Project Planning, Management & Control

NETWORK PLANNING

Contents

1. Introduction ........................................................................................... 1
2. Network Representation ........................................................................ 1
3. Critical Path Networks .......................................................................... 2
4. Computer Assisted Documentation........................................................ 3
5. Strategy of Adjusting the Project Network ............................................ 6
6. Applications of Networks to Project Control......................................... 6
7. The Control Cycle.................................................................................. 7
8. Reporting ............................................................................................... 7
9. Re-scheduling for Timing ...................................................................... 8
10. Re-scheduling for Resources ................................................................. 9

Copyright © 2008 University of Warwick

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Network Planning

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Project Planning, Management & Control page 1

NETWORK ANALYSIS
1. INTRODUCTION
Network Analysis is a generic term for a family of related techniques developed to aid
management in the planning and control of projects. These techniques show the inter
relationship of the various jobs or tasks which make up the overall project and clearly
identify the critical parts of the project. They can provide planning and control
information on the time, cost and resource aspects of the project.

Network analysis is likely to be of most value where projects are:-

(a) Complex, i.e. they contain many related interdependent activities

(b) Large, i.e. they contain many tasks with varying resource types and costs
(c) Where restrictions exist, i.e. target completion dates, limited resources or costs
limits

2. NETWORK REPRESENTATION
The method of representing the tasks as boxes linked by lines to show their sequence
is known as the ACTIVITY ON NODE technique. The resulting networks are known
as precedence diagrams. A START node and FIMSH node are required to complete
the network.

Generally, the lengths of the lines have no significance and they represent logical
dependencies only. Usually, when one activity has finished the next in line is
assumed to start immediately. However, more accurate modelling may sometimes
require a lag time to be introduced.

An alternative representation is ACTIVITY ON ARROW. This is the more

traditional method but requires the use of dummy activities to uniquely number
parallel activities and to express al1 the logical dependencies. In computerised
projects this is wasteful of memory for large networks so the method is largely giving
way to precedence networking.

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3. CRITICAL PATH NETWORKS

The object of the basic technique is to represent the activities of the project in their
logical sequence connected together to form a network, and then identify the longest
path through the network as this controls the completion date of the project.

3.1 Time Analysis

Time Analysis is accomplished by first doing a Forward Pass of time from the start of
the network which establishes the early times, i.e. the earliest start (ES) and finish
(EF) times that each activity can logically be achieved. Next a Backward pass of time
from the end of the network starting from the target finish date, establishes the latest
times that each activity must be undertaken by to achieve the required completion
date, (latest start (LS) and latest finish (LF)).

3.2 Float
The difference in time between the late start and early start for a particular activity is
called the Total Float. If this is positive (i.e. the late start date is after the early start),
then that activity can be delayed by that period of time without affecting the end date
of the project.

Conversely, if the total float is negative, then the project end date will be late by the
extent of the negative float. (Note that in this case that the early time is later then the
late time, which at first seems anomalous but is explained by the above definitions
and is the cause of the float being negative).

When early and late times are the same, the float is zero. A path with zero float is
called a Critical Path. This is of academic interest because in real networks more that
one path can have zero float. Activities on late paths (with negative float) should be
manipulated (controlled) so that float is adjusted to zero. This indicates what needs to
be done so that the project can be completed by the target date.

3.2.1 Paths of Constant Float

A feature of the techniques is that activities along a particular path have the same lot,
until the path branches, then one branch will maintain the float of the parent path
while the other(s) will have greater or equal float. This is of vital importance when
identifying cause of lateness of a project or analysing other aspects of timing.

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3.3 Milestones
Intermediate activities can be set target dates. This is normal if those particular
activities are to be used as milestones. Float is then calculated against the milestone
dates although it would be over written if subsequent milestones or project end dates
resulted in lower values of float. This is a useful way of distributing float throughout
a project at the planning stage.

Float can also be affected by target start dates, i.e. NOT to be started before…...dates.

