5.3 Critical Path Analysis (HL)

• CPA provides managers and decision makers with a visual representation of a complex project which may be easier to interpret.

• It can be used to suit a range of circumstances and help solve a variety of business problems or issues.

• It reduces the time lost between tasks, ensuring that projects run smoothly and are completely in the most time efficient way.

• As a planning tool, CPA encourages forward planning in business organizations.

• It forces managers and decision makers to consider all aspects of a project, including resourcing all tasks, thereby improving efficiency in production.

• It helps to improve the firm's cash flow position by operating more efficiently and avoiding delays to projects.

• Construction of a network diagram alone does not guarantee the smooth completion of a project. In reality, there are likely to be disruptions and unforeseen circumstances that may well delay the project.

• Similarly, during the planning stage, not every single task in a project may be included; human error therefore limits the extent to which CPA assists with project management.

• Some projects are immense, making network diagrams complex and difficult to manage.

• Network analysis will only be helpful if the data used to construct the network diagrams are complete and reliable.

Answers

(a)  Define the term critical path analysis.  [2 marks]

Critical path analysis is a visual planning tool that shows the activities, duration, and interdependencies of all activities for a given project.

Award [1 mark] for a vague definition that shows some understanding.

Award [2 marks] for a clear and accurate definition that shows good understanding, similar to the example above.

(b)  Explain why understanding float time is important for project managers.  [4 marks]

Float time, also known as slack, refers to the amount of time a task can be delayed without affecting the project's overall completion date. Understanding float time is crucial for project managers for several reasons:

• Identifying the critical paths - Float time helps project managers to identify the critical path in a project. By understanding float time, project managers can pinpoint critical tasks that require close monitoring to ensure they stay on schedule.

• Resource allocation - Knowing which tasks have float time allows project managers to allocate resources more effectively. Tasks with more float time are less critical, allowing for more flexible resource allocation. On the other hand, critical tasks may require additional resources or close attention to avoid delays.

• Risk management - Float times provide a buffer against unforeseen delays. Project managers can use this buffer to manage risks and uncertainties that may arise during the project. It acts as a safety net, allowing for adjustments without jeopardizing the project's overall timeline.

• Communication and decision-making - Project managers need to communicate effectively with employees and other stakeholders, including float time information. It helps in setting realistic expectations, explaining the potential impact of delays, and making informed decisions about project priorities.

Award [1 - 2 marks] for an answer that shows some understanding of the demands of the question, although the response lacks detail in areas.

Award [3 - 4 marks] for an answer that shows good understanding of the demands of the question, with appropriate use of business management terminology throughout, similar to the examples above.

(c)  Explain two reasons why businesses use critical path analysis.  [4 mark]

Possible reasons for using CPA could include an explanation of any two of the following points:

• Critical path analysis helps managers to focus on identifying the activities that are dependant on other tasks for their completion in a timely manner.

• Understanding the dependencies between different activities helps to organize activities and resources to ensure the project progresses in an efficient way, especially with large and complex projects.

• It helps reduce the risks and costs of large and complex projects.

• Accept any other reason that is clearly explained.

Mark as a 2 + 2

For each reason, award [1 mark] for a valid point, and a further [1 mark] for the explanation, up to the maximum of [4 marks].