Critical Path Analysis A critical Path!

Critical Path Analysis (final section of 3 Critical Path Analysis (final section of 3.3 Decision Making Techniques) Essential Items you need to know Wide range of uses for planning/projects/launches Scheduling to conserve TIME, minimise COST and maintain QUALITY NOT required to build critical path from scratch but finish semi-complete diagram Identification of where is the critical path Understanding Critical Path terms (and calculating results for) items such as “Total Float”, Earliest Start Times and Latest Finish Times Understand the strengths and weaknesses of the approach

Critical Path Analysis = use of “Network Diagrams” What industries are likely to use these diagrams? (And why?) Project based construction, engineering, product development, software design, aerospace and defence industry, event planners (2012 London Olympics)

Intro: Making a cup of tea (no sugar) – how quick can we plan to do this - from standing in the kitchen to have a hot tea ready to drink? Lets list what we need to do, how long it takes and in what order: Sketch a critical path diagram to represent the project of making a cup of tea

Chocolates anyone? When Cadbury’s decided to introduce Flake Bites, to compete with Maltesers and KitKat, Management wanted to know how long it would take to reach full scale production. Machinery ordering and delivery will take 9 weeks, Installation takes 5 weeks, Staff recruitment takes 4 weeks, Training 2 weeks, Suppliers need 4 weeks’ lead time, and Trial production requires 2 weeks  

Preparing a network diagram Activity Preceded by Duration A B C D E F Machinery ordering and delivery will take 9 weeks, installation takes 5 weeks, staff recruitment takes 4 weeks, training 2 weeks, suppliers need 4 weeks’ lead time, and trial production requires 2 weeks

Try sketching the network diagram in pencil

Step 1: Network for Flake Bites 9 Node A node represents: The start of an activity The end of an activity Both the start and end of an activity. All networks start and end with a node The number represents which step it is. Number 1 means the first step Activity An activity represents a task that is undertaken, eg staff recruitment 1 Label the activities, putting in time taken. Do in pencil first

Earliest Start Time 1 1 A 9 B D 5 4 F C E 2 EST - Earliest start time EST - Earliest start time EST is the earliest time an activity can start. We write this in the top right box in the node: The EST for the first activity is now ie 0 We start from the left and fill in, remembering we cannot start an activity until all the preceding activities have finished, which means the EST is the longest route to a node. Calculating EST allows a firm to organise when it needs resources, and gives the earliest completion date for the whole project. So for example, the earliest we can start on D (installation) is 9 weeks. This means the earliest time Cadbury’s needs its engineers on site to install the machines is 9 weeks after the project starts

Latest Finish Time 1 1 A 9 B D 5 4 F C E 2 14 16 16 14 16 16 LFT – Latest Finish Time LFT shows the time by which an activity must be completed. We write this in the bottom right box in the node; it refers to the preceding activity We start from the right and work backwards. The final node will have a LFT of the time a project takes, which will be the EST, in this case 16 weeks. Working back gives 14 weeks as the latest all the preceding activities (B,D and E) have to be finished by. Calculating the LFT provides the deadlines that must be met for the project to be completed on time. It also helps to identify the activities which have slack, or ‘float time’, and identifies the critical path

Critical path 1 A 9 B D 5 4 F C E 2 14 16 9 12 14 16 Critical Path is marked The critical path comprises those activities that take longest to complete, and so which determine the length of the whole project. In this case it is A, D and F, and is indicated by A, D and F are the critical activities which must not be delayed by even 1 day – because if they are, the whole project is delayed. Identifying the critical path allows managers to apply management by exception, which means management time is spent supervising the critical activities. If a manager sees an activity might be delayed, the manager can consider moving resources (labour or machinery) from a non-critical task

Float time 1 A 9 B D 5 4 F C E 2 14 16 12 Float Time 14 16 12 Float Time The float time shows by how much time an activity may overrun (be delayed) before is has an effect on either the next activity (“Free Float”), or on the project as a whole (“Total Float”) FF = EST of next task – EST of this task – duration Activity E (training) FF = 14 - 4 - 2 = 8 weeks float Management can delay / extend training an additional 8 weeks if required TF = LFT of the next task - EST of this task - duration Activity D (installation) TF = 14 - 5 - 9 = 0 weeks float NO Slippage Allowed as D is on the Critical Path

Terminology EST – Earliest start time – the earliest day number a project can begin Critical path – the longest collection of steps such that any delay extends the project Free Float – days a task can be delayed without affecting the next step Latest Finish Time – last possible day number a project can finish, so next step is not delayed Total Float – Total time a task can be delayed without affecting the project

Disadvantages of using CPA GIGO Unforeseen Challenges during project Beware the un-doable project Feasibility / Flexibility of resource use

Working Capital Control Benefits of CPA Efficiency Decision Making Working Capital Control Time Management Eff: tasks done together, saves time, resources, highlights probable delays, avoid penalty clauses/earn bonuses. DM: sci and Obj method – should lead to more realistic assessments, fore warns vs difficult areas; Time CPA minimises time OR swaps extra time for lower cost Working Capital – when will mats and equipment be needed – crucial for resource management V IMPORTANT FOR JIT Management

What CPA should be linked to Just-in-time (JIT). JIT is when a business orders supplies just in time for them to be used, and requires the careful planning given by CPA Working capital management, keeping stocks low Human Resource Management (HRM) planning: how many staff are needed, with what skills, for how long

Preparing a network diagram (answers) Activity Preceded by Duration A Machinery - 9 weeks B Staff Recruit - 4 weeks C Suppliers lead time 4 weeks D Installation A 5 weeks E Training B 2 weeks F Trial Production All 2 weeks Machinery ordering and delivery will take 9 weeks, installation takes 5 weeks, staff recruitment takes 4 weeks, training 2 weeks, suppliers need 4 weeks’ lead time, and trial production requires 2 weeks