However the real power of the Critical Path Method (CPM) is that once the logic of
the project activities has been defined for arithmetic analysis then computers can be
used not only for the time analysis calculations butt also to assist with resource
scheduling, calculation of spend profiles and bar charts.

4. COMPUTER ASSISTED DOCUMENTATION

The calculations of ES, EF, LS, LF and Total Float can be performed by hand for
small networks. This data can even be related to calendar date, taking out weekends,
holidays and works shutdowns, if sufficient care is taken. However, networks
representing real situations tend to have many more activities and complicating
constraints than can be managed by hand.

Some documentation which is easily available from a computerised project

management system would be extremely tedious, perhaps even impossible to produce
by hand.

4.1 Traditional Expense of Computers

Computers have been available to assist but historically these were very expensive,
required specialist staff for running the computer as well as creating the network, and
have been non-interactive (i.e. run in batch mode overnight). The dramatic
development of micro-computers and their software has put sophisticated interactive
computing within reach of anyone. On-screen graphics and instant time analysis has
simplified the application of CPA, so it is no longer a specialist subject. The quick
turn-round time for updating networks means they can more closely match the
progress of work.

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4.2 Table of Data

The simplest document that a computer based project management software package
can produce is a table or list of data. The major advantage that a computer generated
list has over a typed or word processed list is:-

- It can access both input data and calculated data (e.g. Early Start times)
- flexibility in which data fields are present (e.g. Early Start &/or Late Start)

- flexibility in which data records are selected (e.g. activities for the whole project
or just a single Work Package)
- ease of updating documents print results to computer file for further processing

4.3 Printing Bar charts

As a computer maintains the start and finish dates (Early, Late, Planned, Scheduled)
of the activities in the project, then it can be instructed to print bars which begin and
end at the desired dates. A wide range of selection and sort criteria can be applied, as
when printing tables described above.

4.4 Multiple Calendars

Most large development (or construction) contracts will involve sub-contractors with
different holiday patterns, or perhaps sections of work will be undertaken in different
countries with holidays different from the UK norm. Software packages can take
account of this by maintaining separate calendars and reporting activities against their
respective calendar. However, one disadvantage of such practise is that float is
normally calculated in "working days". Consequently, if a path through the network
consists of activities on different calendars, then the float along the path will vary as
the calendars change. This complicates the analysis of networks for late or critical
paths.

4.5 Resource Histograms

A computer can also apply the start and end dates of each activity to the resource
requirements of the activity, then accumulate similar resources for all activities in the
network (or as otherwise instructed) thereby showing how the resource demand varies
with time. The X-axis on such a plot can usually be very simply adjusted so that the
daily resource requirement can be accumulated averaged (the term "bucketed" is
sometimes used) over a week, month or quarter year etc.

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4.6 Resource Scheduling

If a resource demand profile peaks above the level of availability, then consideration
should be given to rescheduling activities with float so that the peak is minimised.
Most software packages include such a routine. Scheduled Dates are suggested which
should be used instead of early start etc, to minimise the over-demand on resources.
A revised bar chart then needs to be printed.

If there is sufficient float for over-demands to be avoided, then some other steps must
be taken by the project manager. The choices are:

- Review the logic or work sequence to check that tasks are not being forced in
parallel unnecessarily

- Check whether overtime will accommodate the over-demand

- Employ temporary or contract labour.
- Let the programme run late.

4.7 Cumulative Curves or S-Curves

Once the daily or weekly resources demand is established, the figures can be
processed to produce the cumulative demand curve. This might be done either within
the project management software or possibly by exporting data to a spreadsheet. This
latter option usually gives greater flexibility in processing and presentation.

When the date is plotted an S-shaped curve generally results. This may have little use
at the Launch phase of a project but becomes the base-line document during the
control cycle phase, when actual achievement and predicted performance are
superimposed as the project progresses.

4.8 Spend Profiles

Money is a resource so the rate of spend of money can be shown as a histogram or
accumulated as an S-curve. Once again, the computation can sometimes be done
within the project management software although spreadsheets lend much greater
flexibility and are particularly useful for creating financial models for accountants.

