BUSINESS PLANNING & PROJECT MANAGEMENT

UNIT - 4
Network Techniques
PERT and CPM

Introduction to Network Techniques

Network techniques are structured analytical methods applied in project management to

effectively plan, organize, schedule, and monitor complex projects. These tools help
visualize interdependent activities, determine task sequences, allocate resources
efficiently, and estimate project completion timelines.

Among the most popular network-based tools used in managing projects are:

 PERT (Program Evaluation and Review Technique)

 CPM (Critical Path Method)

Both PERT and CPM rely on network diagrams to map out the flow of activities involved in
a project. However, they differ significantly in their assumptions, approach, and
applicability.

1. PERT (Program Evaluation and Review Technique)

Definition

PERT is a planning and control tool designed to manage projects with uncertain activity
durations. It adopts a probabilistic approach to estimate how long each task may take,
making it suitable for projects where there is a high level of uncertainty.

Key Characteristics

 Primarily used in research and development environments.

 Assumes variability in activity duration.
 Integrates uncertainty and risk in time estimations.
 Uses three time estimates to calculate expected duration:
o Optimistic time (O): Fastest possible time to complete an activity.
o Most likely time (M): The time that is most probable under normal conditions.
o Pessimistic time (P): The longest time an activity might take in case of unexpected
issues.

Expected Time (TE) Formula

TE=O+4M+P6TE = \frac{O + 4M + P}{6}TE=6O+4M+P

This formula offers a weighted average to reflect the uncertainty in time estimations.

Common Applications of PERT

 Launching new products

 R&D projects
 Complex system design
 Projects with undefined or unpredictable activities

2. CPM (Critical Path Method)

Definition

CPM is a deterministic scheduling technique used for projects where activity durations are
predictable. It helps determine the longest sequence of dependent tasks (the critical path),
allowing project managers to identify which tasks must be completed on time to avoid
delays.

Key Characteristics

 Suitable for projects with well-defined, repetitive tasks.

 Assumes fixed activity durations.
 Focuses on the cost-time relationship.
 Determines the Critical Path, which is the sequence of tasks that directly impacts the
project's overall duration.

Critical Path Details

 Longest sequence of connected tasks in the project schedule.

 Any delay in a critical path task results in project delay.
 Non-critical tasks have slack (or float), offering flexibility without affecting project
deadlines.

Common Applications of CPM

 Infrastructure and building projects

 Assembly line and manufacturing operations
 Engineering and plant installations
 Routine business processes

4. Benefits of PERT and CPM

PERT Advantages

 Offers a clear view of time uncertainty and associated risks.

 Helps manage projects with unpredictable activities.
 Facilitates better decision-making in dynamic environments.
 Encourages flexibility and adaptive scheduling.

CPM Advantages

 Simplifies project scheduling with well-known durations.

 Highlights the critical path for effective task prioritization.
 Allows for cost optimization by evaluating time-cost trade-offs.
 Supports project "crashing" (shortening task durations by increasing resources) to meet
tight deadlines.
 5. Limitations

PERT Limitations

 Dependent on accurate and realistic estimation of time values.

 Time-consuming to update and manage for large projects.
 Complex to implement when numerous activities are involved.

CPM Limitations

 Inflexible to time variations or unpredictable changes.

 May neglect qualitative aspects like scope and quality.
 Less effective for projects involving research or innovation.

6. Practical Applications in Business and Management

PERT and CPM equips us with vital project management skills:

 Enhances project forecasting and time planning.

 Aids in optimal allocation of resources across departments.
 Improves understanding of risk in project environments.
 Essential for managing deadlines, especially in cross-functional teams.

Real-Life Example

A construction company employs CPM to manage housing development projects by

identifying tasks like excavation, foundation laying, and roofing as critical. These must
follow a strict timeline. Meanwhile, a pharmaceutical R&D team might apply PERT to
estimate the uncertain duration of clinical trials, where many factors influence task
completion.

PERT and CPM are powerful network-based tools that facilitate efficient project
management. PERT is ideal for uncertain, exploratory projects, while CPM is more
suitable for structured, deadline-driven initiatives.

Risk Analysis Using Simulation with Crystal Ball 2000

1. Introduction to Network Techniques and Risk

In project management, especially for complex and large-scale projects, it's essential to
plan, schedule, and control activities efficiently. Network techniques like PERT (Program
Evaluation and Review Technique) and CPM (Critical Path Method) help visualize and
manage interdependent tasks. However, these traditional models assume fixed or
estimated time durations and often overlook the uncertainties and risks inherent in real-
life projects.

To address this limitation, risk analysis using simulation techniques provides a more
dynamic and realistic approach to project planning. One of the most effective tools for this
purpose is Crystal Ball 2000, which integrates seamlessly with Microsoft Excel to perform
advanced risk assessments using Monte Carlo simulations.
 2. Crystal Ball 2000

Crystal Ball 2000 is a simulation and forecasting software developed to support risk
analysis and decision-making. It works as an Excel add-in, allowing users to transform
standard spreadsheets into powerful predictive models.

Key Features:

 Performs Monte Carlo simulations to analyze uncertainty.

 Models probability distributions for input variables.
 Provides forecasts with confidence intervals.
 Offers tools for sensitivity analysis to identify key risk factors.

By replacing static inputs with dynamic probability distributions, Crystal Ball enables
project managers to better understand potential outcomes and make informed decisions.

3. Integrating Simulation into Network Techniques

Traditional vs. Simulation-Based Planning

 PERT/CPM techniques use expected time estimates to build project schedules.

 These estimates are often based on best guesses or historical data, and do not account
for variability.
 Simulation, on the other hand, introduces a range of possible values, reflecting real-world
uncertainties.

With Crystal Ball 2000, network models like PERT can be enhanced by simulating the
variations in activity durations. This provides a more probabilistic view of the entire
project timeline.

