- A business must make sure it carries out marketing, production and sales processes in the correct order.
- Gantt charts have horizontal bars which represent the duration of each individual task in a complex operation. The tasks are arranged to show which tasks can be done at the same time.
- The length of each bar represents the time that a task takes.
- The chart helps to schedule the events. Some tasks can take place simultaneously, while other tasks are dependent upon another task getting finished first.
Gantt Chart Evaluation
- They show at a glance whether a project or production line is on schedule.
- If it's falling behind, more resources can be allocated. This means operations can be controlled more efficiently.
- The graphical format is easy to understand. It's a good way for managers to communicate what needs to be done for the rest of a team.
For Gantt charts to be effective, managers need to remember to update them if anything changes.
- They don't show how one activity being delayed will affect all the other activities on the chart.
For very complex projects with lots and lots (30+) of different activities, critical path analysis is often used as an alternative to Gantt charts.
Critical Path Analysis (1)
- Identifies the most efficient and cost-effective way of completing a complex project - i.e. a project made up of a series of activities.
- The various activities which make up the project are identified, and the order or sequence that these activities must be performed in is identified.
- The duration (how long each activity will take) is estimated.
- These factors are then arranged as a network or graph, showing the whole project from start to finish, and showing which tasks can be performed at the same time.
- The shortest time required to get from start to finish can then be identified. The sequence of tasks which have to be done one after another with no gaps in between, to get the project done as fast as possible, is called the critical path. Activities on the critical path are called critical activities - if they're delayed, the whole project is delayed.
Critical Path Analysis (2)
- EST = Earliest Start Time, in number of days since the start of the project. An activity can't start until the activity before it has been completed. EST is worked out by adding the duration of the previous activity to its EST. The EST of the first activity is always 0.
- EFT = Earliest Finishing Time. It's the time that an activity will finish if it's started at the earliest start time. The EFT of an activity can be worked out by adding its duration to its EST.
- LFT = Latest Finishing Time. This is the latest time by which the activity can be completed without holding up the completion of the project. It's calculated by subtracting the duration of the next activity from its LFT - you have to work out the LFTs by working backwards from the end of the project.
- Float time is the spare time available for an activity. Only non-critical activities have float time.
- Free float is the length of time you can delay an individual activity for without affecting the EST of the next activity. An activity only has free float if the next activity can't start until the completion of another activity, which is scheduled to take longer. Free Float = EST (next activity) - Duration (this activity) - EST (of this activity)
- Total float is the length of time you can delay an activity without delaying the completion time for the project. Total float = LFT (this activity) - Duration (this activity) - EST (this activity).
Critical Path Analysis (3)
- CPA is used when planning a complicated project, such as the launch of a new product or building a new office block.
- It allows companies to work out when they'll need resources to be available, e.g. that a certain machine will need to be free on Friday or that raw materials will need to be ordered so they arrive on day 25 of a project.
- In many cases, it's possible to shorten the critical path by allocating additional resources to an activity. E.g. sewing buttons onto a batch of jumpers might be expected to take 5 days, but if the company hired extra machinists, it might be possible to reduce that to 3 days.
- Some resources can be switched between actvities - e.g. multi-skilled staff can be moved from construction to painting. It's easier to switch resources between activities if the firm has flexible production facilities.
- Critical path anlaysis also helps managers with strategic decision-making. Knowing the latest finish time of a project makes it easier to decide when to launch an ad campaign or when to schedule a launch party.
- Identifies the critical activities (activities on the critical path), which need to be supervised closesly, to make sure they meet their deadlines.
- Labour resources can be transferred from activities with float time to critical activities, to make sure that deadlines are met.
- CPA allows managers to operate just-in-time production. Resources such as raw materials, labour and equipment can be employed efficiently from the earliest start time, instead of hanging around waiting to be needed. This saves on the storage costs and opportunity costs of stock holding, and improves liquidity.
- CPA helps firms forecast their cash flow - it gives definite earliest start times when cash will need to be spent on raw materials, which allows the firm to predict its liquidity.
- CPA finds the shortest time possible for completing a complex project. This can give a competitive advantage. It's an important element of time-based management.
- It's an excellent visual aid to communications, because it shows at a glance which steps take place at the same time, and which have any float time.
- CPA forces managers to think about the activities involved in the project. Without the systematic approach of CPA, something might be forgotten.
- CPA can be used to review progress on individual tasks, e.g. if a task overruns its float time or total float time you can see if it will delay the overall project or just the next activity. If there are changes and modifications to the progress of the project, the CP can be updated as the project goes on.
- CPA relies on estimates of how long each task will take. If these aren't accurate, the whole analysis will be inaccurate.
- Unless critical activities are identified and supervised closesly, there'll be delays to the whole project. CPA can sometimes put excessive pressure on managers to meet deadlines.
- Managers must make changes to the CPA once they know that delays are likely. Otherwise, it'll be inaccurate.
- Constructing the CPA will require a significant amount of planning and time.
- CPA sets tight deadlines, especially for critical activities. It's tempting for employees to cut corners in the rush to meet deadlines. Quality can suffer.
- CPA can't tell you anything about costs - or anything about how good the project is.