Accountants require to deal with figures rather than graphs and charts; their principle
method of reporting is by variance analysis, which involves subtracting actual spend
from budget spend. When costing labour, they may separate overheads from wages,

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and often want to superimpose different inflation rates for future years. The cost of
borrowing to finance a project is a function of the cash flow profile, which is the
difference between the spend profile and the payment profile. The spend profile must
correctly identify when sub-contractors are likely to submit their invoices and
appropriate times for clearing and payments, i.e., payment is not strictly tied to
completion of work.

However, although figures must be made available for accountants, it is usually the
project manager who must take decisions for controlling the work. The correct
graphical presentation can greatly ease decision making, rather than needing to
comprehend tables of numbers which usually only represent the situation at one point
in time.

5. STRATEGY OF ADJUSTING THE PROJECT NETWORK

When planning the initial project or updating an established plan, it is essential there
is a strategy being followed and changes made systematically. The flow chart (page
7) shows a strategy whereby the network is first adjusted for the correct completion
date.

Next there is a check that resources are available and to what extent peaks can be
levelled.

Finally, the cost is calculated. If this was outside the permissible budget then changes
to the starting assumptions might be necessary.

6. APPLICATIONS OF NETWORKS TO PROJECT

CONTROL
The control phase of a project concerns a control cycle, whereby actual performance
is compared with the Base Line plan, deviations are detected and corrective actions
are determined. These actions are introduced to modify the remaining plan, according
to the strategy adopted as discussed previously.

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7. THE CONTROL CYCLE

The control cycle consists of issuing instructions according to the base line plan, for
project execution. After a period, measurements are collected relating to the input of
resources and money, and the output of progress (completed activities).

These measurements are accumulated and compared to the appropriate base line
figures. This can be a clerical task. The variance data is fed to management for
analysis and consideration of response.

Management can make decisions concerning re-scheduling or timing of activities, re-

scheduling of resources, and investigating causes of variance, overspends may be
caused as a result of poor initial estimating, poor efficiency of the work-force, or
perhaps the inclusion of unbudgeted additional work.

Except in the case of the very short term or situations where there is an inevitable,
straightforward sequence of events, it would be rare that plans work out exactly as
originally conceived. At the start of the plan there is rarely sufficient information to
plan accurately. There is always considerable uncertainty about events in the future.

When changes occur, the new information should be fed into the plan to determine the
best decisions and resource allocations to achieve the project objectives. Thus the
first loop on the control cycle is completed and new instructions are issued for
implementation during the next cycle.

When external changes are imposed (e.g. change of specification), then the plan
should be used to evaluate the effect. Without a plan the changing circumstances can
only be approximated.

8. REPORTING
As illustrated above, the plan should be a dynamic model of the project. However, it
is to be used as a management tool it must as far as practical, be always up to date.
The input/output measurements should be taken regularly so that variance data reports
are as current as practical. If reports are delayed then managers may take decisions
on a judgmental basis without waiting for planning analysis.

The essential questions to be answered when updating a plan are:

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- Is the planned logical sequence of activities still current?

- What activities are completed and what are the remaining durations of
uncompleted activities?

- What resources and costs have been utilised or incurred so far?

- What are the current estimates of resources and costs required to complete
outstanding activities?

However, the input figures (resources and costs so far) will generally be made
available by the company infrastructure, which will probably be on a monthly basis.
It may be difficult, if not impossible to acquire these figures more regularly.

Revised estimates to complete are usually unpopular and involve a lot of people (the
work package holders) in a lot of re-calculation. This must be endorsed by
management at all levels if meaningful figures are to result. The total effort can be
reduced by only demanding frequent re-estimates for those work packages with
adverse variances.

The re-estimating of future requirements must not be an open cheque to invite

additional spend, procedures must be in place so that predicted adverse variances
must be accounted for and approved before they occur or alternative actions advised.