4. Steps in Risk Analysis Using Crystal Ball 2000

Step 1: Define the Model

Create a network-based schedule in Excel using PERT or CPM logic. Identify all project
activities and their dependencies.

Step 2: Assign Probability Distributions

For each activity duration or cost, assign a probability distribution such as:

 Normal Distribution (common for predictable variations)

 Triangular Distribution (suitable when only minimum, maximum, and most likely values
are known)
 Uniform Distribution (used when any outcome is equally likely)

Step 3: Set Forecast Cells

Choose the final project outcomes you want to analyze, such as total project duration or
total cost.

Step 4: Run the Simulation

 Crystal Ball conducts thousands of simulations (called Monte Carlo iterations) to
generate a range of possible outcomes. Each iteration randomly selects values from the
assigned distributions and recalculates the model.

Step 5: Analyze Results

Results are displayed through:

 Histograms showing the distribution of outcomes.

 Percentile graphs indicating the probability of meeting deadlines or budgets.
 Sensitivity charts to highlight which activities contribute most to risk.

5. Benefits of Simulation-Based Risk Analysis

1. Realistic Project Forecasting

Simulation provides a full spectrum of possible results rather than a single outcome,
making planning more accurate.

2. Better Risk Visibility

It highlights which variables carry the highest risk, enabling targeted risk mitigation.

3. Enhanced Decision-Making

Managers can set realistic expectations, plan contingencies, and make informed trade-offs
between cost, time, and resources.

4. Easy Integration with Excel

Crystal Ball works within Excel, making it accessible and convenient for those already
familiar with spreadsheets.

6. Applications in Management and Business

Apply simulation-based risk analysis in a wide range of domains:

 Project Management: Forecasting completion timelines, budgeting, and resource

planning.
 Strategic Planning: Evaluating the impact of uncertain factors on long-term goals.
 Investment Analysis: Assessing financial risk in capital projects or portfolio management.
 Supply Chain Management: Analyzing variability in lead times, demand, and inventory
levels.
 New Product Development: Managing the uncertainty in development and market
acceptance timelines.

7. Example Scenario

Case: Software Development Project

 A company is launching a new mobile app. The development project includes tasks like UI
design, backend integration, testing, and deployment. Each task has uncertain completion
times.

Using Crystal Ball 2000:

 The project manager builds a PERT network in Excel.

 Time estimates for each activity are assigned triangular distributions.
 The simulation reveals there's a 70% chance the project will be completed within 12
weeks.
 Sensitivity analysis shows that delays in testing have the greatest impact on overall
duration.
 The manager then reallocates resources to the testing phase to reduce risk.

8. Limitations of Crystal Ball 2000

 Data Dependency: The quality of simulation results depends heavily on the accuracy of
the input data and assumptions.
 Learning Curve: Requires understanding of statistical concepts and Excel modeling.
 Resource Intensive: Running large simulations may require considerable computational
power and time.

Risk analysis using Crystal Ball 2000 represents a major advancement over traditional
project planning tools. By combining network techniques with simulation-based risk
modeling, managers can plan more effectively in environments filled with uncertainty.

Critical Path Method (CPM) & Crashing a Project

Types of Resource Allocation Problems

1. Time-Constrained Projects
o Project must be completed by a fixed deadline.
o Focus is on adjusting resource levels without affecting project duration.
o Delays are not acceptable.
2. Resource-Constrained Projects
o Resources are fixed or limited.
o Project completion time is flexible to some extent.
o Objective is to complete the project with available resources.

Techniques to Solve Resource Allocation Problems

1. Heuristic Methods (Rule-based)

o Examples: Minimum slack, shortest duration first, earliest start time.
o Easy to implement but may not give the optimal solution.
2. Optimization Techniques
o Use mathematical models like Linear Programming or Integer Programming.
o More accurate but computationally intensive.
3. Resource Leveling
o Focuses on adjusting the start and finish dates to balance resource usage.
o Prevents over-allocation and burnout.
4. Resource Smoothing
o Keeps project duration constant.
o Adjusts resource usage to be more uniform across time.

Impact of Poor Resource Allocation

 Delays in project completion.

 Budget overruns.
 Underutilization or overutilization of resources.
 Poor stakeholder satisfaction.

Resource Loading

Definition

Resource loading refers to the process of assigning resources to project activities over
time and analyzing the workload distribution.

In simpler terms, it's a graphical representation of the amount of resources required during
different time periods in a project.

Purpose of Resource Loading

 To understand the demand for resources over the project duration.

 To identify periods of peak demand or underutilization.
 To ensure the project has enough resources at the right time.

Resource Histogram

A resource histogram is a common visual tool used to represent resource loading. It

displays:

 Time on the X-axis.

 Number of resource units on the Y-axis.

It helps managers visualize overloads or idle periods.

Balanced vs Unbalanced Loading

 Balanced Loading: Resource usage is evenly distributed. Helps reduce costs and
maintain productivity.
 Unbalanced Loading: Peaks and valleys in demand. May require overtime or lead to
resource idling.

Resource Loading Strategies

1. Uniform Loading
o Distributes work evenly.
o Improves efficiency but may increase project duration.
2. Front-End Loading
o Loads resources heavily at the beginning.
o Speeds up progress but risks burnout.
3. Just-in-Time Loading
o Resources are assigned exactly when needed.
o Reduces waste but demands precise scheduling.

Relationship Between Resource Loading and Allocation

While resource allocation is about who gets what and when, resource loading is
about how much is being used and when. Both must work together for effective project
management.

Effective use of network techniques like CPM and PERT helps managers visualize the
project flow and dependencies. Addressing the resource allocation problem ensures
that scarce resources are optimally distributed, while resource loading ensures workload
is manageable and efficient. Both concepts are vital for project success in dynamic
business environments.

Resource Leveling & Constrained Resource Allocation

In contemporary project management, network planning tools like the Critical Path
Method (CPM) and Program Evaluation and Review Technique (PERT) play a pivotal
role in organizing, sequencing, and executing complex tasks. Two key approaches used in
managing limited resources effectively within these frameworks are Resource Leveling
and Constrained Resource Allocation.

