NETWORK ANALYSIS
Network is a set of symbols connected with each other with a sequential relationship with each step
making the completion of a project/event. A business plan or any project contains various activities.
Any delay in any activity will affect the other activities, project is delayed, costs will go up leading to
reduced profit. A number of networking techniques have been developed for project scheduling. They
are:
Program me evaluation and Revuew techniques
Critical path method
Line of balance
Graphical evaluation and Review techniques
Work shop analysis and scheduling programme
Among these, PERT and CPM are the most widely used network analusis techniques in project
management. Importance of network analysis The network analysis helps in identifying the hidden
stages involved in project estimates. By identifying them the management can improve on the
ongoing project estimates and learn for future use. The following are some of the points that speak
about the importance of network analysis.
1. The whole project has to be considered with reference to the sequence of activities and
events. Sequence means activities that are to follow on after another leading to an event.
2. The events should be considered as different branches of operations.
3. The different segments of the project are treated as separate network which are finally
integrated to the overall network. Then the entire project may be put on one network.
4. The time estimates may be done based on either previous experience of similar types of
operations or may be based on probabilities for the ones where previous experience does not
exist.
5. Cost estimates would depend on the project time estimates and the charge of prices of
different factors of production.
6. The physical progress of the project, nature of events, job formed and snags in different
areas of project work would call for corrective action at appropriate time. The concept of
crashing would be helpful to reduce penalties.
Programme evaluation and Review techniques (PERT)
PERT was first developed as a management aid for completing Polaris Ballistic missile project in
USA during 1958. It worked well in completing this project well in advance. From then on PERT
schedules the sequence of activities to be completed in order to accomplish the project within a short
period of time. It helps to reduce both cost and time of the project.
Steps involved in PERT:
The various activities involved in the project are drawn up in a sequential relationships to
show which activity follows what.
The time required for completing each activity of the project is estimated and noted on
network.
The critical activities of the project are determined.
The variability of the project duration and probability of the project completion in a given
time period are calculated.
Advantages of PERT:
1. It determines the expected time required for completing each activity.
2. It helps completion of project with in an expected time period.
3. It helps the management in handling uncertainties involved in the project there by reducing
the element of risk.
4. If enables detailed planning of activities.
5. It stresses for correct action at a given time period there by helping the project to be
completed on time.
Limitations of PERT:
1. Difficult to provide realistic/correct time estimates for new activities in the absence of past
data.
2. There is no provision in this techniques about requirement of resources at various
activities.
3. For the effective control of a project using PERT, it calls for frequent updates and revision
of calculations which is a costly affair.
Critical path method (CPM)
CPM was first developed by Dupont of USA in 1956 for doing periodic overhauling and maintenance
of a chemical plant. CPM differentiates between planning and scheduling of the project. Planning
refers to determination of activities to be accomplished; scheduling refers to the introduction of time
schedules for each activity of the project. The duration of different activities in CPM are
deterministic. There is a precise known time for each activity in a project.
Advantages of CPM:
1. It helps in ascertaining the time schedule of activities having sequential relationship.
2. It makes control easy for the management.
3. It defines the most critical elements in the project. Thus, the management is kept alert and
prepared to focus their attention on the critical activities.
4. It makes room for detailed and better planning.
Limitations of CMP:
1. CPM operates on the assumption that there is a precise known time that each activity in the
project will take. But this may not be true in real practice.
2. CPM estimates are not based on any statistical analysis.
3. CPM cannot be used as a controlling device for the simple reason that any change
introduced will change the entire structure of network. It is not a dynamic controlling device.
Difference between PERT and CPM
Though PERT and CPM look same, they differ in certain aspects. The differences between PERT and
CPM are listed below:
PERT CPM
Its origin is military Its origin is industry
Event oriented approach Activity oriented approach.
Allows uncertainty. Does not allow uncertainty
It has three time estimates Only single time estimate
Time based Cost-based
Probabilistic model Deterministic model
There is no demarcation between critical Marks critical activities
and non-critical activities.
It averages time. Does not average time
It is suitable where high precision is Suitable where requirement of precision
required in time estimates. is reasonable.
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