Network Analysis / Critical Path Method (CPM) - Office of Facilities Management

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Network Analysis / Critical Path Method (CPM)

PART I - INTRODUCTION

1. Purpose and Scope: This guidebook states the policy for the use of the Network Analysis System-CPM (Critical Path Method) on construction projects. This management/scheduling technique is recommended on all projects exceeding $5 million and other VA projects where the best interest of the Government will be served by its use. CPM is used to:

(a) Obtain information and data that are needed by construction project managers, contracting officers, and program managers to identify, manage, and resolve project and program problems and make decisions.
(b) Document, manage, and monitor job site progress to effectively minimize legal disputes on construction projects.
(c) Minimize and establish realistic construction project duration(s) while maintaining overall cost and design requirements.

2. VACPM System: The Network Analysis System, hereafter referred to as the "VACPM System," consists of the following:

(a) Graphic representation (CPM Network) of how a construction project is to be built. This includes the logical sequence of work events and the time required for each of these work events. With this information, the project length can be determined and time/scheduling management decisions can be carefully evaluated.
(b) The cost of each work event provides the cost/accounting data. It is used for making payments to the contractor and providing cost management information to the user/owner.
(c) Monitoring consists of the monthly analysis and presentation of VACPM scheduling information so that it is a usable management tool. The data is kept current and accurate so that it is technically translatable for the decision-making process of the project/program managers.
(d) Top level management reporting on the VA construction program includes periodic project status reporting of all projects on the system. Special review and analysis reporting on specific projects is accomplished upon request by top level management, program managers or project managers.

PART II - VACPM NETWORK DIAGRAM

1. Network Diagram Logic: Project length is one of the most important cost considerations on any construction project. For a contractor, the major benefit of using CPM on a construction project is that the job can be built on paper (many times and in different ways) to determine the shortest and most profitable approach to construction. The accuracy of the CPM schedule in obtaining this goal is dependent upon good network diagram logic.

2. Network Diagram Criteria - The basic initial document used for the VACPM System is a network diagram. A project specific network diagram is developed for every construction project where CPM is used. This network diagram is described as a standard activity-on-node network of events and is generally developed using the technique set forth in the current AGC publication CPM in Construction - A Manual for General Contractors.

In the VACPM System, the standard symbol legend format, and its use is required by contract, for showing an event is as follows:
Event data limitations:
1. Identifier: within limits of software being used
2. Duration: work days (limited to maximum of 20 for work events)
3. Trade code: 5 alphanumeric characters maximum
4. Area code: 5 alphanumeric characters maximum
5. Description: 35 alphanumeric characters maximum
6. Cost: less than $9,999,999 (cents allowed; including negative numbers for credit activity costs)
7. Percent complete: whole numbers 0-100%
8. Manpower: 3 numeric digits maximum

3. Network Numbering:The systematic assignment of identifiers on event nodes is essential for an easily understood and comprehensible network diagram. In general, the network diagram should be numbered from top to bottom and left to right. Some identifiers (those ending in 3, 6, & 9) should be skipped to allow for future logic revisions. Special series of identifiers should be set aside and used for submittals/approvals/deliveries, change orders, and supplemental agreements. In addition, each unique work area represented in the network diagram logic should have its own set of numbers for easy identification and cross-referencing on the CPM drawing(s). Once the CPM schedule is in use, new events entered into the schedule should use appropriate identifiers to maintain this easy work area reference. This type of identifying system has been found to be the best and easiest to use on VA projects.

4. Trade and Area Code - These abbreviated descriptive codes on each event identify who is responsible for the work and where it is located, respectively. They are selected and assigned to each event so that the computer can sort and categorize related work items on the various CPM computer reports. There are approximately thirty (30) different trade codes normally used on VA projects, but the number of different area codes will vary with individual project size. In general, trade sorted event data is used for updating and payment purposes and area sorted event data is used for project manager scheduling. To this extent, the assignment of trade and area codes should be thoughtfully and carefully assigned to avoid either too few or too many separate listings of related event listings via the computer.

5. Milestone and Key Events - For overall monitoring and supervision of the project, special event listings can be created that summarize the CPM schedule information. Selected events on the network are identified that represent significant portions of project work from which overall status can be evaluated. Milestone events are used to concisely identify portions of work and should show only the predicted dates produced by the updated CPM. Key events compare the predicted early date to an externally applied target date. Special area and trade codes are assigned to isolate and list these evens on various computer reports.

