STAR FINANCIAL CONSULTANT CPA REVIEW CLASSES

NETWORK ANALYSIS AND PROJECT SCHEDULING

⎯ Network analysis is a vital technique in PROJECT MANAGEMENT. It enables taking a systematic
quantitative structured approach to the problem of managing a project through to successful completion.
It has a graphical representation that means it can be understood and used by those with a less technical
background.
⎯ A Schedule Network Analysis is a graphical representation of a schedule showing each sequenced
activity and the time it takes to finish each one. Networks model the interrelated flows of work that must
be accomplished to complete a project. They visually portray the events and activities that are planned
for the project and show their sequential relationships and interdependencies. Networks generally flow
from left to right and may or may not be drawn to scale on a time-based calendar.

➢ Explanation Of Key Terms

Project
A project can be considered to be any series of activities and tasks that
- have a specific objective to be completed within certain specifications.
- have defined start and end dates.
- have funding limits and consume resources.
An activity
This is an item of work to be done that consumes time, effort, money or other resources. It is represented by
an arrow. Tail represents start and head represents end of that activity.
Event/Node
It represents a point time signifying the completion of an activity and the beginning of another new activity.
Here beginning of an activity represents tail event and end of an activity represents head event.
Predecessor Activity
This is an activity that must be completed immediately before the start of another activity.
Successor Activity
Activity, which cannot be started until one or more activities are completed but immediately succeeds them
is called successor activity of a project.
Critical Path
It is the longest path in the project network. Any activity on this path is said to be critical in the sense that any
delay of that activity will delay the completion time of the project.

⎯ Two different techniques for network analysis were developed independently in the late 1950's – these
were:
(i) PERT (for Program Evaluation and Review Technique); and
(ii) CPM (for Critical Path Management).

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 STAR FINANCIAL CONSULTANT CPA REVIEW CLASSES
❖ The Critical Path Method (CPM)
This calculates
(i) The longest path of planned activities to the end of the project
(ii) The earliest and latest that each activity can start and finish without making the project longer
Project Scheduling with activity time
- Determines “critical” activities (on the longest path) by prioritizing activities for the effective
management and to shorten the planned critical path of a project by:
• Pruning critical path activities
• “Fast tracking" (performing more activities in parallel)
• “Crashing the critical path" (shortening the durations of critical path activities by adding
resources).
The critical path can be identified by determining the following four parameters for each activity:
(i) ES – earliest start time: the earliest time at which an activity can begin given that its predecessor
activities must be completed first.
(ii) EF – earliest finish time, equal to the earliest start time for the activity plus the time required to
complete the activity.
(iii) LF – latest finish time: the latest time at which an activity can be completed without delaying the
project.
(iv) LS – latest start time, equal to the latest finish time minus the time required to complete the activity.

⎯ This method consists of two phases calculations. In Phase 1, which is also called forward pass, Earliest
start times (ES) of all the nodes are calculated.
⎯ In Phase 2, which is also called backward pass, Latest finish time (LF) of all the nodes are calculated.
⎯ These two calculations are displayed in the network diagram in a two chamber boxes. Upper chamber
represents LF and the lower one as ES.

The formula used for calculating Early Start and Early Finish dates.
▪ Early Start of the activity = Early Finish of predecessor activity + 1
▪ Early Finish of the activity = Activity duration + Early Start of activity – 1
➢ Total Float and Free Float
Total float:
This is the amount of time an activity can be delayed without delaying the project completion date. On a
critical path, the total float is zero. Total float is often known as the slack.
Total Float = (Late Start date – Early Start date), or (Late Finish date – Early Finish date).
Total Float = duration of the critical path – duration of the non-critical path

Free Float:
This is the amount of time an activity can be delayed without delaying the Early Start of its successor
activity.
Free Float = (ES of next Activity – EF of current Activity).
Keep in mind that if two activities are converging to a single activity, only one of these two activities may have
free float.

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 STAR FINANCIAL CONSULTANT CPA REVIEW CLASSES
REVIEW QUESTION ON NETWORK ANALYSIS
EXAMPLE 1
A project schedule has the following characteristics:
Activity Time
1–2 3
1–3 1
2–4 1
2–5 1
3–5 5
4–9 6
5–6 5
5–7 8
6–8 1
7–9 2
8–10 4
9–10 6

Required: Draw the project network and find the following

(i) Earliest Start Time
(ii) Latest Finish Time
(iii) Critical Path.
(iv) Total Floats and Free Floats.

QUESTION 3
Activity Predecessor Duration In Days
A - 3
B A 4
C A 2
D B 5
E C 1
F C 2
G D, E 4
H F, G 3
Required: Draw a networking diagram and identify the following:
(i) Critical path
(ii) Critical activities
(iii) Early start time for each activity
(iv) Early finish time for each activity
(v) Late start time for each activity
(vi) Late finish time for each activity
(vii) Total float for each activity
(viii) Free float for each activity

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 STAR FINANCIAL CONSULTANT CPA REVIEW CLASSES
QUESTION 3
Activity Predecessor Duration In Days
A - 5
B A 4
C A 5
D B 6
E C 3
F D,E 4

Required: Draw a networking diagram and identify the following:

(ix) Critical path
(x) Critical activities
(xi) Early start time for each activity
(xii) Early finish time for each activity
(xiii) Late start time for each activity
(xiv) Late finish time for each activity
(xv) Total float for each activity
(xvi) Free float for each activity

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