Network Analysis Demystified

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Network analysis is defined as the process of “breaking down a complex project’s data into its parts (activities, events, durations, etc.) and plotting them to show their interdependencies and interrelationships.”

Network analysis as a process serves as the foundation of several special analytical methods used whenever it is necessary to analyze and optimize a network. These methods are used in project management, logistics, and transportation, just to give a few examples, and they include:

  • Critical Path Method (CPM)
  • Critical Chain Method (CCM)
  • Program Evaluation and Review Technique (PERT)

Let’s now take a closer look at these methods to understand the differences between them, their strengths, and their weaknesses.

Critical Path Method (CPM)

Often called critical path analysis (CPA), the critical path method (CPM) is an activity-scheduling algorithm developed by Morgan R. Walker of DuPont and James E. Kelley Jr. of Remington Rand in the late 1950s. CPM has established its place as an effective method for use with all forms of projects, including software development and product development.

At the heart of the CPM method is a construction of a model that includes a list of all activities required to complete the project, the time that each activity will take to complete, the dependencies between the activities, and logical end points. CPM calculates the earliest and latest that each planned activity can start and finish without delaying the project.

Critical Chain Method (CCM)

Also known as critical chain project management (CCPM), critical chain method (CCM) is based on a management paradigm called the theory of constraints (TOC), which views any manageable system as being limited in achieving more of its goals by a very small number of constraints. Eliyahu M. Goldratt introduced CCM in 1997 in his book Critical Chain. Independent studies have demonstrated that projects managed using the CCM method finish up to 50 percent faster and cheaper than projects managed using traditional methods.

CCM places emphasis on resources, including people, equipment, and physical space. Unlike the Critical Path and all the methods that are derived from it, CCM requires a large degree of flexibility in start times.

Program Evaluation and Review Technique (PERT)

Commonly abbreviated as PERT, this statistical tool and method designed to analyze and represent the tasks involved in completing a given project was developed by the United States Navy in the 1950s for planning and scheduling large army projects. PERT was quickly adapted to solve complex project management challenges all over the industry. For example, one of the earliest adopters of PERT was the Olympic committee during the 1968 Winter Olympics in Grenoble.

Incorporating uncertainty to account for unknown details, PERT estimates the minimum time needed to complete the total project as well as the time needed to complete each project task. Compared to other methods, PERT is more event-oriented than completion-oriented.

Conclusion

Network analysis is the key process behind many popular project management tools designed to handle complex and time-sensitive operations, such as Critical Path Method (CPM), Critical Chain Method (CCM), and Program Evaluation and Review Technique (PERT).