1. Resource Leveling

What It Is:

Resource leveling is a technique applied to smooth out resource usage over a project’s
timeline. This method adjusts task scheduling to prevent the overburdening of specific
resources. If needed, it allows tasks to be delayed beyond their early start dates to
maintain resource availability—even if that means extending the overall project duration.

Purpose:

 To achieve a consistent and manageable workload for resources

 To reduce periods of resource idleness or excessive demand
 To promote workforce well-being and operational stability

Implementation:

 Activities are rescheduled within their available float time to manage peak resource usage.
 Emphasis is placed on utilizing resources effectively, rather than accelerating project
delivery.
 Often used when specialized labor or key equipment has limited availability.

Benefits:

 Prevents resource conflicts and overutilization

 Promotes even distribution of work
 Minimizes fatigue and unplanned overtime

Challenges:
 Can lead to longer project timelines
 Less effective for time-sensitive projects with little schedule flexibility

2. Constrained Resource Allocation

What It Is:

This method involves planning project activities under the constraint of fixed resource
availability. Rather than optimizing for time or cost, this approach prioritizes tasks based
on the limited availability of resources, often leading to changes in the project sequence or
duration.

Purpose:

 To complete the project using only available resources

 To determine task order when multiple activities compete for the same limited resources

Implementation:

 Scheduling decisions are driven by resource limitations rather than task dependencies
alone.
 May result in shifting the critical path as resources are assigned where needed.
 Often uses decision rules or software tools to find feasible schedules.

Common Techniques:

 Priority-Based Rules: e.g., process tasks with the earliest deadline or least float first.
 Heuristics: Applied to manage which tasks to delay when resources are insufficient.
 Optimization Models: For complex cases, algorithms like integer programming are used
to allocate resources efficiently.

Illustration:

If three construction tasks require a crane and only one is available, constrained allocation
sequences them based on urgency or project impact, rather than executing them
simultaneously.

Benefits:

 Encourages effective use of scarce resources

 Helps in creating realistic and executable plans
 Identifies potential bottlenecks in advance

Challenges:

 May significantly alter the initial project schedule

 May lead to longer overall completion times
 Requires experienced planners and often advanced tools

Comparison at a Glance
 Aspect Resource Leveling Constrained Resource Allocation

Primary Goal Smooth resource utilization

Schedule within strict resource constraints

Might extend project

Impact on Timeline May shift or extend the timeline
duration

Uses slack/float to adjust Limited by non-negotiable resource

Flexibility
tasks availability

CPM with decision rules, algorithms, or

Planning Tools Manual adjustment, CPM
software tools

Resource Assumes some level of

Operates under strict resource limits
Dependence flexibility

Key Insights for Future Managers

They provide practical solutions for handling real-world resource constraints in projects.
These methods help project leaders to:

 Balance the triple constraints: scope, time, and cost

 Adapt schedules according to resource realities
 Communicate trade-offs clearly to stakeholders
 Use planning tools to generate viable, data-driven schedules

By effectively applying resource leveling and constrained allocation strategies, managers

can enhance team performance, reduce risks related to resource shortages, and improve
overall project outcomes—even under demanding circumstances.

Two key approaches used in managing limited resources effectively within these
frameworks are Resource Leveling and Constrained Resource Allocation.
1. Resource Leveling
Resource leveling is a technique applied to smooth out resource usage over a project’s
timeline. This method adjusts task scheduling to prevent the overburdening of specific
resources. If needed, it allows tasks to be delayed beyond their early start dates to
maintain resource availability—even if that means extending the overall project duration.
Purpose: To achieve a consistent and manageable workload for resources To reduce
periods of resource idleness or excessive demand To promote workforce well-being and
operational stability
Implementation: Activities are rescheduled within their available float time to manage
peak resource usage. Emphasis is placed on utilizing resources effectively, rather than
accelerating project delivery. Often used when specialized labor or key equipment has
limited availability.
Challenges: Can lead to longer project timelines less effective for time-sensitive projects
with little schedule flexibility
2. Constrained Resource Allocation
 This method involves planning project activities under the constraint of fixed resource
availability. Rather than optimizing for time or cost, this approach prioritizes tasks based
on the limited availability of resources, often leading to changes in the project sequence or
duration.
Purpose: To complete the project using only available resources to determine task order
when multiple activities compete for the same limited resources
Implementation: Scheduling decisions are driven by resource limitations rather than task
dependencies alone. May result in shifting the critical path as resources are assigned
where needed. Often uses decision rules or software tools to find feasible schedules. ⚙
Common Techniques: Priority-Based Rules: e.g., process tasks with the earliest deadline
or least float first. Heuristics: Applied to manage which tasks to delay when resources are
insufficient. Optimization Models: For complex cases, algorithms like integer programming
are used to allocate resources efficiently.
If three construction tasks require a crane and only one is available, constrained allocation
sequences them based on urgency or project impact, rather than executing them
simultaneously. Benefits: Encourages effective use of scarce resources Helps in creating
realistic and executable plans Identifies potential bottlenecks in advance
Challenges: May significantly alter the initial project schedule May lead to longer overall
completion times Requires experienced planners and often advanced tools Comparison
at a Glance Aspect Resource Leveling Constrained Resource Allocation Primary Goal
Smooth resource utilization Schedule within strict resource constraints Impact on Timeline
Might extend project duration May shift or extend the timeline Flexibility Uses slack/float to
adjust tasks Limited by non-negotiable resource availability Planning Tools Manual
adjustment, CPM CPM with decision rules, algorithms, or software tools Resource
Dependence Assumes some level of flexibility Operates under strict resource limits These
methods help project leaders to: Balance the triple constraints: scope, time, and cost
Adapt schedules according to resource realities Communicate trade-offs clearly to
stakeholders Use planning tools to generate viable, data-driven schedules By effectively
applying resource leveling and constrained allocation strategies, managers can enhance
team performance, reduce risks related to resource shortages, and improve overall project
outcomes—even under demanding circumstances.

