Critical Path Management (CPM)

Posted on September 15, 2015 By

What is Critical Path Management (CPM)?  It’s an essential part of determining a project management timeline.  It was originally developed in the 1940’s and was implemented developed by the Manhatten project, Dupont and other large corporations.

The mathmatical equations have changed since it was created, however, the thought process and logic are essential.

A simple example is that you are building a house.  What do you do first?  Put on the roof?  Of course not!  Let’s start with the building permit approval.  The permit approval requires an environmental study, traffic study, and architectural plans.  How much time do those other activities take?

Here are some commonly used items that you need to complete a CPM.

  • A itemized list of all the needed activities. This needs to be more specific than ‘install floor’.  Install floor might be a main category, but what are the steps that are required to do that.  Measure, level and cut flooring might be subsections of that list.  If you have projects that are similar, consider creating a master file that has almost too many steps and then adjust it for each project.
  • How long each item on the list will take.  (example, installing a large tile floor requires one day of prepping the floor, one day of laying out the tile pattern, one day of installing tile, and one day of grouting.)
  • What are the bottlenecks or the dependencies that require one item to be finished before another is started. (example, new building construction requires the foundation to be laid before the walls are constructed.)
  • What are the endpoints or deliverables? Milestones are bit different than endpoints.  Milestones are substantial parts of the job that are completed.  (example, completed drywall completion)  Milestones are often project bottle necks. Endpoints are the completed project goal.  If it is a large project, the subprojects might be referred to as endpoints.

CPM then is used to calculate the longest completion path in the project. Start that process by finding all the critical items that need to happen without the project stopping.  The float items are those that can happen without the project happening.  By identifying your must haves or bottlenecks it helps determine the project length.  Adding up the critical path times will tell you the shortest path to completion.  It simply won’t be possible to complete the project without finishing those items.

I use the critical path to create a framework for fitting in the float items, or the tasks that do not create a block another project from happening.  Once you have a basic framework, you can make adjustments.  For example, trim work in the living room needs to be completed for all construction jobs.  However, using a prepainted trim package can keep it from being a non-critical path item for painting the living room.

If there is an item that requires time for something to start.  Say, a specialist that is only available on Mondays, the six days prior to that are float time.  These are potential delays that are foreseeable so you should plan for them.  If the action item is missed in it’s window, it is sometimes referred to as critical path drag.  If you miss the monday appointment, it will be a week before that time slot is available again.

For instance, I’m working on a grant request this week.  The grant is only open every two years.  If I miss the application deadline, it will be another two years before I can apply for that grant.

A parallel path are when there are two or more critical project paths.  The shorter paths are non-critical paths and do not contribute to the project length.

Resource leveling can also be added to the mix by adding the delivery times to resources that impact the project. This is especially critical in custom or one of a kind materials are dependent on third parties to deliver.  An example would be a custom iron wrought fence that is the focus of the driveway.  The customer does not believe this is completed until this elaborate gate is installed.  Resource leveling would be adding that requirement to the critical path.

There a number of different software programs that you can use to quantify the project.  I like project management software that is flexible and can provide a time budget, an estimated time to actual, and several different views of the project.  For instance a visual diagram of the project logic and an project list that can be downloaded or add labor estimates to for costing.   Here is a list of project management software programs on wikipedia. https://en.wikipedia.org/wiki/Comparison_of_project_management_software

Trello is an example of a simple project management software.  Many creatives, writers and software engineers use it to create a to do list for each project.

The goal is to move from educated guesses to a mathmatical equation.  Once you know which days the projects are likely to happen, it’s easier to schedule materials, employees, and subcontractors to show up. (Resource Leveling) The process should be laid out so that you know if the project time, labor or material delivery needs to be adjusted.  If you know a few weeks out that the final cleaning will need to be delayed a month or so, it’s a much smoother project flow.  Even if the project is delayed, at least your subs will be confident that the work site will be ready for them.

 

Laura Dodson
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Laura Dodson

Laura Dodson, CPA is a Seattle Financial Planning & Analysis consultant.She has attended Western Washington University, Pierce College and Bates Technical College. She has written four accounting instructional books. She has worked for small family businesses, mid-sized businesses and a Fortune 500 company.She founded and operated Blue Stone Accounting LLC for five years.She currently runs Paper Butterfly Forge LLC.
Laura Dodson
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