PART III - COMPUTER APPLICATION

1. A computer is used to calculate CPM time/cost data and produce schedules and reports for the users. A large variety of reports are available from most existing project scheduling software programs, but only those normally used by project management and field resident engineers will be discussed. The following is a descriptive listing of the more frequently utilized reports:

CPM Schedules (See Example 1a, Appendix A) display calendar dated scheduling information and total float for each event. The following is a partial list of the various data sorts for this type of schedule report:
1. Event identifier
2. Trade by early start
3. Area by early start
4. Total float (TFL) by early start
5. Early start by "event identifier"
6. Early finish by "event identifier"
7. Late start by "event identifier"
8. Late finish by "event identifier"
Relative Schedules (See Example 1b, Appendix A) show the scheduled dates for each event and their relationship to the extended contract completion date. The late/start finish dates are replaced by relative start/finish dates, and total float is replaced by relative total float. These "relative" values and dates are obtained on the backward pass of the network diagram calculations having the extended contract completion date as a starting point. The relative float values will be positive if the project is on or ahead of schedule and negative if it is behind schedule. The following is a partial list of the different types of relative schedules that are available:
1. 1. Event identifier
2. 2. Trade by early start
3. 3. Area by early start
4. 4. Relative float (RFL) by early start
5. 5. Early start by "event identifier"
6. 6. Early finish by "event identifier"
7. 7. Relative start by "event identifier"
8. 8. Relative finish by "event identifier"
Cost Earned Reports (See Example 1c, Appendix A) show only the CPM cost data and the computer calculated information pertaining to monies. Each event has the cost, previous percent complete, current percent complete and the amount earned to date. The special costs tracked for Material on Site (as described in Part V) are isolated from the network diagram and calculated independently of other contract work events. The reports are sorted by trade or area code and include all events except pure logic restraints. At the end of each trade or area sort, the cost data are subtotaled for the user. Summary subtotals are again provided for each trade or area code and shown at the end of the report.
Cost Schedules (See Example 1d, Appendix A) display both time and cost data. The scheduling data are the same as for CPM schedules and the cost data are the same as for cost earned reports. The different types of cost schedules are as follows:
1. 1. Event identifier
2. 2. Trade by early start
3. 3. Area by early start
4. 4. Total float (TFL) by early start
5. 5. Early start by "event identifier"
6. 6. Early finish by "event identifier"
7. 7. Late start by "event identifier"
8. 8. Late finish by "event identifier"
Look-Ahead Reports (See Example 1e, Appendix A) are used to update the project and are discussed in more detail in Part V. On this report, the computer automatically selects and lists all the activities having an early start and float value of 60 workdays or less, depending on what is requested. This 60 day parameter can be manually reset if necessary to expand the listing of activities. The following are the different types of Look-Ahead Reports that are utilized on VA projects:

1. CPM Schedule - Trade by early start
2. CPM Schedule - Area by early start
3. Relative Schedule - Trade by early start
4. Relative Schedule - Area by early start

Payment Request, Progress Report and Accruals Report (See Example 1f, Appendix A) are computer created based on the CPM data from the monthly update for payment and progress. The distribution of these reports to various offices within the VA generates the contractor's monthly payment. They contain a large collection of information (both electronically and manually entered) to display project status for the various users of the system.
In addition to the computer reports described above, special schedules and listings of CPM information may be required for a particular project. These reports require special report writing and development techniques. A member of the VACPM staff must work with the user to establish and generate the desired schedules or reports.

PART IV - SUBMISSION, REVIEW AND APPROVAL OF THE CONTRACTOR'S CPM DIAGRAM

1. The contractor is required to make two (2) CPM submissions by the NAS section(s) of the specifications: (1) the proposed consultant and (2) the complete final (day-1) network diagram. It is the contractor's responsibility to meet these submission requirements within the specified time frames. CPM payments for work performed cannot be computer calculated until satisfactory compliance with the CPM submissions is obtained.

The submission of the proposed consultant and his qualifications are required 10 calendar days after the award of the contract. The contractor should limit the development of the network diagram until after receiving the contracting officer's approval of the proposed consultant.
The complete final (day-1) network diagram must be submitted within 45 calendar days (60 calendar days for projects over $50,000,000) after receipt of Notice to Proceed (NTP) and should reflect the contractor's approach and plan to build the project as bid. The complete final (day-1) network diagram must represent the construction schedule for the entire project and shall not contain any contract changes or delays. When approved by the contracting officer, it establishes the original intent and procedure for performing all the original contract work. CPM schedules are then to be used and updated for the duration of the project construction.

2. The first updating of the complete final (day-1) network is usually quite time consuming. It consists of translating the progress from the NTP to the CPM schedules of the complete final (day-1) network diagram. All outstanding requests for time are analyzed and any adjustments for contract changes are incorporated into the appropriate update, if manual progress updates for payment have been made during the period from NTP to this first formal schedule update. Manual progress updates for payment should be carefully and jointly recorded by the R/E field staff and the contractor to ensure proper time analyses for these manually updated periods. The events being manually updated should preferably be easily referenced to those on the network diagram submitted by the contractor for VA review and approval. Failure to do this makes the time analysis for the period prior to the approval of the complete final (day-1) network diagram very time consuming and at best a late debate among those present at the project site. It is prudent practice to jointly record and agree to the project status at these intervening update intervals when they occur.