Network Techniques: The Planning-Monitoring-Controlling Cycle

Effective project management is crucial for the success of any project, and it requires
careful planning, monitoring, and controlling. These practices help ensure that projects are
delivered on time, within scope, and within budget. Network techniques play a vital role
in this process, as they provide a structured way to schedule, visualize, and manage tasks
and resources throughout the project’s lifecycle. A fundamental framework that utilizes
these techniques is the

Planning-Monitoring-Controlling Cycle (PMCC), which helps project managers keep

the project on track and meet its intended objectives.

The PMCC comprises three key stages:

1. Planning
2. Monitoring
3. Controlling

Each of these stages is interconnected, and they work together throughout the project to
ensure successful execution. Below is a detailed breakdown of each stage and how
network techniques contribute to the process.

1. Planning Phase

The planning phase is the foundation of a successful project. It involves defining the
project’s goals, establishing its scope, identifying tasks, determining the sequence of
activities, and allocating necessary resources. A well-thought-out plan serves as a guide
to help the project team stay on course.

Key Aspects of the Planning Phase:

 Work Breakdown Structure (WBS): The WBS is used to decompose the project into
smaller, more manageable components. It breaks down the overall project into specific
tasks and subtasks, which helps identify dependencies and organize work logically.
 Network Diagram: A network diagram visually represents the relationships and
dependencies between tasks. It helps to identify the critical path—the longest path of
dependent tasks that determines the project's overall duration. Tools such as Critical
Path Method (CPM) and Program Evaluation and Review Technique (PERT) are often
used to construct network diagrams.
 Critical Path Analysis (CPA): CPA identifies the essential tasks that directly impact the
project’s completion date. It helps calculate the minimum time required for project
completion, ensuring that key deadlines are met.
 Resource Allocation: In this phase, project managers allocate resources to various
tasks, ensuring that the necessary materials, equipment, and personnel are available.
Techniques like resource leveling and resource smoothing may be used to balance
resource availability and prevent overuse or bottlenecks.
 Risk Management and Contingency Planning: Identifying risks and preparing for
uncertainties is essential during the planning phase. Developing contingency plans
ensures the project can adapt to unexpected events or disruptions.

Network Techniques for Planning:

 Critical Path Method (CPM): CPM is a network technique that identifies the longest
sequence of activities necessary to complete a project. By calculating the critical path,
project managers can determine the minimum time required for the project and manage
dependencies effectively.
 Program Evaluation and Review Technique (PERT): PERT is particularly useful for
projects with uncertain durations. It uses probabilistic time estimates for each task
(optimistic, pessimistic, and most likely) to calculate a more accurate project timeline.

2. Monitoring Phase

Once the project begins, the monitoring phase ensures that the project is progressing as
planned. This phase involves tracking and measuring performance against the project’s
baseline and identifying any deviations from the planned schedule or budget.
 Key Aspects of the Monitoring Phase:

 Tracking Progress: Project managers monitor task completion, milestones, and the
overall timeline to ensure that the project is on schedule. Tools like project management
software, spreadsheets, and dashboards help visualize progress.
 Earned Value Management (EVM): EVM integrates cost, scope, and schedule
performance to evaluate the project's progress. It allows project managers to assess the
value of work completed relative to the planned schedule and budget.
 Status Reports: Regular reports and updates to stakeholders help communicate the
current project status, including completed tasks, upcoming milestones, and any emerging
challenges.

Network Techniques for Monitoring:

 Gantt Charts: While not a pure network technique, Gantt charts are widely used for
monitoring progress. They display project tasks along a timeline, making it easy to see
which tasks are completed and which are pending.
 Network Analysis: In the monitoring phase, network analysis helps identify delays or
deviations from the planned schedule. By recalculating the critical path and re-assessing
task dependencies, project managers can evaluate the impact of delays and make
adjustments accordingly.

3. Controlling Phase

The controlling phase focuses on addressing any issues identified during the monitoring
phase and making corrective actions as needed. This phase ensures the project remains
aligned with its objectives and the initial plan.

Key Aspects of the Controlling Phase:

 Change Control: If deviations are found, changes may be required in the project’s plan. A
formal change control process ensures that changes are evaluated for their impact and
authorized before being implemented.
 Performance Metrics: Project managers use key metrics such as schedule variance
(SV) and cost variance (CV) to measure the project’s performance against the baseline.
These metrics help identify areas where corrective actions are necessary.
 Corrective Actions: If the project is not progressing as planned, corrective actions are
implemented. This may involve adjusting timelines, reallocating resources, or altering the
scope to address delays or other issues.

Network Techniques for Controlling:

 Critical Path Method (CPM) Reassessment: During the controlling phase, the project’s
critical path is continuously reassessed. If delays occur in critical tasks, it may cause shifts
in the critical path, affecting the overall project timeline. Immediate action is needed to
correct any issues and mitigate the impact.
 Resource Leveling: If the project faces resource constraints, resource leveling can be
used to smooth resource allocation across tasks. This technique ensures that resources
are utilized optimally without overburdening any team member or resource.
 Interrelationship Between Planning, Monitoring, and Controlling

The Planning-Monitoring-Controlling Cycle (PMCC) is a dynamic process. The stages

are closely interlinked and continuously inform each other:

 Planning informs Monitoring and Controlling: The project plan created in the planning
phase serves as the baseline for monitoring progress. Any deviations identified during
monitoring are compared to the plan, helping determine the necessary corrective actions
in the controlling phase.
 Monitoring and Controlling inform Planning: Issues that arise during monitoring often
lead to adjustments in the project plan. The controlling phase ensures that these
adjustments are made, and any new information is integrated into the planning phase for
future iterations or similar projects.
 Continuous Feedback Loop: The feedback gathered during monitoring and controlling
helps refine future planning. As a result, the cycle is iterative, adapting to changing project
conditions and ensuring that the project stays aligned with its goals.

