St.

Joseph’s College of Commerce (Autonomous), Bangalore

NETWORK ANALYSIS

Project: A project is a set of activities or jobs that are performed in a certain sequence determined
logically to accomplish a given objective.

Conditions:

i) These activities or jobs are to be completed within a specified time and within a specified
cost.
ii) It should also meet the performance standards.

Examples: Construction of a building, new product launch, etc.

Characteristic features common for all projects:

a) Objective: Each project has certain performance standards, i.e., an objective or a set of objectives
to be accomplished.
b) Sequence of activities: Every project consists of a set of activities and events, which are linked
together in a logical manner. There may be concurrent activities and sequential activities in a
project.
c) Large scale: Projects are generally very large and complex. It involves:
i) Resources like materials, machinery, tools, etc.
ii) The efforts of a large number of persons like workers, supervisors and experts. The
resources and efforts have to be properly co-ordinated and matched.
d) Time: Every activity in the project involves time. Also, each project has a completion date, i.e., a
deadline. In case of any delay in the completion of the project, extra costs (penalties) may have to
be incurred.
e) Cost: Every activity in the project consumes resources and has a specific cost. Some costs are
related to time, e.g., overheads per day, hire charges for machinery per day, etc., while other costs
may relate to the resources used for that activity, e.g., materials consumed in construction contract,
etc.
f) Uncertainty: Time estimates and cost estimates of a project are not very certain. Even where a
company deals in projects of the same kind, e.g., a civil construction company, every new project is
of a one-time nature and has a degree of uncertainty associated with it.

Network or Arrow Diagrams:

A network is a graphical representation of a project, depicting the flow as well as the sequence of well-
defined activities and events, and their inter-relationships.

Project Schedule:

When results of time estimates and computations are added to a network, it is called a Project Schedule.

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Fundamental terms used in Network Diagram:

Activity/Task/Job:

a) An activity is any portion of a project/network, which consumes time or resources and has a definite
beginning and ending, e.g., laying of foundation in a construction contract.
b) Activity may involve labour, paper work, contractual negotiations, machinery operations, etc.
c) Activities are graphically represented by arrows and denoted by alphabet A, B, C , D, etc.
d) The tail of the arrow portraying an activity represents the starting point of the activity and its head
(arrow pointer side) represents its completion.

Events/ Nodes/Connectors:

a) The beginning and ending points of an activity or a group of activities are called events.
b) Event is the results of the previous activity, and provides the starting point for the next activity.
c) Some examples of events are – foundation completed, materials purchased, etc.
d) An event is represented graphically by a numbered circle.

Tail Events or Preceding Events:

All activities in a network must commence from some event called Tail Events. Since the arrow diagram
is always drawn from left to right, the LHS Node/Event is called the Tain Event

Head Events or Succeeding Events:

All activities in a network must have terminal points called the Head Event. The Node/Circle to which
the arrow points to, i.e., the RHS Node/Event is called the Head Event.

Note: In a Network, symbol ‘i’ is used to represent Tail Event (or Preceding Event) and ‘j’ for the Head
Event (or Succeeding Event) of an activity. An Activity is denoted by (i-j)

Merge Event:

If an Event represents the joint completion of more than one activity, it is called a Merge Event. In other
words, if two or more arrows/activities point to one Event, such Head Event is called Merge Event.

Burst Event:

If an Event represents the joint initiation of more than one activity, it is called a Burst Event. In other
words, if two or more arrows/activities commence from one Event, such Tail Event is called Burst Event.

Conventions used in Drawing Network Diagram

a) Activities are represented by arrows. They are designated by alphabet like A, B, C, D, E, etc.
b) Events are represented by numbered circles called nodes. They are designated by numbers, i.e., 1,
2, 3, …

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c) Time flows from left to right. Hence the activities can be indicated from left to right by way of
straight horizontal lines, vertical lines or diagonal lines also. (In fact, every flow other than right to
left is permitted).
d) Every subsequent event should be depicted preferably to the right hand side of the preceding event.
This will facilitate scheduling computations for each event.
e) Each event/node should be numbered without any ambiguity. The numbers should be assigned to
events in such a way that the number assigned to the Head Event of an activity is greater than the
number assigned to the Tail Event of that activity.
f) Each activity should be bound by two events, i.e., a Tail Event and a Head Event. No Event/Activity
should hand or dangle loosely in the Network. Also, no two activities should have the same Head
and same Tail Event.
g) Arrows that cross each other should be avoided to the extent possible. Where crossing of arrows is
unavoidable, bringing may be used.

Common errors committed in drawing Network Diagrams.

a) Looping: Generally, the arrow points from left to right, since time flows in that direction. If this
convention is not followed, the result is illogical looping.
b) Dangling: This represents a situation when an event is not continued further, i.e., it hangs abruptly
in the middle of a the network without being connected to completion stage. Such activities
undertaken with no results should be avoided. This can be overcome by following these rules:
1) All events, except the first and the last, must have at least one activity entering and one activity
leaving them.
2) All activities must start and finish with an event.
c) Duplication: Activities that have the same head event and the same tail event are called duplicate
activities. Duplication can be corrected by the instruction of a Dummy Activity.

