1. Operations Management
Unit 5
Project Management
HL ONLY

2. Learning Objectives Construct and interpret a network diagram
Analyse how critical path analysis (CPA) and network diagrams can be used to help with project management
Apply CPA to different projects
Evaluate the usefulness of a network in the management of projects

3. Critical Path Analysis (CPA)
A planning technique that identifies all tasks in a project, puts them in the correct sequence and allows for the identification of the critical path
Critical Path Analysis is a planning and management tool with the following advantages:
Allows a business to plan ahead - efficiency
Is time related giving an accurate plan
Enables resources to be planned ahead
Allows for good management
Helps with cash flow management
Reduces waste
CPA may be used as part of the decision making process to allow a business to plan and monitor operations
Time related – identifies the maximum time for an operation to be completed
Identify potential problems in implementing operation Identifies where and when resources (including human ones) are needed

4. Critical Path Analysis
CPA is sometimes called network analysis
It’s a tool used to plan activities so that a job can be completed in the SHORTEST time
It breaks down a job into a number of tasks and looks at their DEPENDENCIES
Used commonly in manufacturing and construction

5. Parts of a Network

7. A simple Network diagram

8. Illustrating simultaneous activities

9. Developing the network

10. Earliest Start Time (EST)
The main reason for drawing a network is to identify the CRITICAL activities
To do this we must calculate the earliest time at which any given activity can start
This is called the Earliest Start Time (EST) of the activity
EST = EST of Previous activity + Duration of previous activity

11. Earliest Start Time (EST)

12. EST and simultaneous activities

13. EST Recap The EST of the first activity is always ZERO
Calculate the EST by working Left to Right across a network
EST = EST of Previous activity + Duration of previous activity
When there are 2 simultaneous activities the HIGHEST figure is used as the EST

14. Latest Finish Time (LFT)
There is one final piece of information needed to complete our network diagram
To identify the CRITICAL activities we must also know the latest time at which any given activity must end
This is called the Latest Finishing Time (LFT) of the activity
It is calculated by working BACKWARDS across the network using the following formula
LFT = LFT at the end of following activity – Duration of following activity

15. Latest Finish Time (LFT)

16. LFT and simultaneous activities

17. LFT Recap The LFT of the last activity is always equal to its EST
The LFT of the first activity is always ZERO
Calculate the LFT by working Right to Left across a network
LFT = LFT at the end of following activity – Duration of following activity

20. The Float Any activity without spare time is CRITICAL
Spare time is referred to as the FLOAT

21. Calculating the FLOAT
FLOAT= LFT – (EST+ Duration)
Total FLOAT = the amount of spare time available for an activity without delaying the whole project
Activity
LFT
EST
Duration
Total
FLOAT A 14 12 2 AA B 17 3

22. What does this mean? This data tells us:
Activity
LFT
EST
Duration
Total
FLOAT A 14 12 2 AA B 17 3
This data tells us:
Activity A can be delayed 2 weeks without delaying the whole project
Activity AA is CRITICAL
any delay will hold up the project
Activity B is CRITICAL

24. Dummy Activities
Dotted line representing logical dependency

25. Dummy Activities

26. Identifying the Critical Path

28. Advantages of CPA
Managers need to consider exactly what activities are involved in a project
Managers can identify CRITICAL activities to be completed on time to get the whole project completed ASAP
Good use of CPA can enable managers to reduce time to market and costs, and make the business more efficient

29. Disadvantages of CPA Diagrams can become complicated and unmanageable
Relies on good estimates from reliable staff
Can be padded to make performance look better than it really is
OR can be overoptimistic
Can make the company very dependent on suppliers and hence they need to be very reliable

30. Other issues
Managers must agree ‘what success looks like’ so that staff do not cut corners
Managers must also agree what resources and spend are available to the project
Managers must also watch the utilisation of resources throughout the project in order to schedule work to make the most of paid staff

31. CPA and Lean Production
Lean production aims to reduce wastage and thereby make a business more efficient and competitive.
Two operational strategies based on CPA to achieve Lean Production:
Kaizen (continuous improvement)
JIT – Just In Time production

32. Kaizen
Employees attempt to improve what they do in some small way every day
Small regular contributions from the whole firm can have big cumulative effects

33. Raw Materials and components
JIT
Holding stock increases costs:
Warehousing, breakages, capital
JIT aims to minimise the stocks held at any point of the production process:
Raw Materials and components
Work in progress
(unfinished goods)
Finished goods