The Planning-Monitoring-Controlling Cycle (PMCC) is integral to the success of any

project. By utilizing network techniques such as CPM and PERT, project managers can
effectively plan, track, and control the project’s progress. These techniques provide clarity
in task scheduling, resource allocation, and timeline management, which helps identify
and resolve issues early on. Through constant evaluation, adjustments, and feedback,
projects can be guided to successful completion, ensuring that they meet their objectives
within the specified timeline and budget.

Network Techniques: Information Needs and the Reporting Process

Network techniques are essential for managing complex projects, particularly in areas like
business management, project coordination, and strategy formulation. These methods
allow for more efficient planning, execution, and monitoring, ensuring that project
outcomes meet desired objectives. At the heart of network techniques are concepts such
as information needs and the reporting process, both of which are crucial to effective
decision-making and project management.

1. Network Techniques Overview

Network techniques refer to methods used to visually and systematically represent a

project's tasks and their interdependencies. These techniques help managers outline the
relationships between different tasks, assess their timeframes, and determine how each
affects the overall timeline of a project. Network techniques are pivotal in industries such
as construction, software development, research, and any other fields that require
structured, time-bound project completion.

Common Network Techniques:

 Critical Path Method (CPM): This method identifies the longest path of planned activities
from start to finish, highlighting critical tasks that cannot be delayed without affecting the
overall project timeline.
 Program Evaluation and Review Technique (PERT): PERT is a statistical tool used to
evaluate and represent the tasks involved in a project. It considers different time estimates
(optimistic, pessimistic, and most likely) to address uncertainties in project scheduling.
 Gantt Charts: Gantt charts provide a visual timeline of a project’s schedule, displaying the
start and end dates for each task and how tasks overlap.
 Dependency Structure Matrix (DSM): DSM is used to map out task dependencies and
determine which tasks must be completed before others, helping to streamline the
workflow and reduce inefficiencies.

2. Information Needs in Network Techniques

Successful project management requires timely, accurate information that helps in

decision-making and reporting. Information needs evolve across different stages of a
project—planning, execution, and monitoring—each demanding specific data to ensure
the project's success.

Information Needs in the Planning Phase:

 Project Scope and Objectives: Clearly defined goals and deliverables.

 Resource Requirements: Knowledge of the necessary personnel, equipment, and
financial resources, along with their allocation.
 Timeline and Milestones: A detailed schedule with key milestones and deadlines.
 Task Dependencies: Understanding how delays in one task can affect others.
 Risk Assessment: Identifying potential risks and planning mitigation strategies.

Information Needs in the Execution Phase:

 Progress Tracking: Regular updates on task completion and project status.

 Quality Control Data: Monitoring the quality of work to ensure adherence to project
standards.
 Budget Monitoring: Tracking expenditures against the initial budget.
 Team Performance: Feedback on how well team members are performing in terms of
task completion and collaboration.

Information Needs in the Monitoring Phase:

 Variance Reports: Comparing actual performance to the planned project metrics (time,
cost, and scope).
 Change Requests: Documenting and managing any changes in scope, resources, or
schedules.
 Final Deliverables: Ensuring all project deliverables are met and that the project is ready
for closure.

3. Reporting Process in Network Techniques

Effective reporting ensures that all stakeholders stay informed about the project's health
and progress. A well-structured reporting process communicates key information in an
actionable format, facilitating timely decisions and corrections.
 Types of Reports:

 Status Reports: Provide a snapshot of the project’s current state, highlighting completed,
ongoing, and upcoming tasks, often accompanied by performance indicators.
 Progress Reports: Focus on how well specific tasks or phases are progressing,
indicating whether they are on track, ahead of schedule, or delayed.
 Variance Reports: Track discrepancies between actual performance and the original
plan, helping identify issues in time, cost, or scope.
 Risk Management Reports: Outline new risks, their potential impact on the project, and
strategies for mitigating them.
 Final Report: A comprehensive summary of the project's outcomes, lessons learned, and
recommendations for future projects.

Key Elements of an Effective Reporting Process:

 Clear Objectives: Each report should have a clear purpose, explaining what is being
communicated and why it matters.
 Timeliness: Reports should be delivered on a regular basis, whether daily, weekly, or
monthly, to ensure that the information is current and useful.
 Clarity: The report must be straightforward and understandable, with sufficient detail to
support decision-making. Visual tools like Gantt charts and PERT diagrams can enhance
clarity.
 Actionable Insights: A good report provides not only data but also recommendations or
next steps to guide decision-making.

4. How Network Techniques Influence Information Reporting

Network techniques play a pivotal role in organizing and analyzing data, which directly
influences the reporting process. By structuring tasks and their dependencies, these
techniques help in creating clear, actionable reports. For example, CPM helps identify
critical tasks that require special attention to avoid project delays, and PERT’s uncertainty
analysis helps in representing potential risks in reports.

Reporting Through Network Visualization:

Visualization tools like CPM and PERT charts simplify reporting by offering clear visual
representations of task sequences and dependencies. These charts allow managers to
quickly identify where delays might occur or where bottlenecks are forming, enabling more
focused corrective actions.

By understanding the information needs at different stages of the project and mastering
the reporting process, managers can enhance decision-making, optimize resource usage,
and ensure successful project delivery. Tools like CPM, PERT, and Gantt charts not only
facilitate project planning and monitoring but also streamline the reporting process,
ensuring that stakeholders remain informed and risks are managed proactively.

Earned Value Analysis (EVA)

1. Introduction to Network Techniques in Project Management

 Network techniques are essential tools used in the planning and execution of complex
projects. These methods assist project managers in organizing tasks logically, allocating
resources effectively, and ensuring adherence to schedules, budgets, and project scopes.
Among the commonly applied methods are:

 Critical Path Method (CPM)

 Program Evaluation and Review Technique (PERT)

While CPM and PERT are primarily designed to manage timelines and scheduling,
Earned Value Analysis (EVA) extends beyond time management. EVA incorporates cost
and project performance into its evaluation, offering a more comprehensive insight into a
project's status.

