What is a 'Critical Path Analysis'

Critical path analysis is a technique that identifies the activities necessary to complete a task, including identifying the time necessary to complete each activity and the relationships between the activities. Also known as the critical path method, critical path analysis helps to predict if a project will finish on time.

BREAKING DOWN 'Critical Path Analysis'

Critical path analysis (CPA) aids in reorganizing the project before initiation and as it progresses. CPA aids in keeping the project's completion on track and makes certain that deliverables finish on time. In the late 1950s, James Kelley, Jr. of Remington Rand and Morgan Walker of DuPont developed a project management technique called the critical path method (CPM). CPM aids in planning project activities and helps project managers handle complex and urgent tasks and projects with a large number of activities.

CPA detects and defines the critical and noncritical tasks in relation to a business process or work plan and the amount of float associated with each activity to prevent schedule delays and process bottlenecks. CPA is a key component in reducing project timelines and controlling costs to prevent exceeding the project budget.

Critical path analysis results define the critical path, a sequential set of related and important steps that comprise a work plan, usually with zero slack. CPA examines all options for decreasing the time necessary to complete the critical steps in a work plan.

How it Works

When using the critical path method, some activities cannot start until others are finished and must be executed in a sequence. These activities are known as sequential activities. For example, when you cook Sunday dinner, a ham cannot be served at dinner until it is thoroughly cooked and taken out of the oven.

CPM diagrams the time necessary to complete an activity, activity dependencies, milestones, deliverables and how each activity is connected to a former and subsequent activity. The critical path method diagrams the project activities using circles and arrows to depict the connection between activities and the length of each activity. A series of activities is called a path, and the longest path in the diagram is the critical path. The critical path is the path that justifies the final project timeline.

CPM plans and organizes resources, prioritizes tasks, estimates and minimizes project time, supports project cost estimates and evaluation, and helps provide project guidance. The critical path method assesses specific tasks that must conclude, assesses where parallel activity can occur, detects the quickest time to complete a project, and identifies resource requirements, categorizes the sequence of activities and enables project scheduling.

RELATED TERMS
  1. Critical Path Analysis - CPA

    A process by which projects are outlined and sequenced to have ...
  2. Project Management

    The planning and organization of an organization's resources ...
  3. Scope

    A project management term for the combined objectives and requirements ...
  4. Completion Bond

    A financial contract that insures a given project will be completed ...
  5. Capital Project

    A long-term investment made in order to build upon, add or improve ...
  6. Gantt Chart

    A Gantt chart is a visual representation of a project schedule. ...
Related Articles
  1. Personal Finance

    Project Manager: Job Description & Average Salary

    Discover more about the specific tasks that project managers are responsible for and the average salary that can be expected in such a position.
  2. Personal Finance

    Investing "Road Less Traveled" May Lead To Riches

    Using the same strategy year after year may be comfortable, but it's not always profitable.
  3. Small Business

    What Exactly Do Project Managers Do?

    While supervision is one important part of the job, a lot more goes into project management than just watching everyone work.
  4. Personal Finance

    Project Manager: Career Path & Qualifications

    Learn more about what project managers job, the qualifications necessary for the position and the most common careers for these professionals.
  5. Personal Finance

    Common Interview Questions for Project Managers

    Discover the basic skills needed for a position as a project manager along with common interview questions used in applying for such a position.
  6. Small Business

    Time Management Practices to Master Before Starting Your Own Business

    Learn how Pareto analysis, the ABC method, the Eisenhower method and the POSEC method can help small business owners effectively manage their time.
  7. Managing Wealth

    What's a Hurdle Rate?

    Hurdle rate has two meanings. In the business world, a business typically makes a decision on a capital project based on the net present value approach. To determine the net present value, the ...
  8. Small Business

    Understanding Operating Activities

    Operating activities are the daily processes conducted by a company to generate income.
  9. Investing

    Want ETFs But Hate To Buy And Hold? Try Active ETFs

    Choosing between passive and active ETFs depends on your beliefs about active management's value.
  10. Small Business

    What are Business Activities?

    Business activities are any actions in which a company engages to make a profit.
RELATED FAQS
  1. How do you determine the Critical Path in operations management?

    Find out how to develop and use the critical path in a standard critical path analysis, a popular operations management technique ... Read Answer >>
  2. Who developed Critical Path analysis in operations management?

    Read about the origins of critical path analysis, starting in the 1950s with DuPont chemicals and including later improvements ... Read Answer >>
  3. How do companies calculate the estimated duration of a new project?

    Learn about some of the common methods used by companies to estimate the duration of a new project, including those with ... Read Answer >>
  4. How do you use the profitability index rule when scoping out a project?

    Understand the parameters of the profitability index rule and how this rule is used in corporate capital allocation to determine ... Read Answer >>
  5. What are the differences between percentage of completion and the completed contract ...

    Learn the advantages and disadvantages businesses face when using either the percentage-of-completion or completed contract ... Read Answer >>
  6. What is the formula for calculating net present value (NPV) in Excel?

    Understand how net present value is used to estimate the anticipated profitability of projects or investments and how to ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center