Project Management

Network diagram is just a graph which represent activities with their relationships to develop a schedule and to workout critical paths or near. OR

What is a network diagram in project?

A network diagram is a graphical representation of a project and is composed of a series of connected arrows and boxes to describe the inter-relationship between the activities involved in the project. Boxes or nodes represent the activity description, and arrows show the relationship among the activities. in this lecture we will be drawing a network diagram of the project,

The critical path (or paths) is the longest path (in time) from Start to Finish; it indicates the minimum time necessary to complete the entire project. Your critical path is the longest path from the first column through the lines showing prerequisites to the last column. It determines the project completion date because you must complete all tasks on the path within the estimated time or delay the project.

The program evaluation and review technique is a statistical tool used in project management, which was designed to analyze and represent the tasks involved in completing a given project. in this lecture we will give solution to a real life project problem using PERT.

EVM or earned value management is a method in which we track or assess the project performance and progress by combining the projects scope, schedule and ofcoarse resource measurements. Now in order to assess the projects progress and performance there must be a reference which is known by baseline in management field, so formation of integrated base line is must against which progress and performance can be measured.

now in this lecture will be discussing all the related formulas to EVM such as CPI, SPI, SV, CV, TCPI, ETC, EAC etc.

The Cost Performance Index (CPI) is a method for calculating the cost efficiency and financial effectiveness of a specific project through the following formula:

CPI = earned value (EV) / actual cost (AC).

A CPI ratio with a value higher than 1 indicates that a project is performing well budget-wise. A CPI value of 1 indicates that a project is performing on budget. A CPI value that is less than 1 indicates that a project is over budget.

Schedule Performance Index (SPI) provides an indicator of the overall schedule performance to date which can help us to check whether the activities were on time as planned or not.

Now spi or schedule performance index is the ratio between earned value and planned value.

Here again if you remember earned value is the value of completed work as of today or you can say its just the planned value of completed work. And planned value is the estimate cost or value of work planned to be spent as of today. if SPI is less than 1 the means the project is behind the schedule and that’s not ok, the manager has to take corrective decisions to bring the schedule on track.

If spi equals 1, that is a good sign which means the project is on schedule.

And if spi is greater than one, then that is more than ok which means the project is ahead of schedule.