Planning in a high level of detail is not a solution to obtaining tighter project control.
The more detailed a plan attempts to be, the more likely it is that some aspects will
change so the plan becomes inaccurate and then confidence in it is undermined, e.g., a
plan detailing activities as short as one day is likely to need updating after one week
and the number of activities to be progressed will be more than when the same work
is programmed on a coarser scale. Thus the workload can become onerous.

9. RE-SCHEDULING FOR TIMING

The principle assistance to re-scheduling for timing is the calculation of total float
from the critical path analysis network. Paths which are running late have negative
float. If the network is being run on micro-computer it is a simple task to sort the
activities from these paths, in order of criticality. Depending upon the facilities
available in the software, it will be possible to either print the data as a list for
inspection, plot the data as a bar chart or possibly as a network. A bar chart is
favoured.

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The extent of the negative float indicates the extent to which the path must be
shortened. Each tack should be considered to see if a saving on duration time can be
justified (or on leads and lags if they are used). Considerations should include affects
of overtime, additional resources, chasing suppliers for earlier delivery dates or re-
sequencing of activities.

If all of these fail, then the probability is that the project will finish late. The most
late path may be adjusted to finish on time but the remaining late paths must similarly
be adjusted. Generally these paths can be treated independently and this greatly
simplifies the re-scheduling of all tasks to finish on time.

10. RE-SCHEDULING FOR RESOURCES

It was mentioned in the project planning session that computer software is able to re-
schedule activities within the constraints of their total float. Manual adjustments
could be made by adjusting leads and lags but the procedure would be tedious.

The algorithm that schedules the activities usually assumes that first priority on
resources should be given to activities with least float. It would then slip less critical
activities to times when resources were available. Clearly, the computer must be
instructed as to what the available resource profiles are.

More sophisticated programmes allow a choice of whether a target finish date or a

resource availability shall be the constraining feature. Secondary resource
availabilities (to be used only when primary resources have been taken up) and
secondary target finish dates (beyond which the project must NOT slip) and manually
entered activity priorities are additional features sometimes available.

The outcome of such software is that SCHEDULED start and finish dates are
suggested, instead of using ES, EF, LS and LF. Remaining Float is usually quoted.

10.1 Variance Analysis

Although the term is usually applied to control of money it can also be used to report
changes in spend of manpower. This is usually favoured among project engineers
who have a greater "feel" for how many man hours of work a task will take, rather
than the charge the accountants say the task will cost after they have included

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overheads, i.e., project engineers' can control man hours but have little control over
overheads.

The method is usually applied to each work package to monitor performance. It

requires the establishment of a base line plan which details predicted spend per
accounting period for each work package. Thus it is possible to define at the end of
any accounting period:

- Predicted spend during this period

- Predicted accumulated spend at the end of the period

- Predicted accumulated spend at the end of the project

From actual figures recorded it is possible to calculate the simple variance for the
above figures. i.e.,

- Variance of spend during this period.

- Variance of spend so far.
If a re-estimate of spend to complete, from the end of the period is added to the spend
so far, then a revised Total Estimate results from simple addition and an overall final
variance can be predicted. These figures form a snap-shot of the picture described by
the S-Curve.

However, these figures indicate the extent of spend but not the extent of progress. An
estimate of the Value of Work Done (normally referred to as the Budget Cost of the
Work Performed - BCWP) should be made for comparison with the recorded spend so
far. However, the VOWD is often difficult to establish. If the planning has been
done in a high level of detail, then the VOWD can be calculated from the sum of the
resources originally budgeted on the activities which are now finished.

On the other hand, with a less detailed plan the individual activities will be longer so
will be more likely to be ongoing (rather than finished) so an estimate must be made
of what has been achieved.

A feature of this analysis is that it quantifies the total variance as either

overspend/under spend or network changes. The latter identifies where additional
work has been included in the project.

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10.2 Performance Index

If Work Packages are of varying size then the absolute variation of spend (difference
between budget and predicted) might not indicate the extent to which it is deviating
from plan. Value of the work done divided by actual cost is termed the cost
performance index.

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