Note: A Dummy Activity is a hypothetical activity, which consumes no resources and time. It is
represented by dotted line in the Network Diagram. For a dummy activity, time consumed = nil,
resources used = nil and cost incurred = nil.

Critical Path:

It is the longest path in a Network Diagram. It is the minimum time required to complete the project.
This path does not provide flexibility in scheduling and transferring resources.

Concept of Floats used in Network Analysis

Non-critical activities have some flexibility, i.e., they can be delayed for some time without affecting the
project duration. This flexibility is called as slack for events and float for activity.

Slack time for an event:

a) Head Event Slack: It is the difference between the latest and earliest time at the Head Event of
an activity.

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b) Tail Event Slack: It is the difference between the latest and earliest time at the Tail Event of an
activity.

Total Float:

• Total float of an activity is equal to the difference between the earliest or latest start or finish
time for an activity.
• Activity float = (LST – EST) or (LFT – EFT).
• It indicates the amount of time by which an activity can be delayed without causing any delay in
the project duration.
• It refers to the free time associated with an activity which can be used before, during or after
the performance of this activity.

Note: For all Critical Path Activities, Total Float = Zero. This is because these activities cannot be
delayed.

Free Float:

• It is the portion of the total float within which an activity can be manipulated without affecting
the float of the succeeding activities.
• Free Float = Total Float – Head Event Slack.
• It indicates the value by which an activity in question can be delayed beyond the earliest starting
point without affecting the earliest start and the total float of the activities following it.
• It is always either equal to or less than the total float of an activity. If a negative value is
obtained, then the free float is taken to be zero.

Independent Float:

• It is the portion of the total float, within which an activity can be delayed for start without
affecting the float of the preceding activities.
• Independent float = Free float – Tail Event Slack
• It is always either equal to or less than the Free Float of an activity. If a negative value is
obtained, the Independent Float is taken to be Zero.

CRITICAL PATH METHOD (CPM)

CPM stands for Critical Path Method. It is a network analysis approach that helps to plan and control the
most logical and economic sequence of operations for accomplishing a project. CPM is based on the
estimation of the standard time needed for execution of an activity. CPM manages both the time and
cost of the project.

CPM works by determining the longest path along all the critical activities in a project, which is the
minimum duration of the project. CPM also helps to separate the critical from non-critical activities,
which can help to optimize the use of resources and avoid delays. CPM is a deterministic approach, that
assigns only one time estimate for each activity, based on historical data or expert judgment.

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CPM is an activity-oriented technique that focuses on the tasks and work activities more than the events
and milestones. CPM is mainly used for simple, routine and predictable projects, such as civil
engineering, construction, or manufacturing projects.

PERT (PROGRAM EVALUATION AND REVIEW TECHNIQUE)

PERT stands for Program Evaluation and Review Technique. It is an event-oriented technique. It is a
probabilistic model, i.e., it takes into account uncertainties involved in estimation of time of a job or an
activity.

Distinguish between CPM and PERT

Basis of distinction CPM PERT

Full form It stands for Critical Path Method. It stands for Program Evaluation and
Review Technique
Event/Activity It is activity-oriented. Results of various It is Event-oriented.
calculations are considered in terms of
activities.
Uncertainty It is deterministic model. It does not It is a probabilistic model. It uses 3
consider uncertainties involved in estimates of activity time to, tm and tp,
project completion. keeping time uncertainty in view.
Emphasis It places dual emphasis on time and It is primarily concerned with time.
cost.
Nature of projects It is used for projects of repetitive It is generally used for new projects
nature, where one has prior experience where time required for various
of handling similar projects. activities are not pre-determined.

TIME ESTIMATES USED IN PERT:

Three kinds of time estimates are used in PERT taking uncertainty into account. They are:

• Optimistic Time Estimate: This is the estimate of the shortest possible time in which an activity
can be completed under ideal and perfect conditions. No provision is made for delays or
setbacks. It is denoted by to.
• Pessimistic Time Estimate: This is the maximum possible time which an activity could take to
complete the job. This represents all abnormal and inefficient situations, i.e., estimated time if
everything went wrong. It is denoted by tp.
• Most likely Time Estimate: This is the time estimate of an activity which lies between the
optimistic and the pessimistic time estimates. It assumes normal conditions and expected
setbacks. It is denoted by tm.

Characteristics associated with the time estimates in PERT:

The time estimates in PERT are governed by the following formulae / relationships:

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• Expected Time: Average time taken for the job can be determined as under:
𝑡𝑜+4 𝑡𝑚+𝑡𝑝
te = 6
• Range: It is the difference between the maximum and minimum time, i.e.,
Range = tp - to
• Standard Deviation: It is equal to one-sixth of the range, i.e.,
1 𝑡𝑝−𝑡𝑜
SD = (tp – to) or 𝑆𝐷 =
6 6
• Variance: It is square of the standard deviation, i.e.,
𝑡𝑝−𝑡𝑜 2
Variance = SD2 or ( )
6
• Probability: Due to uncertainty in time estimates, the probability or chance that the project will
be completed within the Expected Duration / Critical Path Duration is only 50%. Probability of
completing the project within a shorter duration than the Critical Path will be less than 50%, and
the probability of completing the project at a date later than the Critical Path will be higher than
50%.

