Network Techniques

Introduction:

In today’s highly competitive environment, management is continually seeking

new and better control techniques to cope with the complexities, masses of data,
and tight deadlines that are characteristic of many industries. In addition,
management is seeking better methods for presenting technical and cost data to
customers. Since World War II, scheduling techniques have taken on paramount
importance. The most common of these techniques are shown below:

• bar charts
• Milestone charts
• Line of balance
o Networks Program Evaluation and Review Technique (PERT)
o Arrow Diagram Method (ADM) [Sometimes called the Critical Path
Method (CPM)]

Meaning of Network Technique:

Network technique is a technique for planning, scheduling (programming) and
controlling the progress of projects. This is very useful for projects which are
complex in nature or where activities are subject to considerable degree of
uncertainty in performance time.
This technique provides an effective management, determines the project duration
more accurately, identifies the activities which are critical at different stages of
project completion to enable to pay more attention on these activities, analyse the
scheduling at regular interval for taking corrective action well in advance,
facilitates in optimistic resources utilisation, helps management for taking timely
and better decisions for effective monitoring and control during execution of the
project.

Advantages of Network Technique:

Main advantages of the network system are as follows:
1. Detailed and thoughtful planning provides better analysis and logical thinking.
2. Identifies the critical activities and focus them to provide greater managerial
attention.
3. Network technique enables to forecast project duration more accurately.
4. It is a powerful tool for optimisation of resources by using the concept of slack.
5. It provides a scientific basis for monitoring, review and control, to evaluate
effect of slippages.
6. It helps in taking decision;
(i) To over-come delays,
(ii) Optimising resources, and
7. It helps in getting better co-ordination amongst related fields.

Limitations of Network Techniques:

Network techniques have following limitations:
(i) Network technique is simply a tool to help the management; hence its
effectiveness depends on how well it is used by the management.
(ii) Its accuracy depends on the estimation of the data used in the network.
(iii) It is useful only if it is updated regularly and decisions for corrective actions
are taken timely.

Applications of Network Technique:

Applications of network techniques are very wide, but are very common in some
of the following fields:
(i) Planning
(ii) Construction of buildings, bridges, highways, railways, stadiums, irrigation
projects, factories, power projects etc.
(iii) Development and launching of new products,
(iv) Strategic and tactical military planning,
(v) Research and development,
(vi) Market penetration programmes.

Planning, Scheduling (or organising) and Control are considered to be basic

Managerial functions, and CPM/PERT has been rightfully accorded due
importance in the literature on Operations Research and Quantitative Analysis.
Far more than the technical benefits, it was found that PERT/CPM provided a
focus around which managers could brain-storm and put their ideas together. It
proved to be a great communication medium by which thinkers and planners at one
level could communicate their ideas, their doubts and fears to another level. Most
important, it became a useful tool for evaluating the performance of individuals
and teams.
There are many variations of CPM/PERT which have been useful in planning
costs, scheduling manpower and machine time. CPM/PERT can answer the
following important questions:
How long will the entire project take to be completed? What are the risks
involved?
Which are the critical activities or tasks in the project which could delay the entire
project if they were not completed on time?
Is the project on schedule, behind schedule or ahead of schedule?
If the project has to be finished earlier than planned, what is the best way to do this
at the least cost?

The Framework for PERT and CPM

Essentially, there are six steps which are common to both the techniques. The
procedure is listed below:

I. Define the Project and all of it’s significant activities or tasks. The Project
(made up of several tasks) should have only a single start activity and a
single finish activity.
II. Develop the relationships among the activities. Decide which activities must
precede and which must follow others.
III. Draw the "Network" connecting all the activities. Each Activity should have
unique event numbers. Dummy arrows are used where required to avoid
giving the same numbering to two activities.
IV. Assign time and/or cost estimates to each activity
V. Compute the longest time path through the network. This is called the
critical path.
VI. Use the Network to help plan, schedule, monitor and control the project.

The Key Concept used by CPM/PERT is that a small set of activities, which make
up the longest path through the activity network control the entire project. If these
"critical" activities could be identified and assigned to responsible persons,
management resources could be optimally used by concentrating on the few
activities which determine the fate of the entire project.
Non-critical activities can be replanned, rescheduled and resources for them can be
reallocated flexibly, without affecting the whole project.
Five useful questions to ask when preparing an activity network are:

▪ Is this a Start Activity?

▪ Is this a Finish Activity?
▪ What Activity Precedes this?
▪ What Activity Follows this?
▪ What Activity is Concurrent with this?

Some activities are serially linked. The second activity can begin only after the
first activity is completed. In certain cases, the activities are concurrent, because
they are independent of each other and can start simultaneously. This is especially
the case in organisations which have supervisory resources so that work can be
delegated to various departments which will be responsible for the activities and
their completion as planned.
When work is delegated like this, the need for constant feedback and co-ordination
becomes an important senior management pre-occupation.
Critical Path Project Management (CPM)

Critical path project management (CPM) is a technique used to

complete projects on time by focusing on key tasks. One path through all the inter-
connected tasks is the fastest avenue to take when completing any project. By
focusing on the tasks that make up the critical path, the project manager maximizes
the chances of completing the project on time.