3. As each monthly CPM update occurs, a new project schedule is produced. This updated schedule, unless objected to by the contracting officer, represents the currently approved schedule of the project. Thus the CPM schedules should be current and accurate at all times.

PART V - UPDATING THE CPM

1. The CPM progress update is done monthly on a date mutually agreed upon by the contractor and the VA senior resident engineer. The Look-Ahead Report (See Example 1e, Appendix A) should be marked up by the contractor and given to the resident engineer at least three work days prior to the progress update meeting so that it can be reviewed and verified. This enables minimal discussion at the meeting as only exceptions need to be resolved and progress made in the three work days prior to the meeting. Actual start and finish/completion dates should be reported for each event during the monthly updates as appropriate. The sample update in the appendix is appropriately cross-referenced as follows:

Progress on Submittals, Approvals and Deliveries: Until the specific material has been received at the job site, the submittal, approval or delivery event must be updated to indicate the status of the item(s) in question. The in-progress event is updated by changing the duration to the workday difference between the anticipated completion date and the update date. These events are unique in that they represent the first delivery of the material being tracked to the job site and must be updated accordingly. There are times when delivery, of the material is received so that the first affected event can be accomplished, but not sufficient material for succeeding events to be accomplished. In such cases, create an additional material delivery event for the remaining material. You should not allow the original delivery event to show no progress until all material is delivered, when the first event being affected by the delivery is being accomplished. Not correcting this situation will create a schedule that does forecast or report job progress accurately.
Work-in-Progress Events - These events must be updated for both time and money. The time is revised by changing the duration to the actual number of non-consecutive workdays anticipated to complete the work. Money is updated by showing a percent complete for the work actually in place at the time of the update. Time and money are treated independently on the VACPM System and there are no limitations with respect to either increasing or decreasing the duration and percentage numbers, especially if they were incorrectly reported the previous update or recent experience indicates that existing event durations are either too pessimistic or optimistic. This is a commonly overlooked task at update meetings.
Completed Work Events - On these events, the duration is changed to zero; the percentage is changed to 100 and the actual finish/completion date should be provided on the report.
Material on Site - Money paid to the contractor for stored material is tracked separately, off schedule, and handled by the Senior Resident Engineer during payment voucher preparation using their payment voucher module. The Resident Engineer should discuss material on site (MOS) with the contractor and establish the proper processing of these requests as early as possible once the contract begins. For any questions regarding this item or the payment module, call the VACPM staff.
Change Orders - Events for new Change Orders must be added to the network diagram each month. These entries must include all logic and event data necessary to represent the changed work. Previously entered Change Orders are revised and updated like any other work event until it is canceled by/converted to a Supplemental Agreement. When a Change Order is canceled/converted, the Change Order event data must be revised to reflect this contract action:
1. 1. Duration is changed to zero
2. 2. Percentage is shown as 100%
3. 3. Change the event description to reflect the transaction (Example: "FCO K CANC XFSA 120")
4. 4. Budget is changed to 0
5. 5. Finish date is converted to the Supplemental Agreement date; unless the Change order has been finished before the canceling Supplemental Agreement is issued, then the Change Order should reflect when the work was actually completed by leaving the finish date alone when the canceling Supplemental Agreement is issued.
Supplemental Agreements - CPM network diagram logic and associated events for new Supplemental Agreements are developed by the contractor and included as a part of his proposal for the changed work. This proposal data is updated to its present job status and added to the CPM on the first update after issuance of the written Supplemental Agreement. Once the Supplemental Agreements are included within the CPM network diagram, they are updated and monitored like all other work events for both time and money.
CPM Revisions - These are necessary to keep the CPM monitoring project progress properly and can usually be recognized and made by a "float analysis". Last month's float report is used to review all the float paths having float which is equal to or less than the workday difference between the predicted completion date and the contract finish date. Erroneous restraints or trade bump logic restraints are easily identified on each float path. Some revisions are made by updating or correcting reported progress and may correct more than one float path. All the paths should be reviewed each month with respect to recent changes to the actual construction plan. Once the "Float Analysis" is completed, the necessary revisions are incorporated into the update.
As a final check to ensure that all the revisions have been made, the late start dates on the Look-Ahead Report are compared to a "cut-off" date. This date is based on the workday difference between the predicted completion date and the contract completion date, which is then added to the as-of-date. If the late start of an event is earlier than the "cut-off" date, that particular event's work should be in progress or completed. If it has not been started or completed, a network logic revision should be considered and made to maintain schedule status, to avoid further schedule slippage, when appropriate.

