Back to Basics (Part 10): How to Create a Project Network Diagram - InLoox

One of the biggest project management challenges is to meet deadlines and completing projects on time. Creating a project network diagram can help you plan projects more accurately.

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What is a project network diagram?

The InLoox project management glossary defines a project network diagram as follows:

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A network in project management displays the duration of project activities and the dependencies between activities graphically or as a table.

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In a network, nodes (rectangles) represent activities and events. Arrows connect nodes with each other. Arrows represent the dependency between the activities or events.

People often use the terms Work Breakdown Structure and a project network diagram synonymously. But there is an important difference between the two: A work break down structure enables you to view the project independently from its schedule and you visualize logical relationships in a hierarchical tree diagram. A network diagram also takes into account the chronological order of activities and uses dependencies to display them. Bar charts such as Gantt charts are a special type of network.

The network analysis enables the project manager to take into account various aspects when creating a project plan:

Dependencies between activities
Buffer times between activities
Earliest and latest start and end dates, as well as the duration of activities
Critical Path

How to conduct a network analysis

We’ve talked a lot about the theory but how does a network analysis actually work and what do you have to do? We’ll show you step by step how it works using a sample project – a teambuilding event.

Step 1: Define activities, durations and dependencies

Create a list of all your project activities and estimate their duration. Then define the chronological order of the activities, i.e. the dependencies between them. Enter everything into a table:

Step 2: Display all activities in nodes (rectangles) and enter the duration (d) into the node.

Each node is displayed as follows:

EST = Earliest Start Time = When can I start the activity at the earliest?
EFT = Earliest Finish Time = When can I complete the activity at the earliest?
LST = Latest Start Time = When is the latest possible date to start the activity if I want to complete the project on time?
LFT = Latest Finish Time = When is the latest possible date to complete an activity if I want to complete the project on time?
d = duration of an activity (here in hours)
CBT = Cumulative buffer time = extra time you can use to complete an activity without compromising the project end date
BT = free buffer time = extra time you can use to complete an activity without compromising the completion time of its direct successor(s)

Step 3: Link activities

Define the dependencies between activities. Predecessor and successor activities are linked by an arrow – this enables you to see which activity or activities you have to complete before you can start the next activity.

Step 4: Forward planning

Forward planning means that you start at the first activity and go through the activities #1-#8 chronologically. Add the EST (earliest start time) and EFT (earliest finish time). Here’s how you calculate the times:

EST of activity #1 is always 0
EFT of an activity is the sum of its EST and duration >> EFT of activity #1 is: 0 + 1 (EST = 0, d = 1)
EFT of an activity is automatically the EST of its successor activity
If a node has more than one predecessor activity, the HIGHEST EFT is used >> EST of activity #6 is: 26 (taken from EFT of activity #2)

Step 5: Backward planning

This step enables you to calculate the latest start time (LST) and the latest end time (LFT). Start from activity #8 and continue until you reach activity #1. Here’s how you calculate the times:

LFT of activity #8 is the same as its EFT and represents the starting point of the backward planning: EFT = 66 = LFT
LST of an activity is: LFT – duration >> LST of activity #8 = 66 – 5 = 61
LST of an activity is also always the LFT of the predecessor activity >> LST of activity #8 = 61 so the LFT of activity #7 = 61
If a node has more than one successor activity, the LOWEST LST is used >> activity #1 has 3 successor activities (activity #2,3,4). Out of the three successors, activity #4 has the lowest LST (=1) so the LFT of activity #1 = 1.
You can check whether your backward planning is correct if LST = EST = 0 for activity #1.

Step 6: Calculate the buffer times

The next step is to identify the cumulative buffer time (CBT) and the free buffer time (BT) for all activities.

Cummulative buffer time

Formula for the CBT is: LST – EST >> So CBT for activity #6 is: 30 (LST) – 26 (EST) = 4

The cumulative buffer time indicates how much delay there can be in completing an activity before it jeopardizes the project’s completion.

Free buffer time

Formula for the BT is: EST of the successor activity minus the current activity’s own EFT. BT of activity #3 is: 26 – 16 = 10 (EST of activity #4 = 26; EFT of activity #3 is 16)
If an activity has more than one successor, take the LOWEST EST for the calculation. E.g. activity #4 has 2 successors (activity #5 and #6). EST of activity #6 = 26, EST of activity #5 = 21 >> BT of activity #4 is 21 – 21 = 0

The free buffer time indicates how much delay there can be in completing an activity before it has an impact on the completion time of the next activity.

Step 7: Determine the critical path

The critical path is the longest path (i.e. the path with the longest duration) from project start to finish. The activities and milestones on this path have no buffer time. Which means that even the slightest delay of one activity, the project’s completion will be delayed accordingly.

In a network diagram every activity (node) without any cumulative or free buffer time belongs to the critical path: CBT = BT = 0. In our case those are activity #1, #4, #5, #7 and #8.

So the critical path determines the minimum project duration and enables the project manager to identify activities that are particularly risky should delays arise there. This helps them to devise countermeasures from the start. It’s important the they keep a close eye on the activities on the critical path. On the other hand, if you manage to complete a critical activity earlier than planned, you can decrease the duration of the project accordingly.

Conclusion

The network analysis is a very precise method but that means that it is also pretty complex. For smaller projects with a smaller number of activities such as our teambuilding event, it’s feasible. But if you have a complex project plan with a lot of activities, it’s not only complex to create a network diagram but it’s also complex and time-consuming to keep it up to date. Which is why most use a project management software to create a network diagram. Though it’s still helpful to know how to conduct a network analysis manually as it helps you to understand your project plan better. The biggest advantage of a project management tool is that it calculates end and start times automatically according to the dependencies and constraints you’ve defined, calculates the critical path automatically and – most importantly – it takes much less time and effort to create a project plan.