2. What is Earned Value Analysis (EVA)?

Earned Value Analysis is a performance measurement approach that integrates scope,

cost, and schedule metrics to evaluate project progress. It compares what was planned,
what has been achieved, and what has been spent, enabling project leaders to assess
efficiency and detect potential deviations from the plan.

The three fundamental elements of EVA include:

 Planned Value (PV): The projected cost of scheduled activities up to a specific point in
time.
 Earned Value (EV): The projected cost of the actual work completed.
 Actual Cost (AC): The amount actually spent for the completed work.

3. Core Terminology in EVA

Term Definition
Planned Value
Also called Budgeted Cost of Work Scheduled (BCWS); it represents the
(PV) expected cost of tasks planned to be completed by a certain date.
Earned ValueAlso referred to as Budgeted Cost of Work Performed (BCWP); it
(EV) indicates the estimated value of work actually completed.
Actual Cost Known as Actual Cost of Work Performed (ACWP); this is the real
(AC) expenditure incurred for the completed work.

4. Key EVA Metrics and Calculations

Metric Formula What It Tells You

Cost Variance (CV) EV - AC Positive = under budget; Negative = over budget
Positive = ahead of schedule; Negative = behind
Schedule Variance (SV) EV - PV
schedule
Cost Performance Index (CPI)EV ÷ AC >1 = cost-effective; <1 = cost overrun
Schedule Performance Index
EV ÷ PV >1 = faster progress; <1 = slower progress
(SPI)
Estimate at Completion (EAC)BAC ÷ CPI
Forecasted total cost at project completion
Variance at Completion (VAC)BAC - EAC
Projected savings or cost overrun at the end

Terms:
 BAC (Budget at Completion): Total approved budget for the project.
 EAC (Estimate at Completion): Updated estimate of final project cost.
 VAC (Variance at Completion): Difference between planned and forecasted cost.

5. EVA Application Example

Let’s consider a project with the following financial data:

 Budget at Completion (BAC): $200,000

 Planned Value (PV): $100,000
 Earned Value (EV): $90,000
 Actual Cost (AC): $120,000

Calculations:

 Cost Variance (CV): 90,000 - 120,000 = -30,000 → Over budget

 Schedule Variance (SV): 90,000 - 100,000 = -10,000 → Behind schedule
 Cost Performance Index (CPI): 90,000 ÷ 120,000 = 0.75 → Cost efficiency is low
 Schedule Performance Index (SPI): 90,000 ÷ 100,000 = 0.90 → Progress is slower than
expected
 Estimate at Completion (EAC): 200,000 ÷ 0.75 = 266,667 → Cost overrun likely
 Variance at Completion (VAC): 200,000 - 266,667 = -66,667 → Anticipated budget
deficit

These metrics help identify performance issues early and enable timely corrective
measures.

6. Benefits of Using EVA

 Holistic Performance View: Offers a combined perspective on cost, schedule, and

project scope.
 Early Detection of Deviations: Helps spot issues before they escalate.
 Data-Driven Insights: Allows for accurate tracking of actual progress.
 Supports Forecasting: Enables reliable predictions of project outcomes.
 Improved Decision-Making: Provides real-time, actionable data for stakeholders.

7. Limitations and Challenges of EVA

 High Data Accuracy Requirement: Effective use depends on precise and current data.
 Complexity for Beginners: The method can be difficult for those unfamiliar with technical
project tools.
 Rigid Baseline Dependence: Works best when the project baseline is stable and well-
defined.
 Limited Suitability for Agile Projects: EVA is not ideal for flexible, iterative development
approaches where scope frequently changes.

8. Relevance of EVA in Strategic Management

EVA offers more than just performance tracking. It:

 Provides a structured method for evaluating efficiency and project health.

 Supports alignment with strategic goals such as profitability and time management.
 Equips future managers with analytical tools applicable across industries like IT,
construction, defense, and consulting.

Earned Value Analysis is a comprehensive tool that blends scope, time, and cost into a
single performance measurement framework. It equips project managers with the insights
needed to control costs, track progress, and ensure project success. When implemented
properly, EVA enhances transparency, supports informed decision-making, and
contributes to strategic project alignment.

The Fundamental Purposes of Control

In the sphere of management, control stands as a fundamental pillar alongside planning,

organizing, and leading. The significance and objectives of control is crucial for steering
organizations toward consistent performance, operational excellence, and long-term
success.

1. Ensuring the Achievement of Goals

The foremost aim of control is to confirm that an organization is progressing toward its
predefined goals. Control mechanisms allow managers to track progress, detect
discrepancies, and take corrective action as needed. By consistently comparing actual
performance against targets, businesses can stay aligned with their strategic direction.

Example: If a retail chain aims to generate $1 million in quarterly sales, control tools such
as sales dashboards and periodic performance reports help assess whether the target is
within reach and what adjustments are needed.

2. Assessing Performance

Control systems provide a structured way to measure performance at various levels—

individual, team, and organizational. This allows leaders to evaluate efficiency, recognize
high performers, and identify areas that require improvement, using objective data and
benchmarks.

Example: Sales representatives might be evaluated using KPIs such as monthly revenue,
client retention, and customer feedback scores.

3. Supporting Better Decision-Making

Accurate and timely information generated through control systems is essential for making
well-informed decisions. Managers use this data to uncover patterns, anticipate future
challenges, and weigh strategic options.

Example: A manufacturing firm may analyze production data to decide whether to ramp
up operations or hold off, based on demand forecasts and inventory levels.
4. Boosting Efficiency and Productivity

Through continuous monitoring, control helps highlight inefficiencies and reduce waste. It
ensures optimal utilization of resources, thereby increasing productivity and contributing to
overall profitability.

