Critical Path Method

Critical Path is another technique to do the Schedule Network Analysis. It’s again a very popular technique and we will study this method in next few slides.

Critical Path Method

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First, let me explain what is a critical Path?

Critical path is defined as the longest duration path through a network diagram and determines the shortest time to complete the project. We will shortly learn on how to identify a critical path in a network.

Float is another concept, which is quiet important in understanding the critical path. Float is calculated once the network diagram is ready. There are three kind of float that can be calculated. The first being the Total Float, which is the amount of time an activity can be delayed without delaying the project end date or an intermediary milestone.

The second type of float is Free Float which is the amount of time an activity can be delayed without delaying the early start date of its successor(s) activities.

The last type is Project Float which is the amount of time a Project can be delayed without delaying the externally imposed project completion date required by the customer or previously committed by the Project Manager.You can think of float as a cushion time available to complete an activity. Float is also called slack.Now, let me ask you. What is the slack of the activities on the critical path? The answer is Zero.

Because, there is no scope to delay activities in the critical path. Critical Path actually represents the Project duration. They actually add together to the Project duration, so where is the scope for the delay? Delaying activities on the critical path is as good as delaying the project duration!

How to Calculate Float?

There are two ways in which float of an activity can be calculated. But before that let me inform you that first step in critical path method is to identify the Critical Path of the Network. Once the critical path is identified, calculate the start date and end date of each of the activities on the critical path.

As we have seen earlier, the float of the activities on the critical path is zero…so they represent the overall project duration. Now, that you know the Project duration.Either you can go through the network starting with time zero and keep on calculating the time required to complete each of the activity till you reach the last activity of the Project. This is also called Forward pass. The starting time for each of the activity in this approach is called “Early Start” and end time for each activity is called the “Early Finish”.

Or you can travel through the network from the project end date and calculate the time required to complete each activity. This is called backward pass. The end date in this approach is called the Late Finish and the start date of the activity in this approach is called the Late Start.

The float of the activity is either the difference between the Early Start and Early finish or the difference between the Late Start and Late finish. Both the differences work out to be the same.If you are finding difficulty understanding critical path, I suggest that you go through the last two slides twice and than look at the next slide where in we have explained a critical path example.

Critical Path Example

Let’s look at this example. There are basically 5 activities in this Project. If you look at the Network diagram, there are two paths in this Network. Start, 1, 2, 4, 5, End is one path and Start, 1, 3, 5, End is the second path. Since the duration of the path Start, 1, 2, 4, 5, End is 18 days, which is more than the duration of the path Start, 1, 3, 5, End.

The critical path of the Project is Start, 1, 2, 4, 5, End.Take some time to calculate all the four values, i.e. Early Start, Early Finish, Late start and late finish of the activities. I have written down the values for your verification.

Let me take Activity 3 as an example.

First we will calculate the Early Start and Early Finish dates.Activity 3 can start only after Activity 1. Since the Early finish of Activity 1 is 3, which becomes the Early Start of Activity 3.Activity 3 can not start earlier than 3, because Activity 1 is getting completed only than.So, Early Start of Activity 3 is 3. Since the duration of the activity is 6 days. The Early Finish of Activity 3 is 3+6= 9 days.Now, let’s calculate the late start and late finish of Activity 3.

Late Start of Activity 5 is 14 days. The activity 3 happens just before Activity 5, so the Late Finish of Activity 3 is 14 days. To calculate the late start, you can subtract the duration from late finish. So the Late start of Activity 3 is 14-6=8.

Earned Value Technique is an excellent way to track the Project Progress against the Project Plan.

Earned Value Technique

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It’s a method of objectively measuring project performance against the Project baseline. Result from an Earned Value analysis indicate deviation of the Project from cost and schedule baselines.

Let me quickly ask you what is a Baseline? I have already explained this earlier..but just to provide a quick recap…baseline means first approved value. So schedule baseline means, the first approved Project Schedule.

There are various terms used in Earned Value Techniques. All these terms are listed in this slide. Please go through the same. They are quiet self explanatory.

For example, PV, meaning Planned Value, is the Estimated Value of the Work Planned to be done. This value is measured in terms of currency, say dollar. So, if planned value is $340, it was planned to do work worth 340 dollars.

But, how do you calculate Earned Value? It’s quite simple. Just add the budget allocated to each of the activities that have completed at that point in time. The resulting value is Earned Value at point of time.

All other parameters listed in this slide are also measured in terms of currency only.

Earned Value Formula

Now that you have gone through the Earned Value Terms, Let’s look at the formulas involved in calculating the Earned Value.

