Critical path Method (CPM) with Company Analysis on Orchid

Business Group PLC (OBG)

By: Birhanu Fanta (MBA Student: Business Administration)

January, 2019
Addis Ababa, Ethiopia
 1. INTRODUCTION
Orchid Business Group PLC is an Ethiopian company established in 2000 primarily operating
in the areas of Infrastructure, Construction and Logistics. The company has developed its
expertise over the last nineteen years in business and is advancing to new frontiers within the
industry.

The Mission of the company is to stand and work relentlessly to create a professional,
competent and effective work force so as to create job opportunities, bring forth excellence by
unleashing the potentials of everyone.

The Companies Vision is to see the lives of as many people as possible transformed whereby
advances in technology are made available to the regular person and become part of this as an
individual and a company.

The CEO of the Company, Mrs. Akiko Seyoum promises that her Company aims to do its best
to create and add meaningful value to its customers, staff, supply chain, the community and the
environment in which it operates.

She further explains Professionalism and excellence are at the center of the Company’s core
values, and they are achieved by having high quality staff who are not only great at what they
do, but will always go that extra mile when it is required. We are committed to creating
customer satisfaction by being responsive, flexible and most importantly, delivering on time,
on budget in a safe and assured manner.

We measure our growth not just by our work streams, but by the contribution we make to the
industry, our community, our customers, and last but not least, to our employees who are the
foundation of the company. I believe that if we value and respect all of our stakeholders,
growth will follow, and positivity and value creation will continue to flow.
The Company is recently participating in the following areas of business:-
Orchid infrastructure (roads, bridges, Airstrips etc),
Civil works,
Foundation technology,
Water well Drilling,
Energy - Remote Field services(Oil, Gas, & Mining),
Lifting Services,
Construction Equipment /material Supply,
Engineered Formwork Systems,
Logistics and transport, and
ICT Support and Development.

2. THEORETICAL FOUNDATION /CONCEPTUAL DISCUSSION

The critical path method (CPM) is a scheduling technique based on a network diagram
representation of the project. Developed in the late 1950s for time sequencing manufacturing
operations, the CPM quickly became popular in other application areas including construction
project scheduling (Moder and Phillips, 1970).
Nowadays, the CPM is considered the de-facto standard in the construction industry and is
implemented in several widely-used commercial software systems for construction project
planning and management. The CPM takes as input the durations of tasks and the logic
constraints (precedence relationships) between tasks, and produces as output a range of start and
finish times for each task that results in the minimum project duration satisfying the logic
constraints. The CPM also identifies a critical path—a continuous path or paths through the
network of nodes and arrows whose length is equal to the project duration. Any delay along this
path will cause a delay in the overall project duration. The CPM consists of simple arithmetic
operations only.
The original CPM was only capable of handling finish-to-start precedence relationships (Moder
and
Phillips, 1970). Later developments added the capability to handle all four logic constraints
(Willis, 1986;
Hendrickson and Au, 1989). Sometimes the name precedence method is used for the enhanced
CPM (Willis, 1986). In this book, CPM refers to the enhanced algorithm, which is generally the
case in practice. The project evaluation and review technique (PERT) is another scheduling
technique also developed in the late
1950’s. PERT is fundamentally similar to the CPM, being based on a network diagram
representation of the project. Unlike the CPM, however, the PERT uses as inputs a statistical
distribution for the task durations and the time outputs have statistical significance. PERT is not
widely used in the construction industry.

Critical Path Analysis is commonly used with all forms of projects, including construction,
aerospace and defense, software development, research projects, product development,
engineering, and plant maintenance, among others. Any project with interdependent activities
can apply this method of mathematical analysis. The first time CPM was used for major
skyscraper development was in 1966 while constructing the former World Trade Center Twin
Towers in New York City. Although the original CPM program and approach is no longer
used, the term is generally applied to any approach used to analyze a project network logic
diagram.

The critical path method is a deterministic project scheduling method used to estimate the
minimum project duration and longest path to determine the amount of scheduling flexibility on
the logical network paths within the schedule model. Schedule network analysis technique
calculates the early start, early finish, late start, and late finish dates for all activities without
regard for any resource limitationsby performing a forward and backward pass analysis through
the schedule network (Levine, 2002). The resulting early and late start and finish dates are not
necessarily the project schedule, rather they indicate the periods within which the activity could
be executed, using the parameters entered in the schedule model for activity durations, logical
relationships, leads, lags, and other known constraints. The critical path method is used to
calculate the amount of scheduling flexibility on the logical network paths within the schedule
model (PMI, 2013).

Components

The essential technique for using CPMis to construct a model of the project that includes the
following:

1. A list of all activities required to complete the project (typically categorized within
a work breakdown structure),
2. The time (duration) that each activity will take to complete,
 3. The dependencies between the activities and,
4. Logical end points such as milestones or deliverable items.