Critical Path (CP) is defined as the longest estimated sequence of interdependent

activities that should be accomplished on time to ensure completion of the project
on due-date. The critical path activities are performed under the “predecessor-
successor” relationship, so that any next activity cannot be started until its
predecessor is complete.
As implied by this definition, CP represents the most important tasks or events that
are organized into a dependency sequence and that directly impact the project’s
completion date. These tasks/events determine the longest duration for the entire
work and are helpful in activity scheduling and resource planning.

As said above, one of the best ways to ensure effective project planning and
scheduling is to use activity network diagram. Such a diagram makes is easier for
planners to visualize possible activity paths and define the critical one.
Teams use network diagrams to get a visual of the entire work broken down into
interdependent tasks and to plan their further actions accordingly. Bubbles, boxes
and arrows will help understand the activities and how they are link to each other.
The project manager produces the diagram to model the activities flow and
visualize the critical path definition. Each activity is marked either with a certain
code (ID) or name; activity paths need to be highlighted.

Critical Path Analysis

The work needed to complete the project needs to be broken down and all
activities need to be defined. Once we know how long each activity will take, we
can use this information to understand the duration of the project. A network
schedule of activities needs to be completed.

Early Start – The earliest time that an activity can start according to the logical
constraints.
Duration – The estimated time to undertake the activity.
Early Finish – The earliest time that an activity can finish according to logical
constraints.
Late Start – The latest time that an activity can start according to logical
constraints and without affecting the overall project duration.
Float – The time by which an activity may be delayed without affecting the overall
project duration.
Late Finish – The latest time that an activity can finish according to logical
constraints and without affecting the overall project duration.
In order to work out how long it will take to complete the sequenced work, we
need to perform what is known as a forward pass. The early start of the first
activity is zero and the early finish is calculated by adding the duration.
Early Start + Duration = Early Finish
This process is then carried through subsequent activities. Where an activity has
two or more preceding activities it is the latest time which is transferred.

In order to establish the latest dates that an activity can commence without
affecting the end date a back pass is performed. The early finish of the last activity
in the network is transferred to the late finish. The duration is then subtracted from
the late finish to obtain a late start. Where an activity has two or more succeeding
activities, it is the earliest date that is transferred. This process is repeated
throughout the network until all late start and finish dates have been identified.

Late Finish – Duration = Late Start

We can now work out what flexibility or float we have in the network. This is very
important to the project manager as it will allow for decisions to be taken with the
allocation of resources to maximise their utilisation. There are two types of float:

Free Float – this is the amount of time a task can be delayed without affecting the
succeeding task. This can be calculated by subtracting the Early Finish of an
activity from the Early Start of its subsequent activity.
Total Float – this is the amount of time which an activity can be delayed without
affecting the end date of the project.
Latest Finish – Earliest Finish = Float

Now that we have the early start and late start for each activity and have calculated
the float available, we can work out the critical path through the network. The
critical path is the series of activities within the network with zero total float. The
critical path is shown in red in our example given.

Meaning of Programme Evaluation Review Technique (PERT):

PERT was first used in 1957 as a method of planning and controlling the Polaris
Missiles Programme by Booz, Allen and Hamilton together with U.S. Naval
department. The aim was to finish the project two years in advance. PERT
describes basic network technique which includes planning, monitoring and
control of projects. PERT finds applications in planning and control of complex set
of tasks, functions and relationships.

It is a very important technique in the field of project Management. PERT is

commonly employed for conducting the initial review of a project. PERT is a very
useful device for planning the time and resources. It represents an important step in
the development of managerial science. It points out potentially troublesome areas
(which may disrupt programme objectives) against which a timely action can be
taken to prevent their occurrences. PERT helps in decision making.

PERT, actually, developed as a research and development planning tool where

activity timings could not be estimated with enough certainty. PERT can be
employed at those places where a project cannot be easily defined in terms of time
or resources required.

Of course, events can be readily defined which means it is known that, first, part A
will be manufactured, only then subassembly can be built and so on. PERT
technique proves very much advantageous when used for non-repetitive type of
projects, R & D prototype production, defence projects, etc.

Because of the uncertainty of activity timings, PERT acquired the shape of a

probabilistic model.
The basic tool used in PERT technique is the network or flow plan. Network
consists of a series of related events and activities. An important point is that, as a
person plans the activities in his mind, so the flow plan (or diagram) evolves and, it
even points out the gaps in the drawing. The network thus drawn shows, how
various activities of a project depend on each other and that certain activities have
to be completed before the others can start.

Steps Involved in PERT Planning Techniques:

The PERT planning technique consists of the following steps:
(1) The project is broken down into different activities systematically.
(2) Activities are arranged in logical sequence.
(3) The network diagram is drawn. Events and activities are numbered.
(4) Using three times estimate, the expected time for each activity is calculated.
(5) Standard deviation and variance for each activity are computed.
(6) Earliest starting times and latest finishing times are calculated.
(7) Slack is calculated.
(8) Critical path(s) are identified and marked on the network diagram.
(9) Length of critical path or total project duration is found out.