Here again, all the formulas are listed in the slide along with their explanation. Remember to note that Negative cost variance means that the project is over budget, positive means the project is under budget.

Similarly, Negative schedule variance means that project is behind schedule where as Positive schedule variance means that project is ahead of schedule.

The next two parameters i.e. Cost Performance Index (CPI) and Schedule Performance Index (SPI) are also quiet important parameters. Their value varies between 0 and 1.

So, if CPI is say 0.8, it means that we are getting 80 cent out of every dollar spent in the Project.

If, SPI is say 0.9, it means that project is progressing at only 90% of the speed originally planned.

The next parameter is Estimate At Completion. So, at any point of time during the project execution, if it is required to know how much the project would actually cost by the time its gets completed, just divide the Budget At Completion by the Cost Performance Index.

What is Budget At Completion? It’s just the Budget of the Total Project.

The next parameter is Estimate to Complete, which is how much more would the project cost from this point onwards. This is calculated simply by subtracting Actual Cost from the Estimate at Completion.

Also, Variance at Completion can be calculated by subtracting Estimate At Completion from the Budget At Completion.

Earned Value Problem Example

Let’s take the example of a Project to build a compound wall. It’s a four side wall and each side is planned to take one day to build and the budget to build each side of the wall is 500 dollar. The walls are planned to be completed one after the other.

Today is the end of day 3; calculate the CPI and SPI of this project.

Now, as you can see in the slide, at the end of the day 3, the status of the Project is:

• Side 1 of the wall is completed within the planned time and budget.
• Side 2 was planned to get over by 2nd day, but it actually gets completed by 3rd day. It costed $700 instead of $500 to get completed.
• Side 3 is only 50% done, thought it was supposed to get completed by 3rd day. It costed $300 instead of $250 to get completed.
• Work on Side 4 has not yet started and it was not even planned to get started.

Based on the above information, we will calculate the CPI and SPI of the Project in the next slide.

Earned Value Problem Solution

To calculate the Planned Value, PV, you just need to add the amount of work that was supposed to be done by 3rd day. Three sides were supposed to be done. The budget to complete each of the three sides was $500.

So the planned value, PV, is 500+500+500= $1500.

But, what is actually done by 3rd day is, two sides completely done and third side is only 50% done, hence the Earned Value, EV is 500+500+250=$1250

The actual cost, AC, of doing the work is 500+700+300= $1500.

Now, since we know, PV, EV and AC…calculating CPI and SPI is pretty straight forward. Just put these into the formulas we learn earlier.

What Are PMP and PMI?

The video covers areas like, what are PMP and PMI. These are terms you will frequently encounter in your conversation with certified Project Managers or people preparing for this exam.

PMP stands for Project Management Professional. It’s the name of the certificate awarded to any one who scores more than the required passing mark in the PMP Exam. So if you successfully pass the PMP Exam, you become a Project Management Professional i.e. PMP. As evident by the name itself, this certificate is of interest to any one interested in Project Management as a career.

Let me tell you, PMP is most recognized Individual certification in the area of Project Management. It’s valued worldwide. For many of the Project Management Jobs, it’s even a mandatory qualification.

PMP is not for Project Managers from a specific domain. A Project Manager working in any Industry, be it manufacturing or Retail or Defense or Information Technology, can write the PMP Exam and upon successful completion can become a PMP.

Now let’s look at what is PMI?

PMI is a not for profit Organization, who conducts PMP Examination. PMI stands for Project Management Institute. PMI is based in USA and it has local chapter across the globe. So, if you are based in Singapore, you can look for PMI chapter in Singapore. Such local chapters conduct regular knowledge sharing and networking session for people interested in Project Management.
If you need more information about the PMI, you can check out their website, www.pmi.org

A PMP certificate is valid for only three years. Post completion of this three year period. It can be renewed for another three years.PMI measures Project Management Experience in units of PDU. PDU means Professional Development Unit.

So, if you attend a Project Management Class of 1 hour by an expert, its equivalent to say 1 PDU. If you write a White Paper on Project Management related topic, it may be equivalent to 5 PDU. PMI has detailed guideline on what kind of project management activity amounts to how many PDUs. You can check their website for more details.

Every three years, one must have acquired 60 PDUs to retain their PMP certificate. So first time, when you write the exam, you become PMP for 3 years.

After this period, to renew your PMP credentials, you need to submit proof that you acquired at least 60 PDUs in last three year and pay the PMI certificate renewal fee, your certificate gets renewed for another three years. You can conveniently do this online at www.pmi.org

Finally, let’s look at what is PMBOK?