Example: Companies applying lean methodologies depend on robust control processes to

streamline production lines and minimize unnecessary costs.

5. Promoting Accountability and Discipline

Control fosters a culture of responsibility by clearly defining expectations and monitoring

performance. When employees know their actions are being measured, they tend to
operate more ethically and diligently.

Example: Regular audits and compliance reviews encourage employees to follow

procedures and maintain integrity in financial practices.

6. Adapting to Change and Managing Uncertainty

Modern businesses face constant change and unpredictability. A strong control system
helps organizations adapt quickly by providing early warnings about internal issues or
external shifts.

Example: Businesses using real-time market data can quickly pivot their strategies in
response to evolving customer demands or economic changes.

7. Protecting Organizational Assets

Control systems play a key role in safeguarding a company’s resources—whether

physical, financial, or intellectual. These systems prevent misuse, theft, or loss, ensuring
resources are handled responsibly.

Example: Inventory tracking systems help monitor stock movement, reducing the risk of
theft or misplacement in warehouses.

8. Aligning Interdepartmental Efforts

In complex organizations, different departments must work cohesively toward shared

objectives. Control mechanisms help align departmental activities, reduce silos, and
promote collaboration.

Example: A centralized budgeting system ensures that departments like sales, marketing,
and production operate within the organization’s financial framework.

To sum up, control is not merely about monitoring—it is about enabling progress, ensuring
alignment, and fostering a disciplined and adaptive work culture. For future business
 leaders, mastering control mechanisms is essential for driving sustained organizational
success in an ever-evolving marketplace.

Three Types of Control Processes

In project management and operational planning, network techniques play a vital role in
organizing tasks and ensuring efficient project execution. These techniques help project
managers visualize task sequences, manage resources efficiently, and keep track of
project progress. At the core of these methods are three essential control processes
that guide the planning, scheduling, and execution stages of a project.

The Three Types of Control Processes

Network techniques incorporate three main types of control processes that help ensure
project goals are met efficiently:

1. Planning and Scheduling Control

Overview: This process involves establishing the project framework before execution
begins. It includes identifying tasks, determining their order, estimating timelines, and
setting deadlines. This proactive control method lays the foundation for successful
execution.

Key Components:

 Work Breakdown Structure (WBS): Decomposing the project into smaller, manageable
units.
 Task Identification and Sequencing: Determining what needs to be done and in what
order.
 Time Estimation: Calculating how long each task will take.
 Network Diagrams: Visual tools (like PERT or CPM charts) to map task relationships and
timings.

Advantages:

 Offers a clear roadmap of the entire project.

 Highlights critical tasks that affect project duration.
 Facilitates efficient resource management.

Example: In a construction project, scheduling control helps plan when to lay the
foundation, install electrical systems, or begin interior work—based on logical
dependencies.

2. Progress and Performance Control

Overview: This control process focuses on tracking the project during its execution phase.
It ensures activities are progressing as planned and highlights any deviations from the
schedule or budget.

Key Components:

 Monitoring Progress: Measuring actual progress against the planned timeline.

 Milestone Checks: Verifying if key targets are met as scheduled.
 Variance Analysis: Detecting and examining differences in scope, time, or cost.
 Performance Evaluation: Using techniques like Earned Value Management (EVM) to
assess efficiency.

Advantages:

 Provides real-time insights into project performance.

 Enables early identification of problems or delays.
 Supports timely and informed decision-making.

Example: If a software rollout is behind schedule due to extended testing, progress

control tools can help realign tasks and mitigate further delays.

3. Corrective Control

Overview: When discrepancies or delays are detected, corrective control comes into play.
It involves taking remedial actions to get the project back on its intended track. Though
reactive, it is crucial for achieving project success.

Key Components:

 Re-baselining: Updating the original plan based on current project realities.

 Crashing: Adding more resources to speed up critical activities.
 Fast Tracking: Performing tasks concurrently to save time.
 Problem Solving: Tackling the root causes of issues and resolving conflicts.

Advantages:

 Helps maintain budget and schedule integrity.

 Prevents minor setbacks from escalating.
 Enhances flexibility and responsiveness in project execution.

Example: If a production delay occurs due to equipment failure, corrective measures

might include outsourcing part of the work or switching to backup machinery.

Successful project management relies on effective control mechanisms that ensure timely
and efficient execution. The three control processes—Planning & Scheduling Control,
Progress & Performance Control, and Corrective Control—collectively provide a
structured approach to managing projects.

By understanding and implementing these processes, project managers can ensure

efficient use of resources, timely task completion, and the fulfillment of project objectives—
key factors in thriving in today's competitive business landscape.

Comments on the Design of Control Systems

In the fields of operations management and systems engineering, the use of network
techniques is fundamental to planning, executing, and overseeing complex projects.
These techniques not only enhance project management but also support the
development of control systems—mechanisms
 These approaches help project managers by:

 Highlighting essential tasks

 Estimating project duration
 Streamlining time, cost, and resource management

3. Network Techniques in Designing Control Systems

Control systems are essential for tracking progress, evaluating outcomes, and ensuring
that operations meet set goals. In the context of project management, network techniques
contribute significantly to control system design through the following ways:

a) Visual Representation of Activities

Network diagrams visually map out all project activities and their sequences. This clarity
allows managers to install checkpoints at key stages, focusing attention on critical tasks.

b) Time Estimation and Flexibility

With PERT, managers estimate the best-case, worst-case, and most likely durations of
tasks. This supports the development of adaptable control systems that can adjust to
project uncertainties.

c) Identifying Critical Paths

CPM identifies the longest chain of dependent activities, known as the critical path.
Control systems can prioritize monitoring along this path, as any delay here can impact
the overall project timeline.

d) Resource Allocation
Network-based models assist in balancing resource usage across tasks. Control
mechanisms can be designed to track and optimize the use of resources at key project
stages.

e) Risk Management
Both PERT and CPM aid in assessing potential project risks. Control systems can
incorporate backup plans and mitigation strategies for high-risk activities identified in the
network analysis.

