MODULE 4 - NETWORK ANALYSIS

KOCHI BUSINESS SCHOOL, THENGODE, EDACHIRA, KOCHI

08-03-2023 Assistant Professor: Adarsh C S 1

Introduction
• The problem of network is to find a course of action which
minimum time, cost or distance in the performance of various
activities. Network problems may occur in many areas such as
production, distribution, transportation, communication and
activities of commercial undertakings.
• Network analysis provides techniques for planning, scheduling,
controlling, monitoring or coordinating large and complex
projects which consist of many activities.

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Objectives of Network Analysis
• Minimization of total cost of a project
• Minimization of total time of a project
• Minimization of cost of a project for a given total time
• Minimization of time of a project for a given cost.
Use of Network Techniques for Management
• Helps the management in Planning the Complicated projects
• Provides a number of check and safeguards against going astray
• Helps in reaching the goal with minimum time and cost
• Gives better managerial control.
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Application of Network Techniques
• Construction of building, bridges, etc..
• Administration
• Manufacturing
• Research and Development
• Inventory Planning
• Marketing

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Different Phases in the Application of Network Techniques
• Planning: Planning is the most important project management, in
which the jobs or activities to be performed, are formalized.
• Scheduling: Scheduling is the determination of time required for
executing each operation and other in which each operation has to
be carried out to meet the plan objectives.
• Controlling: Controlling is the process in which difference or
deviation between the plan and the actual performance are
revived after the project has started.

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Terminology Used
• Event: An Event represents an instant of time at which an activity
of a project starts or finishes. In a network an event is represented
by a node. An event is a mile stone which indicates the start and
completion of the project but dose not consume any time. The
beginning of an activity is tail event and finishing of an activity is
Head event.
• Activity: In both PERT & CPM an activity is a distinct operation or
an element of work which has to be performed for execution of
job. Activity is represented by an arrow

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Different Types of Activities
• Predecessor Activity: Activity that must be completed
immediately prior to the start of another activity.
• Successor Activity: Activity that cannot be started until one or
more activities are completed but immediately succeed them.
• Concurrent Activity: Activities which can be accomplished
simultaneously are known as concurrent activity.
• Dummy Activity: A dummy activity is an activity which takes no
time in completion and requires no resources. A dummy activity is
introduced in a network when two or more parallel activates have
same head and tail events.

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Errors in Network Logic

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 Assistant Professor: Adarsh C S
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Rules to Frame a Network
1. Each activity must start and end in a node. The tail of an activity
represents the start and head the completion of work.
2. The event No. 1 denotes the start of project and is called initial
node or event. All activates emerging from event (1) should not
be preceded by any other activity. Event carrying the highest
number denotes the completion event.
3. Events should be numbered in an ascending order so that for
each activity (a,b) (a is less than b)
4. Only one activity can span across a pair of events
a. An event number should not be repeated or duplicated.
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 b. Two activities should not be identified by the same
completion events
c. Activities must be represented either by their symbol or by
the corresponding order of starting and completion events.
6. No dangling is allowed unless especially desired in the question.
7. The logical sequence between activities must follow the following
rules;
a. An event can’t occur until all the incoming activates into it have
been completed.
b. Though a dummy activity does not consume either resources
or time even then it has to follow the rules stated above.

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CRITICAL PATH METHOD (CPM)
A critical path is a sequence of connected activities that lead from
the beginning of the project to the end of the project. The longest
path in the network is called the critical path. The activities on this
path are critical activities. Identifying the critical path is of great
importance as it determines the duration of the entire project. If any
activity on the critical path is delayed, the entire project will be
delayed. The basic assumption in CPM is that the activity times are
proportional to the level of resources allocated to them. By assigning
additional resources (capital, people, material, machines) to an
activity, its duration can be reduced to a certain extent. Shortening
the duration of activity is known as Crashing in the CPM
terminology.
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Earliest and Latest event times
• Earliest Event Time (TE): The earliest occurrence time or earliest
event time is the earliest at which an event can occur. Earliest
occurrence of an event say ‘2’ is denoted by E 2.
• Latest Event Time (TL): The latest allowable occurrence time or
the latest event time is the latest time by which an event must
occur to keep the project on schedule. Latest occurrence of an
event, say, ‘2’ is denoted by L2.