Differences Between PERT and CPM:

Note that the principles that we have discussed so far apply not only to PERT, but
to CPM as well. The nomenclature is the same for both, and both techniques are
often referred to as arrow diagramming methods, or activity-on-arrow networks.
The differences between PERT and CPM are as follows:

➢ PERT uses three time estimates (optimistic, most likely, and pessimistic).
From these estimates, an expected time can be derived. CPM uses one time
estimate that represents the normal time (that is, better estimate accuracy
with CPM).

➢ PERT is probabilistic in nature, based on a beta distribution for each activity

time and a normal distribution for expected time duration. This allows us to
calculate the "risk" in completing a project. CPM is based on a single time
estimate and is deterministic in nature.
 ➢ Both PERT and CPM permit the use of dummy activities in order to develop
the logic.

➢ PERT is used for Research and Development projects where the risks in
calculating time durations have a high variability. CPM is used for
construction projects that are resource dependent and based on accurate time
estimates.

Drawing the CPM/PERT Network

Each activity (or sub-project) in a PERT/CPM Network is represented by an arrow
symbol. Each activity is preceded and succeeded by an event, represented as a
circle and numbered.

Event Duration(Weeks)

1-2 4

1-3 3

2-3 0

3-4 7

2-4 6
 ▪ The Earliest Start is the value in the rectangle near the tail of each activity
▪ The Earliest Finish is = Earliest Start + Duration
▪ The Latest Finish is the value in the diamond at the head of each activity
▪ The Latest Start is = Latest Finish – Duration

At Event 3, we have to evaluate two predecessor activities – Activity 1-3 and

Activity 2-3, both of which are predecessor activities. Activity 1-3 gives us an
Earliest Start of 3 weeks at Event 3. However, Activity 2-3 also has to be
completed before Event 3 can begin. Along this route, the Earliest Start would be
4+0=4. The rule is to take the longer (bigger) of the two Earliest Starts. So the
Earliest Start at event 3 is 4.
Similarly, at Event 4, we find we have to evaluate two predecessor activities –
Activity 2-4 and Activity 3-4. Along Activity 2-4, the Earliest Start at Event 4
would be 10 wks, but along Activity 3-4, the Earliest Start at Event 4 would be 11
wks. Since 11 wks is larger than 10 wks, we select it as the Earliest Start at Event
4.We have now found the longest path through the
network. It will take 11 weeks along activities 1-2, 2-3 and 3-4. This is the
Critical Path.

The Backward Pass – Latest Finish Time Rule

To make the Backward Pass, we begin at the sink or the final event and work
backwards to the first event.

At Event 3 there is only one activity, Activity 3-4 in the backward pass, and we
find that the value is 11-7 = 4 weeks. However at Event 2 we have to evaluate 2
activities, 2-3 and 2-4. We find that the backward pass through 2-4 gives us a value
of 11-6 = 5 while 2-3 gives us 4-0 = 4. We take the smaller
value of 4 on the backward pass.

Tabulation & Analysis of Activities

We are now ready to tabulate the various events and calculate the Earliest and
Latest Start and Finish times. We are also now ready to compute the SLACK or
TOTAL FLOAT, which is defined as the difference between the Latest Start and
Earliest Start.
 Earliest Earliest Latest Latest Total
Event Duration(Weeks)
Start Finish Start Finish Float

1-2 4 0 4 0 4 0

2-3 0 4 4 4 4 0

3-4 7 4 11 4 11 0

1-3 3 0 3 1 4 1

2-4 6 4 10 5 11 1

TOTAL FLOAT is the spare time available when all preceding activities occur at
the earliest possible times and all succeeding activities occur at the latest possible
times.

▪ Total Float = Latest Start – Earliest Start

Activities with zero Total float are on the Critical Path

FREE FLOAT is the spare time available when all preceding activities occur at
the earliest possible times and all succeeding activities occur at
the earliest possible times. When an activity has zero Total float, Free float will
also be zero.
Estimation of Activity Time in PERT:
For dealing with uncertainties associated with different activities, PERT approach
computes expected time for each activity from the following three time estimates:
(a) Optimistic Time (to):
It is the shortest possible time in which an activity can be completed if everything
goes exceptionally well.

(b) Most Likely Time (tm):

It is the time in which the activity is normally expected to complete under normal
contingencies.

(c) Pessimistic Time (tp):

It is the time which an activity will take to complete in case of difficulty, i.e., if
mostly the things go wrong. It is the longest of all the three time estimates.

The to, tm and tp are combined statistically to develop the expected time (t e) for an
activity. The fundamental assumption in PERT is that the three time estimates form
the end points It is further assumed that tp and to are about equally likely to occur
whereas the probability of occurrence of t is 4 times that of tp or to.

Therefore, te is given by,