4. Key Components of a Network-Informed Control System

An efficient control system that leverages network techniques should feature:

 Defined Benchmarks: Milestones to measure progress

 Timely Feedback Loops: Reports and updates at regular intervals
 Corrective Mechanisms: Pre-planned actions in response to deviations
 Real-Time Tracking Tools: Integration with platforms like MS Project or Primavera
 Continuous Review: Regular comparison between planned and actual performance

5. Real-World Business Applications

Network techniques are widely applicable across various industries.

 Product Development: Coordinating design, testing, and rollout stages

 Construction Projects: Managing schedules, resources, and compliance

 IT Implementation: Overseeing software development and deployment phases
 Event Planning: Organizing timelines and logistics for major events

6. Advantages of Integrating Network Techniques in Control Systems

Incorporating these methods into control system design brings several benefits:

 Better Decision-Making: Visual data aids in strategic planning

 Clear Accountability: Assigned roles and deadlines enhance responsibility
 Operational Efficiency: Early identification of issues prevents costly delays
 Strategic Focus: Ensures alignment between project execution and business goals

7. Challenges and Considerations

Despite their strengths, network techniques have some limitations:

 Complexity in Larger Projects: Can become difficult to manage without proper software
 Data Accuracy Dependence: Inaccurate estimates can lead to flawed planning
 Rigid Models: Traditional techniques may not adapt easily to evolving project conditions

To address these, it is vital to design control systems that are flexible, data-driven, and
integrated with modern project management tools.

Integrating network techniques into control system design empowers organizations to

manage projects with greater precision and control. For understanding these tools
provides valuable insight into project oversight, risk assessment, and efficient resource
use. As the business world becomes increasingly reliant on data and dynamic project
environments, proficiency in network techniques is becoming a critical skill for future
leaders.

Control as a Function of Management

Introduction
Management control refers to the process by which an organization ensures its activities
are aligned with its objectives, resources are optimally utilized, and operations run
smoothly. One of the critical tools in achieving effective control is the application of
network techniques, which facilitate efficient project management by optimizing resources,
timelines, and task completion. These techniques, including PERT (Program Evaluation
and Review Technique) and CPM (Critical Path Method), help managers monitor, analyze,
and adjust project performance, ensuring that organizational goals are met. This
document explores how these network techniques assist in control within the context of
management.

1. Understanding Control in Management

Control is a key function of management aimed at ensuring organizational objectives are

met effectively and efficiently. It involves several steps:
 Setting Standards: Defining performance benchmarks and expectations.
 Measuring Performance: Collecting actual performance data.
 Comparing Performance with Standards: Analyzing deviations from the planned
performance.
 Taking Corrective Actions: Making adjustments when performance does not meet
expectations.

Control is not merely about monitoring progress but also about proactively guiding efforts
toward achieving the organization's objectives. Through strategic interventions and
adaptive management, control ensures the organization stays on course.

3. Role of Network Techniques in Management Control

Network techniques serve an essential role in enabling effective control by allowing

managers to monitor, analyze, and adjust the project's progress in real-time. Their
contribution to control is significant in the following ways:

Monitoring Progress and Performance

Network techniques provide tools to track task progress and compare it against the
planned timeline. Tools like Gantt charts allow for visual tracking of the schedule, helping
managers easily identify tasks that are ahead or behind schedule.

 PERT: Regularly updated critical paths and slack times allow for early identification of
delays.
 CPM: Managers focus on critical tasks to ensure resources are allocated effectively,
preventing project delays.

Resource Allocation and Optimization

Efficient resource management is crucial in project control. Network techniques help

visualize task dependencies and the flow of resources. Managers can address
bottlenecks, reallocate resources from non-critical tasks to critical ones, and ensure that
project goals are achieved within the allocated time and budget.

Identifying Deviations and Corrective Actions

By comparing actual progress with planned schedules, managers can spot deviations and
take corrective actions early. Network techniques like PERT and CPM help guide
managers in making timely adjustments.

 PERT: Managers adjust the schedule by recalculating expected times for tasks.
 CPM: Focus on the critical path allows for quick action to mitigate delays in key tasks.

Risk Management and Handling Uncertainty

Network techniques, particularly PERT, help manage the uncertainty associated with task
durations. By using multiple time estimates, managers can create more realistic timelines
and adjust for potential risks, thus ensuring a higher likelihood of completing the project on
time.
4. Practical Application of Network Techniques in Management Control

Project Management

Network techniques are integral in project management for ensuring timelines are adhered
to, costs are controlled, and quality is maintained. By applying these techniques, project
managers can keep a close eye on project performance and make necessary adjustments
as the project unfolds.

Example: In construction, CPM helps ensure that critical tasks like foundation work and
structural installation are completed on time, while non-critical tasks like interior decoration
can be adjusted without affecting the overall project timeline.

Manufacturing

In manufacturing environments, network techniques help in planning production

processes, managing inventory, and allocating resources efficiently to meet production
targets.

Example: A car manufacturing plant can utilize network techniques to track the assembly
line, ensuring tasks such as engine assembly, painting, and quality control are completed
on schedule.

Service Industry

In the service industry, network techniques aid in controlling service delivery by planning
and scheduling key tasks, ensuring efficient resource use, and meeting deadlines.

Example: A consulting firm might use PERT to manage client projects, ensuring tasks
such as data collection, analysis, and presentation are completed on time with optimal
resource allocation.

Network techniques are powerful tools for enhancing control in management. Through
methods like PERT and CPM, managers can effectively plan, monitor, and adjust projects
to ensure they meet deadlines, stay within budget, and achieve desired quality outcomes.
These techniques play a crucial role in management control, improving decision-making,
resource allocation, and risk management. By adopting these methods, managers can
ensure greater project success and organizational efficiency.