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What Is a Critical Path Analysis and How to Calculate It?

Critical path method helps eliminate unexpected risks and cheating in software outsourcing. Get a free estimation template and consulting.

Author:

YURI KARPENKO

Position:

VP of Engineering

Over 25 years of experience in project/program management for financial institutions, software development, systems architecture, design, implementation, and integration.

Critical Path Analysis Leaves No Chance for Cheating in Software Projects

Have you ever experienced cheating in software outsourcing? Were you once told that you needed four back-end developers instead of three? Your project lasted more than it was expected? Why? Your oral agreements with a vendor cost you a fortune. Your cooperation, as well as your project success, mustn’t be a fluke. Want to get a fair and transparent estimation? Then this article about a critical path analysis is a good read for you.

What Is a Critical Path?

The critical path method (CPM), also referred to as critical path analysis (CPA), is a sequence of tasks and activities needed to be done to schedule and complete the project. Traditionally, it is used together with the program evaluation and review technique (PERT). According to Wikipedia, this method is widely used for any type of project, including construction, plant maintenance, aerospace, defense, engineering, software development, to name a few.

Critical Path Analysis Components

CPA is used to create a project model that includes the following elements:

  • Activities grouped and categorized in the Work Breakdown Structure (WBS)
  • Duration of each of the activities
  • The dependencies and connections between the activities
  • Deliverables and milestones

Using these components, you can estimate the longest path of allocated activities and milestones, i.e. you will have an approximate end date of the project, along with the nearest time when each of the activities can be started. This schedule helps determine which tasks are critical and which ones can be delayed without impact on the project’s end date.

Basic Terms to Know for Critical Path Analysis

Each project management method requires basic knowledge and understanding of terms used within this approach. Critical path analysis features a few terms that should be explained below.

The earliest start date is the nearest date when you can begin the project. It is defined only then when you know if there are no other tasks dependent on the first scheduled task.

The earliest finish date is the earliest time you can complete the task.

The latest start date is the last moment when you can start the task.

The latest finish date is the last minute in which you can complete the task.

Float (slack) is the time that defines for how long you can delay the task before it affects the project schedule. Note, when you are capturing the tasks for critical path, they should be marked with zero floats.

Crash duration is the minimum time for scheduling the task.

For detailed explanations, feel free to consult with our analysts.

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How Critical Path Method Works

If you contact an outsourcing vendor to evaluate the scope of work, they would probably provide you with the following information:

  • a certain number of hours it will take them to realize the project;
  • a team composition, for example, two front-end developers and three back-end developers;
  • a particular sum of money to accomplish the project.

Sounds like a good plan. However, you can’t be sure about how many people you actually need and how long the project will last. Your provider says that they will finish the development on time. If you have the data mentioned above only, you can’t confirm or refute the veracity of their promises.

So, how must it work? The entire system must be split up by a Work Breakdown Structure (WBS). Your outsourcing vendor must divide the whole project’s work into separate parts. Usually, WBS consists of the tasks we evaluated in hours. Basing on WBS, a Critical Path is created.

Image, you’re building a house. First, you’re preparing the site, then constructing the foundation, next – putting up the walls, building the roof, and so on. These pieces of work can’t be done concurrently. Below is an excellent critical path example of building a house. It consists of specific activities and jobs that are structured in a particular sequence. Each task requires a certain period of time to be accomplished. Such a detailed estimation simplifies the project execution and allows us to work efficiently.

Critical Path is the most effective way to define the sequence of interdependent tasks and activities used in project planning. For example, you would like to build a website. You want to create a user home page. However, we can’t do this until we build login and registration capabilities. You would like to have a dashboard on a user’s home page, but you can’t implement that without having the dashboard itself. As you can see, each functionality or feature is dependent on the other. Thus, it is crucial to determine these interdependencies beforehand to create an appropriate sequence of project activities.

The website design process is made up of specific tasks assigned to certain people who are responsible for their execution. For example, George has to create the design. He is given two weeks for this job. Once the design is done, Robert can start writing HTML. Meanwhile, George contacts the service provider, whereas Linda is busy with the artwork.

What’s important to note about Critical Path is that each of its parts requires different people and a different number of people. Your vendor must calculate the number of specialists and define which specialists are needed to complete every single part of your project. And make sure that your vendor also has established the basis for risk assessment as any type of risk could cause delays.

If you were told that it would take a certain number of hours and people to accomplish your project, you can’t be sure that it is true. You should be provided with documented evidence that explains why you need these people and why you need this very number of people. Only then will your cooperation with an outsourcing partner be transparent and fair. Ask your vendor to give you a Work Breakdown Structure, so that you can trace every phase of software development, the number of people needed for each of the tasks, the timeframes, and costs.

Need a WBS? We will accurately estimate the needed resources while considering all possible risks.

If you get a WBS document, you can be sure of the transparency of your cooperation with an outsourcing vendor. You know what will be done, what resources and skills you need for every single part of the project, and how many specialists you need, with all the risks assessed beforehand. Once you have a WBS, you will also be provided with metrics to measure the performance and track the progress of the project. These metrics make a confluence with the WBS as you can check if a certain work indeed lasted the allocated period. You won’t be deceived as every sum of money can be tracked and checked. This approach to outsourcing is entirely transparent and leaves no chance for cheating.

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How to Calculate Critical Path?

Depending on your outsourcing provider, you can determine the critical path for your project in different ways. However, below are four basic steps to follow if you need to schedule the project timeframes:

  1. Create a Work Breakdown Structure (WBS) to list the activities and tasks needed to be done to complete the project.
  2. Estimate the time needed to complete each of the tasks from the WBS.
  3. Capture all the dependencies between the tasks and include those in the critical path analysis.
  4. Create a list of what should be delivered within the project (deliverables), along with the milestones.

Once you have collected all this data, you can calculate the longest critical path needed to finish the project development. The critical path serves as the most accurate way to plan the project, as well as the guarantee that your outsourcing partner will meet the deadline. Together with a traceability matrix, it helps to avoid undesired implications caused by any small changes in the requirements, consider all possible risks and threats, and avoid misunderstanding and conflicts between a customer and a vendor.

Having a clear WBS, along with finding the critical path, you can monitor the execution of the project and make sure that it is on schedule. To track the critical path, the activity network diagram is often used. Usually, it looks like a chart illustrating all the activities, the ways they are linked and dependent on each other. It may be a Gannt chart or another tool to calculate CPM.

How to Effectively Implement and Use a Project Critical Path?

The critical path method has matured into a powerful quantitative tool used for effective business decision-making processes. You can implement it for accurate project planning, scheduling, and analyzing. It helps to find out what jobs are most critical and how much they affect the project, in what order it’s better to allocate tasks to complete the project at a minimum cost. The critical path algorithm is successfully applied to project initiation and planning, installing and debugging computer systems, project management, software development, etc.

Every single project has basic features that are crucial in using a critical path calculator:

  1. A project consists of jobs, tasks, and activities that must be well-defined.
  2. Within a certain sequence, any task may start or end independently of each other. 
  3. Tasks must be executed in a particular technical sequence.

Each of these characteristics should be considered while you are planning your project. The duration affects the estimation, whereas the latter impacts the team composition and the cost of the project. Although it seems quite simple to calculate a project critical path, you can face a lot of difficulties while performing this analysis. Below you can download a free template of the estimation and get a piece of advice from our experts on how to use it most efficiently.

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