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Start and Finish times of an activity
• Earliest Start Time (EST): The earliest start time of an activity is the
earliest time by which it can commence. This is naturally equal to
the earliest event time associated with the tail event of the activity.
EST of an activity= Earliest occurrence of the tail event of the
activity, So, for the activity 2-3, EST is E2.
• Earliest Finish Time (EFT): If the activity proceeds at its early time
and takes the estimated duration for completion, then it will have an
early finish. Hence Earliest Finish Time (EFT) for an activity is
defined as the earliest time, by which it can be finished.
EFT = EST + Activity duration

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• Latest Finish Time (LFT): The latest finish time for an activity is
the latest time by which an activity can be finished without
delaying the completion of the project. Naturally the latest finish
time for an activity will be equal to the latest allowable occurrence
time of the head event.
Activity 2-3, LFT = L3
• Latest Start Time (LST): Latest start time of an activity is the latest
time by which an activity can be started without delaying the
completion of the project.
LST= LFT – Activity duration

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Slack & Float
• Slack: It is a term associated with events. It denotes the flexibility range
within which an event can occur. Ie; slack of an event is the difference
between the earliest event time and latest event time ie; slack of event ‘2’ is
L2 – E 2

• Float: It is associated with the activity times. Float denotes the range within
which activity starts time or its finish time may fluctuate without affecting
the completion of the project.

Floats are of the following types:

a. Total float b. Free float c. Independent float

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• Total float: It is the time spent by which the starting (or finishing)
of an activity can be delayed without delaying the completion of the
project. In certain activities, it will be found that there is a
difference between maximum time available and the actual time
required to perform the activity. The difference is known as total
float.
Total float = LST – EST or LFT – EFT
• Free float: It is that portion of positive total float that can be used
by an activity without delaying any succeeding activity. The concept
of free float is based on the possibility that all the events occur at
their earliest time.
Free float= EST of successor – EFT of the present activity
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• Independent float: The independent float is defined as the excess
of minimum available time over the required activity duration. Ie;
independent float is the amount of time an activity could be
delayed if preceding activities finish at their latest and subsequent
activities start at their earliest.
Independent float= EST for subsequent activity – LFT for
preceding activity – duration

Critical Activity
An activity whose float is zero is called critical activity.

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Critical Path
Activity Duration EST EFT LST LFT Total Float
1-2 4 0 4 5 9 5
1-3 1 0 1 0 1 0
2-4 1 4 5 9 10 5
3-4 1 1 2 9 10 8
3-5 6 1 7 1 7 0
4-9 5 5 10 10 15 5
5-6 4 7 11 12 16 5
5-7 8 7 15 7 15 0
6-8 1 11 12 16 17 5
7-8 2 15 17 15 17 0
8-10 5 17 22 17 22 0
9-10 7 10 17 15 22 5

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Q. Find the Critical Path

Activity Dependency Duration

A - 4
B - 3
C A 2
D A 5
E B 2
F C 3
G D 2
H E 1
I F, G ,H 3

21-03-2023 Assistant Professor: Adarsh C S 24

 Activi Depe Dura
ty nden tion
cy
A - 4
C=2 B - 3
F=3 I=3
=4 2 4 7 C A 2
A 8
D A 5
1 D E B 2
=5
2
G= F C 3
5 G D 2
B

=1
=3 H E 1

H
I F, 3
G ,H
3 6
E=2

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Earliest Event Time Latest Event Time
E1= 0 L8= 14
E2= 4 L7= 11
E3= 3 L6= 10
E4= 6 L5= 9

E5= 9 L4= 8
L3= 8
E6= 5
L2= 4
E7= 11
L1= 0
E8= 14

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Activity Duration EST EFT LFT LST Total Float
A 4 0 4 4 0 0
B 3 0 3 8 5 5
C 2 4 6 8 6 2
D 5 4 9 9 4 0
E 2 3 5 10 8 5
F 3 6 11 11 8 2
G 2 9 11 11 9 0
H 1 5 11 11 10 5
I 3 11 14 14 11 0

Critical Path = 1-2-5-7-8

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Q5. Ans:
Activity Duration Total float (Lj – Ei – d) Free float (Ej – Ei – d) Independent float (Ej – Li – d)
1-2 20 0 0 0
1-3 25 5 5 5
2-3 10 0 0 0
2-4 12 4 4 4
3-4 6 0 0 0
4-5 10 0 0 0

Critical Path = 1-2-3-4-5

Duration = 46

23-03-2023 Assistant Professor: Adarsh C S 28

Program Evaluation and Review Technique (PERT)
• PERT system is preferred for those projects or operations which
are of non repetitive nature or for those projects in which precise
time determination for various activities can not be made. In such
projects, managements cannot be guided by the past experience.
Example: The project of launching of a space craft involves the
work never done before.
The main objective in the analysis through PERT is to find out
whether a job could be finished by given date.

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Estimating Activity times
• Optimistic Time (to): Is the minimum time an activity is expected
to take if good luck prevails and everything goes right in the first
instance.
• Most Likely Time (tm): The most likely time is time an activity is
expected to take most often when it is repeated under similar
circumstances.
• Pessimistic Time (tp): Pessimistic time is the time an activity
would take assuming unfavorable conditions.

