Project Planning tool