PROBABILITY ANALYSIS IN ACHIEVING COMPLETION DATE

1. A project as a whole, consisting of several activities, will have a normal distribution. Hence, the
probability of completing the project in time (i.e., Critical Path Duration) is equal to Mean Value
Te which is 50%.
2. Using Normal Distribution Assumption, the probability of completing the project by a particular
date can be computed, using the following procedure:
Step Procedure
1 𝑡𝑜+4 𝑡𝑚+𝑡𝑝
Compute the Expected Time te = for each activity.
6
2 Draw the Network Diagram and update te for each activity.
3 Identify the Critical Path and compute Tcp, i.e., Duration of the Critical Path.
4 Compute Variance of all the activities on the Critical Path.
5 Compute the Total Variances of all Critical Path activities, (say V) and compute, Standard
Deviation. SD = √𝑉
6 𝑡𝑝−𝑡𝑐𝑝
Find Standard Normal Variate (Z) = 𝑆𝐷 , where Tr = Duration in which the project is
required to be completed, Tcp = Duration of the Critical Path and SD = Standard Deviation
of the Critical Path.
7 Obtain the value of Standard Normal Variate from the Normal Tables. Call this as NT (Z)
8 Compute Probability of completing the project within the required duration = 0.5
± 𝑁𝑇 (𝑍).
Note: Where required time > Critical Path Duration, probability will be greater than 50% and
vice-versa.

PROBLEMS

1. Draw a Network Diagram from the following.

Activity A B C D E F G
Predecessor - - A A B C D,E

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2. Draw a Network Diagram from the following.

Activity A B C D E F
Predecessor - A A B C D,E

3. Draw a Network Diagram from the following.

Activity A B C D E F G H
Predecessor - - A B C,D C,D E F

4. Draw a Network Diagram for the following and identify the critical path. Give the project
completion period.
Activity 1-2 1-3 2-3 2-4 3-4 4-5
Duration in 20 25 10 12 5 10
days

5. Activities in respect of maintenance of a project is as follows:

Activity 1-2 1-3 1-4 2-5 3-6 3-7 4-7 5-8 6-8 7-9 8-9
Duration 2 2 1 4 5 8 3 1 4 5 3
in months
Draw a Network Diagram and find the Critical Path and the duration of the project. Determine the
total float, free float and independent float.

6. A product comprised of 10 activities whose normal time and cost is given as follows:
Activity 1-2 2-3 2-4 2-5 3-5 4-5 5-6 6-7 6-8 7-8
Duration 3 3 7 9 5 0 6 4 13 10
in months
Required:
a) Draw the Network Diagram.
b) Identify the Critical Path.
c) Determine total float, free float and independent float.
d) What is the project duration and the associated cost, if indirect cost is Rs. 9 per day?

7. Given is the information regarding a project.

Activity A B C D E F
Preceding Activity - - A A B,C D,E
Normal Time in days 16 20 8 10 6 12
Required:
a) Draw the Network Diagram.
b) Find the Critical Path and Project Duration.
c) Find the total float, free float and independent float for each activity.

8. A small project is composed of 7 activities whose time estimates in days are listed below. Activities
are identified by their begging ‘i’ and their end ‘j’ node numbers.

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Activity (i-j) 1-2 1-3 1-4 2-5 3-5 4-6 5-6

to 2 2 4 2 4 4 6
tm 2 8 4 2 10 10 12
tp 14 14 16 2 28 16 30
Required:
a) Draw the Project Network.
b) Find the expected duration and variance for each activity.
c) What is the expected project length?
d) If the project due date is 38 days, what is the probability of meeting the due date?

9. A project consists of 7 activities and the time estimates of the activities are furnished as under:
Activity (i-j) 1-2 1-3 1-4 2-5 3-5 4-6 5-6
to 4 3 4 5 8 4 2
tm 10 6 7 5 11 10 5
tp 16 9 16 5 32 16 8
Required:
a) Draw the Project Network.
b) Identify the different path on the Network and its durations.
c) Identify the Critical Path and Expected Project Duration.
d) What is the probability that the project will be completed in 5 days earlier than the critical path
duration.
e) What project duration will provide 95% confidence level of completion (Z0.95 = 1.65)?

10. A Co. is launching a new product and has made estimates of the time for the various activities
associated with the launch as under:
Activity A B C D E F G H I
Predecessor - - A,B B A C E,F D,F G,H
to 1 3 1 3 1 2 2 2 10
tm 3 4 3 3 2 5 3 2 10
tp 5 5 11 9 3 14 4 2 10
Required:
a) Draw the Project Network and calculate the expected time and variance of each activity.
b) Find out the expected length of the critical path and its Standard Deviation.
c) Find the probability that the launching will be completed in 27 days.
d) Find the duration which has 95% probability of completion.

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