Using these values, CPM calculates the longest path of planned activities to logical end points or
to the end of the project, and the earliest and latest that each activity can start and finish without
making the project longer. This process determines which activities are "critical" (i.e., on the
longest path) and which have "total float" (i.e., can be delayed without making the project
longer). In project management, a critical path is the sequence of project network activities
which add up to the longest overall duration, regardless if that longest duration has float or not.
This determines the shortest time possible to complete the project. There can be 'total float'
(unused time) within the critical path. For example, if a project is testing a solar panel
and task 'B' requires 'sunrise', there could be a scheduling constraint on the testing activity so that
it would not start until the scheduled time for sunrise. This might insert dead time (total float)
into the schedule on the activities on that path prior to the sunrise due to needing to wait for this
event. This path, with the constraint-generated total float would actually make the path longer,
with total float being part of the shortest possible duration for the overall project. In other words,
individual tasks on the critical path prior to the constraint might be able to be delayed without
elongating the critical path; this is the 'total float' of that task. However, the time added to the
project duration by the constraint is actually critical path drag, the amount by which the project's
duration is extended by each critical path activity and constraint.

A project can have several, parallel, near critical paths; and some or all of the tasks could have
'free float' and/or 'total float'. An additional parallel path through the network with the total
durations shorter than the critical path is called a sub-critical or non-critical path. Activities on
sub-critical paths have no drag, as they are not extending the project's duration.

CPM analysis tools allow a user to select a logical end point in a project and quickly identify its
longest series of dependent activities (its longest path). These tools can display the critical path
(and near critical path activities if desired) as a cascading waterfall that flows from the project's
start (or current status date) to the selected logical end point.

Application of Critical Path Analysis

Advantages
• Through the discipline of CPM, the user can achieve better planning due to the logical
approach undertaken during the development of the construction sequence.
• Identification of critical operations on which effort and resources can be applied aids the
contractor's management. This enables 'management by exception' to be applied to critical
activities.
• CPM allows the planner to express his ideas in graphical form. Recent developments in project
management software allow networking on the screen to be carried out.
• The planner has the facility to assign priorities to labor, plant, material and subcontractor
resources to each operation on the network.
• Bar chart analysis aids understanding at site management level for both the contractor and
client.
• The effect of changes and variations can be evaluated and time cost optimization analysis
undertaken.
• Cash flow assessments and valuation forecasting information may be output in graphical format
and readily updated during the project.
• Using notebook and site-based computers, the progress situation may be speedily analyzed, and
a variety of management reports made available.

Disadvantages
• The development of a network sequence is mainly based on 'finish to start' relationships and
this often does not represent the situation on the project.
The relationships which can be developed on precedence diagrams aids the overlapping of
related operations.
• After all the man-hours spent on company management training programmes learning to
appreciate networks, they have never captivated managers in small and medium sized
companies.

Arrow Diagrams
When developing an initial arrow diagram the planner should pose the following questions
concerning related operations/activities:
• Which is the first activity in the sequence?
• Which activities must be completed before the next one starts? (Finish start relationship)
• Which activities can be undertaken at the same time?
• Which is the last activity in the sequence?
It is important at this stage that the arrow diagram is based on finish to start relationships and it is
important to check the operational logic to ensure that the sequence of construction is correct. It
is no good planning to put the roof on a building until all the columns supporting the roof have
been erected. Arrow diagram containing all the relevant data:
• Event numbers,
• Earliest event times,
• Latest event times, and
• Floats
Precedence Diagrams
Precedence diagrams consist of a series of operational boxes representing a construction
sequence, which are linked together by a series of lines which represent the relationships
between the operations. They were developed in the early 1970s by the Cementation Company
as an alternative approach to network
The finish to start limitations of arrow diagrams causes difficulties when, for instance, one
activity is required to start before the preceding activity is completed. This either means dividing
the preceding activity into smaller parts or introducing a dummy with a time value. This
difficulty resulted in the precedence approach being developed which introduced activity boxes
rather than activity arrows. The boxes permit a number of different relationships to be expressed
between activities which relate more to the real situation on a construction project. These
relationships include:
• Finish to Start Relationships
• Start to Start Relationships
• Finish to Finish Relationships
“Start to Finish Relationships
 3. Company Analysis
We Have selected Orchid Business Group PLC to analyze whether it uses CPM method while
undertaking Road project Construction.
Under its Infrastructure section it is constructing a road project named Gambella-Illiya Road which is 78
KMs long.

We have found out that they use CPM method to list of all activities required to complete the project
(typically categorized within a work breakdown structure by a Gantt Chart), the time (duration)
that each activity will take to complete, the dependencies between the activities and, logical end
points such as milestones or deliverable items.
From the Data we have constructed the following activities and their precedence relationship.

