Critical Path Analysis (CPA)
Critical Path Analysis (CPA)
Operational resources are expensive and the most expensive resource is that which is unused or underused – unused stocks take up space and working capital; machinery left idle wastes capital and can require protective maintenance; labor waiting for supplies to arrive will add unnecessarily to the wages bill. Efficient firms will always aim to use their resources as intensively as possible and avoid wasted time and idle assets. Keeping assets busy is not always as easy as it sounds, especially when the project is a complex one.
Consider the construction of a house:
a. The builder only wants to employ specialist staff on a subcontract basis when the job is ready for their particular skills.
b. He also wants to order bricks and other materials to arrive just as they are needed, not weeks before, blocking up the site, wasting working capital and inviting theft.
c. He certainly does not want them three days after the bricklayers require them.
d. Specialist equipment is often hired and to keep this a day more than necessary will raise costs and affect cash flow.
How can all of the different tasks involved in building a house be put into order so that the right goods and labor can be employed just at the right time? The answer for many businesses is to use a technique known as critical path analysis (CPA) – also known as network analysis.
CPA involves drawing a network diagram that indicates the shortest possible time in which a project can be completed. The activities − that must be completed to achieve this shortest time − make up what is known as the critical path. The process of using CPA involves the following steps:
i. Identify the objective of the project, e.g. building a factory in six weeks. ii. Put the tasks that make up the project into the right sequence and draw a network diagram. iii. Add the durations of each of the activities. iv. Identify the critical path – those activities that must be finished on time for
Operational resources are expensive and the most expensive resource is that which is unused or underused – unused stocks take up space and working capital; machinery left idle wastes capital and can require protective maintenance; labor waiting for supplies to arrive will add unnecessarily to the wages bill. Efficient firms will always aim to use their resources as intensively as possible and avoid wasted time and idle assets. Keeping assets busy is not always as easy as it sounds, especially when the project is a complex one.
Consider the construction of a house:
a. The builder only wants to employ specialist staff on a subcontract basis when the job is ready for their particular skills.
b. He also wants to order bricks and other materials to arrive just as they are needed, not weeks before, blocking up the site, wasting working capital and inviting theft.
c. He certainly does not want them three days after the bricklayers require them.
d. Specialist equipment is often hired and to keep this a day more than necessary will raise costs and affect cash flow.
How can all of the different tasks involved in building a house be put into order so that the right goods and labor can be employed just at the right time? The answer for many businesses is to use a technique known as critical path analysis (CPA) – also known as network analysis.
CPA involves drawing a network diagram that indicates the shortest possible time in which a project can be completed. The activities − that must be completed to achieve this shortest time − make up what is known as the critical path. The process of using CPA involves the following steps:
i. Identify the objective of the project, e.g. building a factory in six weeks. ii. Put the tasks that make up the project into the right sequence and draw a network diagram. iii. Add the durations of each of the activities. iv. Identify the critical path – those activities that must be finished on time for