Network Analysis (AQA A Level Business): Revision Note

What is network analysis?

• Network analysis is a tool that supports the management of 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 implement the project

  • The time (duration) that each activity will take to complete

  • How each activity depends on others

• Network analysis shows

  • The order in which activities must be completed

  • The longest path of project activities to the full implementation of the project

  • The earliest and latest that each 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 

Limitations of network analysis

Network diagrams

• A network diagram must always start and end on a single node

• Lines must not cross and must only be assigned to activities

A simple network analysis diagram

Elements of a network diagram

Calculating earliest start times (EST)

• Working forward from Node 1, the Earliest Start Time for each activity is calculated by adding the duration of each task

• 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

Calculating latest finish times (LFT)

• 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

• 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

Float times and the critical path

Identifying the critical path

• 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

Identifying and calculating float time

• 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

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

$\mathrm{Float}=\mathrm{LFT}\mathrm{for}\mathrm{the}\mathrm{activity}-\mathrm{Duration}\mathrm{of}\mathrm{the}\mathrm{activity}-\mathrm{EST}\mathrm{for}\mathrm{the}\mathrm{activity}$

• 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

• If the length of time taken to complete an activity changes, there may be an effect on the critical path and available float

• In the strategy shown in the network diagram above, the duration of activity G is increased from 1 to 4 days

  • The EST at node 7 will increase to 11 days and the LFT to 11 days

  • The EST at node 5 will remains at 11 days, while the LFT will change to 7 days

  • The EST at node 5 will remains at 2 days, while the LFT will change to 2 days

• As a result, the critical path will switch from BEH to ADG