PMBOK means Project Management Body of Knowledge. It’s a Book that PMI releases every four years. The latest version of the PMBOK is version 4 and it was released in June 2009. PMBOK acts as a Text Book for the PMP Exam.You can also think of PMBOK as Standard for Project Management Profession.

Pre-requisite for PMP Exam

Well, Can anyone take up the PMP Examination? Yes, provided one meets certain prerequisite.The prerequisite depends upon person’s formal education.As shown in the table, for bachelor degree holder, they have to have at least 4500 hours of Project Management experience and for someone whose highest formal education is High school degree, its 7500 hours of Project management experience.

In addition to this, there is some requirement in terms of total no of years of work experience as well. For the first category, one has to have at least 6 years of total work experience and for the second category its 8 years.The 3 years within 6 years in the table means that 4500 hours of project management experience should have happened in last 3 years of total 6 years of experience.

Lastly, one also has to show proof of attending 35 hours of Project Management Training just before writing the PMP exam.There are many Project Management Training companies, who are PMI REP.

Now, what is REP?

PMI REP training institute means, these training companies are registered with PMI as Registered Education Provider. If you attend their 35 hour contact training, they also give you 35 PDUs. As I explained earlier, PDU means professional development unit. It’s a measure of Project management activity by PMI.Attending Project Management training is also a Project Management Activity.

I would like to clarify here that even if you attend 35 hours of Project Management Training by a company, which is not REP, you can still go ahead and take up the PMP exam. But you must show proof of attending 35 hours of Project Management training, which is inline with PMI guidelines.So, if you have gone through our complete 14 lesson material and also attended our virtual classes. You qualify to take up the PMP Exam.

Let me also inform you that, One has to submit proof of everything (ie your educational Degree, your Project Management Experience, etc) to PMI while submitting the online application for taking up the exam. PMI randomly audits such submission from time to time. So, If you do not meet the prerequisite and still go ahead and submit the online exam application, there are chances of you getting caught. PMI disqualifies such application.

Also, once your online application for taking up the exam gets approved, PMI sends an Authorization letter. You must write the exam, within a year of getting the Authorization letter.

About the PMP Exam

Now, let me tell you more about the PMP Exam. It’s a four hour exam consisting of 200 questions. Out of this 200, 25 questions are not scored. But beware; you will not know which these 25 questions are! So you should answer all 200 questions, with same seriousness.

PMI includes these questions to see how many test takers are getting them right. Based on this, they might decide to include these questions in future Exam. It’s like a survey conducted by PMI.

The pass marks for the exam is 141 out of 175, which roughly translates to 81%! Now, you must be guessing that PMP exam is not that easy. You are right! Taking PMP exam does require certain seriousness in preparation.Next, I have shown in the table on how many questions appear from which part of the syllabus.

Getting confused with so many new terms… Hold on for a moment!For now, assume them to be the six major topics and percentage of questions that typically comes from each of these topics.

PMP Exam Syllabus

There are three terms that I would like to introduce here.

First, let’s see what Process Group is. The whole Project Management discipline is divided into five broad Process group, they are Project Initiation, Project Planning, Project Execution, Project Monitoring & Control and Project Closing.You probably, might be aware of them as well.

When a new Project starts, it’s in the Project Initiation phase, from Initiation, it moves to Planning, than to Execution and Monitoring & Control and finally its closed. Project Execution and Project Monitoring & Control processes go hand in hand.

So when a new project is started i.e., initiated, all processes of Project Initiation Process Group should be applied to the Project. Similarly when the project is being closed, all Processes of Project Closing group should be applied.

Let me give you more specific example, “Identify Risks” is a Process of Project Planning group. So when the project is in planning phase, you must identify all the Risks of the project.

Let’s see what a Knowledge Area is.

As per PMBOK, There are 9 Knowledge areas. For example, “Human Resource Management” is one of the Knowledge areas. Knowledge area is a set of specific processes required to be performed to meet a project objective. A Knowledge area may have some processes to be done in Project Planning Process Group and some other processes to be done in Project Monitoring & Control Process Group.

For example, if you take “Human Resource Management” Knowledge area, “Develop Human Resource Plan” is processes in Project Planning Group and another process “Manage Project Team” is in Project Execution group.

Lastly there are 42 process areas; we have already come across two such Process areas. “Develop Human Resource Plan” and “Manage Project Team”.
If you are totally confused by now, don’t worry. This is the whole exam syllabus and there is one lesson dedicated to each of these topics!

For now, just remember that there are 5 process groups, 9 knowledge areas and 42 project management processes.