Immediate Duration
Activities Description
predecessor (Days)
A Commencement NONE 0
B Site Possession A 30
C Mobilization A 60
D Temporary Facility for Engineers B 60
E Site Clearance D 90
F Drainage E 120
G Excavation F 150
H Road Bed Preparation F 125
I Cut and Borrow to fill F 100
J Capping Layer H 200
K Gravel Sub base G 250
L Crushed stone base G 200
M Bitumen Surfacing G 200
N Precast concrete I 180
O Sub base material production J,K,L,M,N 200
P Pipe production O 80
Q Base course aggregate O 100
R Fill material production O 90
S Capping material production Q,P,R 120
T Road sign and KM posts S 60
U Project handover T 30
 NETWORK DIAGRAM

B(30)
A
D(60)

C(60) H(125)
E(90)
F(120
) J(200)
G(150)

K(250)

I(100)
L(200)
G(150)

M(200)

N(180)

O(200)

Q(100)
R(90) P(80)

S(120)

T(60)

U(30)
CRITICAL PATH

A-C-E-F-G-K-O-Q-S-T-U = 1150 DAYS OR 3 YEARS AND 2 MONTHS.

4. GAPS

As per the discussion I had with the Contract manager of the company only 30% (23.4 KM) of
the project is accomplished so far.

The main causes of the gap are:-

1. Late mobilization of resources,

2. In efficient use of human and material resources,
3. Delay incurred due to local unrest,
4. Delay of supply of construction material and fuel,
5. Late decision in the undercut works,
6. Inclement weather, and
7. Inundation beyond expected area and duration.

5. CONCLUSION AND RECOMMENDATION

It can be seen from the above finding that only 30% of the project is carried out. But only four
months are left for the project period to be completed as per the contract between the employer
(ERA) and the contractor (Orchid).

One of the remedial action that orchid has to undertake is to deploy additional efficient
manpower and resources like machineries to the site so as to speed the project performance.

The second and important action to be taken is to request the employer to extend the project
period by explaining in detail the major reasons for the delay of the project are uncontrollable
factors and non-concurrent activities beyond the control of the company as described above in
No. 3-7.
Sample Questions with Answer

1.
 2.
Activity ID Duration Dependency
(Weeks)
A 7 -
B 3 -
C 6 A
D 3 B
E 3 D,F
F 2 B
G 3 C
H 2 E,G

Network Diagram

A C
G
7 6
3

B D E

3 3 3

The Critical Path is A-C-G-H with project duration of 18 Weeks.

3.

Activity ID Duration Dependency

(Weeks)
A 5 -
B 8 A
C 6 A
D 9 B
E 6 B,C
F 3 C
G 1 D,E,F

NETWORK DIAGRAM

B D

8 9

A
E G
5
6 1

C
F
6
3

The Critical Path is A-B-D-G with project duration of 23 Weeks.

 4.

Activity ID Duration Dependency

(Weeks)
A 5 -
B 6 -
C 3 -
D 5 A
E 7 B
F 7 B
G 4 C
H 2 D
I 5 E
J 6 F,G
K 4 H,I

NETWORK DIAGRAM

A D
H
5 5
2

START
B
E I
6 K
7 3
4
F
END
C
7
3 J

6
G

The Critical Path is B-E-I-K with project duration of 22 Weeks.

 Activity ID Duration Dependency
(Weeks)
A 12 -
B 7 A
C 11 A
D 8 A
E 6 A
F 10 B
G 9 C
H 14 D,F
I 13 E,G
J 16 H,I
5.
NETWORK DIAGRAM

B F

7 10

A D

12 8
H

14
E J

6 16
I

16

11
G

The Critical Path is A-C-G-I-J with project duration of 61 Weeks.

References
1. [Hojjat_Adeli,_Asim_Karim]_Construction_scheduling, The Ohio State University,2005
2. [Saleh_A._Mubarak]_Construction_Project_Scheduling(z-lib.org), 2015
3. ^ Kelley, James. Critical Path Planning.
4. ^ A Brief History of
Scheduling: http://www.mosaicprojects.com.au/PDF_Papers/P042_History%20of%20Sc
heduing.pdf Archived May 18, 2015, at the Wayback Machine
5. ^ Samuel L. Baker, Ph.D. "Critical Path Method (CPM)" Archived June 12, 2010, at
the Wayback Machine University of South Carolina, Health Services Policy and
Management Courses
6. ^ Armstrong-Wright, MICE, A. T. Critical Path Method: Introduction and Practice.
Longman Group LTD, London, 1969, pp5ff.
7. ^ Blake William Clark Sedore, M.Sc.M.E. [1] "Assembly lead time reduction in a
semiconductor capital equipment plant through constraint based scheduling", M. Eng. in
Manufacturing thesis, Massachusetts Institute of Technology, Department of Mechanical
Engineering, 2014.