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Expected Time (te) = to + 4tm + tp
6
2
Variance of an activity = tp – to
6

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Probability of Project Completion by a Target Date
It is worth mentioning here that PERT make two assumptions.
a. Total project completion time follow a normal probability
distribution.
b. Activity time are statistically independent with these
assumptions, the bell shaped curve can be used to represent the
project dates. It means that there is 50% chance the entire
project will complete in less than expected time, and 50% chance
that it will exceed the expected time.
The above discussion can be summarized as below:

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a) In case the Z factor is positive (+) the probability of completion
of project by scheduled date is more than 50%.
b) In case of factor is negative (-) the probability of completion of
project by scheduled date is less than 50%
c) In case the Z factor is zero, then the probability of completion of
project schedule date is 50%. This will happen in case the
expected completion date and schedule date are equal.
The standard normal equation can be applied as follows:
Due date – Expected date of completion
Z=
𝞼

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Merits and Demerits of PERT
Merits
It enables a manager to understand easily the relationship that
exists between the activities in a project.
It enables a manager to know in advance, where the trouble may
occur, where more supervision maybe needed.
It suggests areas of increasing efficiency, decreasing cost and
maximizing profits.
It makes possible a forward looking type control.
It enables the use of statistical analysis.

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Demerits
It does not lay any emphasis on the cost of a project except on the
time only.
It does not help in routine planning of the recurring events.
Errors in time estimates under PERT make the network diagram
and the critical path meaningless.
It does not consider the matter of resources required for various
types of activities of a project.

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Comparison between CPM and PERT
CPM
• It is a deterministic model under which the
result is ascertained in a manner of
certainty.
• It deals with the activities of precise well
known time
• It deals with costs of a project schedules
and their minimization.
• It deals with the concept of crashing.
• It does not make use of the statistical
devices in the determination of time
estimates.
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PERT
• It is a probabilistic model under which the
result is estimated in a manner of
probability
• It deals with the activities of uncertain time.
• It has nothing to do with cost of project.
• It does not deal with concept of crashing.
• It makes use of the statistical devices.
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Crashing
Project crashing is when you shorten the duration of a project by reducing
the time of one or more tasks. Crashing is done by increasing the resources
to the project which helps make tasks take less time than what they were
planned for. Of course, this also adds to the cost of the overall project.
Therefore, the primary objective of project crashing is to shorten the
project while also keeping costs at a minimum.
A result of project crashing can be a change to the critical path and the
emergence of a new, different critical path.

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Just as the triple constraint says, if you reduce the duration of the
project, or its time, then costs will in turn have to increase. It’s a
trade off. Crashing project management accounts for the triple
constraint, in that to achieve it, you include additional resources or
reduce the project requirements or scope. However, such drastic
measures cannot be implemented without the sponsor or primary
stakeholders agreeing to the changes.

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Time-Cost Optimization Procedure
• Find the critical path and identify the critical activities.
• Calculate the cost slopes for different activities by using the
formula:

Cost Slope = Crash Cost – Normal Cost

Normal Time - Crash Time
• Rank the activities in the ascending order of cost slopes.
• Crash the activities in the critical path as per the ranking.

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Ex. Q1.
The following table gives duration (in days) & cost (in Rs) of the
activities in a project.
Activity Crash Time Normal Time Normal Cost Crash Cost

1-2 3 4 600 800

1-3 2 2 400 400
1-4 4 5 750 900
2-3 5 7 400 600
2-5 6 7 800 1000
3-5 1 2 500 650
4-5 4 5 600 850

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Indirect cost per day is Rs 200.
a. Draw the network of the project.
b. Find the normal duration and cost of the project.
c. Find the optimum duration & cost of the project.

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Resource Scheduling
Resource scheduling is the process of maintaining a uniform
requirement of resources, wherever possible, and in case due to
scarce resources the delays in the project are inevitable, keeping
these delays to a minimum.

 Resource Smoothing:- In this the constraint is the project

duration or project schedule, which cannot be changed or delayed.
Resource scheduling only smoothens the demand for resources in
as uniform a manner as possible.

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 Resource Levelling:- Resource levelling could result in a later
project finish date if the tasks affected in the critical path. In this
situation, the project duration is not treated as an invariant, as
demand on certain specified resources cannot be met over a
specified level.

Thus, in conclusion, we can state that in resource smoothing

operation, the project duration is kept constant and the required
additional resources are outsourced. In the case of resource
levelling, the project duration can be extended and hence the
requirement of resources is limited to what is available.

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