Critical Path Analysis (DP IB Business Management)

The Nature & Purpose of Critical Path Analysis

• 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 

The Components of Network Analysis Diagrams

Diagram: network analysis

• 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

Element	Description
Node	A node is a circle that represents a point in time where an activity is started or finished The node is split into three sections The left half of the circle is the activity number  The top right section shows the earliest start time (EST) that an activity can begin based on the completion of the previous activity The bottom right section shows the latest finish time (LFT) by which the previous activity must be completed
Activities	An activity is a process or task within a project that takes time Activities are  shown on the network diagram as a line which link nodes  A description of the activity or a letter representing the activity is usually shown above the line
Duration	The duration is the length of time it takes to complete an activity The duration is shown as a number of time units such as hours or days below the activity line

Calculating Earliest Start Times

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

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

Calculating Latest Finish Times

• 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

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

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

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

Evaluating Critical Path Analysis

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

Evaluating Critical Path Analysis as a Project Planning tool