2. The resident engineer is responsible for preparing the payment voucher and progress report for submission to VA Central Office (VACO) each month and should refer to the Resident Engineer Handbook for more detailed instructions. In addition, the payment voucher module instruction manual will provide valuable assistance and guidance in performing this responsibility.

Prior to the monthly update meeting, the resident engineer should verify the progress reported on the contractor's advanced copy of the Look-Ahead Report. The events where the contractor and the resident engineer do not agree will be discussed and resolved at the update meeting.

The resident engineer must update those events on the CPM which are the responsibility of the VA. This usually includes approvals, Government furnished equipment, VA moves, etc. They are updated like any other work event on the network diagram.

The resident engineer reviews the logic revisions made by the contractor to ensure that the changes to the construction plan are feasible and reasonable. He/she also reviews the CPM schedules and informs the contractor when and where schedule revisions are necessary in his/her opinion. If assistance in this is needed, he/she should contact the central office CPM staff.

3. The update meeting is devoted to discussing and resolving the issues where the resident engineer and the contractor are in disagreement. Once mutual resolution of the issues of disagreement is reached, both parties sign the Look-Ahead Report and the appropriate distribution is then made. The following is a checklist of items that are verified at the meeting before the final copies of the Look-Ahead Report are distributed:

Review the first three pages of the Look-Ahead Report to verify:
1. As of date.
2. Satisfactory/unsatisfactory performance, etc.
3. Total the Supplemental Agreements and Change Orders previously reported. Check this total against the net changes on last month's Progress Report. They must be in agreement.
4. Double check each and every entry for Supplemental Agreements and Change Orders issued this period against the hard copy document. Be sure that no canceled Change Orders have been overlooked.
5. Review the remarks to make sure they are legible and understandable.
Review the network logic code sheets that are included as a part of the update:
1. Check the Change Order and Supplemental Agreement events against the "issued this period" entries.
  1. Correct logic and numbering.
    1. Correct (updated) durations.
    2. Trade, area and descriptions in keeping with format for particular project.
    3. Event costs (totaled for each Supplemental Agreement or Change Order) must agree with budget figure "issued this period".
    4. Updated progress and completion date (when applicable).
2. Give special attention to canceled Change Orders to ensure that existing events in the network have been appropriately revised.
3. Review the CPM revisions to verify:
  1. Logic and numbering must not be in conflict with existing network.
  2. This month's reported progress is compared to the CPM revisions to ensure continuity.
  3. The logic revisions are reviewed to make sure that they do correct the CPM deficiencies.
Check all the events on the Look-Ahead Report:
1. With the "cut off" date used for analyzing revisions, review all the events for any that may have been overlooked.
2. Pay special attention to updated submittals, approvals and deliveries.
3. Look for events which have:
  1. Missing event actual start and actual finish dates.
  2. Work progress reported without revised durations.
  3. Any information from the previous month that is in error.
4. Double check those items discussed at the update meeting to ensure that the resolved discrepancies have been accurately updated.

PART VI - CONTRACT CHANGES AND TIME EXTENSIONS

CPM procedures for entering Supplemental Agreements, Change Orders and Time Extensions are basically the same. Likewise, the CPM analysis of their impact on the project schedule is similar. Such procedures are easily followed for relatively simple instances of these items and can be easily accomplished in the field. If the contract changes are numerous and/or complex or may involve an extensive CPM analysis, it is advisable to request assistance from the VACPM staff.

1. Entering and Developing CPM Input for Contract Changes: Supplemental Agreement CPM information is obtained from the contractor's proposal for the changed work. Change Order data is normally developed by the resident engineer in conjunction with the contractor. Time Extension data is included in the contractor's request for time justification. However, all three must follow the same basic guidelines for preparation.

The scope of changed or effected work is reviewed to determine where and how the CPM revisions should be incorporated into the network diagram.
The event revisions and additions are sketched on the current network. There are two basic types of logic entries:
1. The simultaneous work event is associated with changed work that will be performed by additional work forces. It is shown as being parallel work with one or more existing events on the network diagram.
2. The sequential work event is associated with changed work that will be performed by existing work forces. It is shown as sequential work that is inserted in series with an existing chain of work events on the network diagram.
3. The logic revisions should include separate events for each involved trade and must be associated with existing events on the network. If the changed work occurs in more than one work area, separate events will be required for each involved work area.
4. > The technique used to display the changed work should be consistent with the existing data format definitions of the existing network diagram. Event numbers, trade codes, area codes, and descriptions must be compatible with the data sorting requirements of the project schedule.
5. In addition to those events required to describe the contract change, other network diagram revisions may also be necessary. These changes include all the logic and modifications and adjustments to the schedule for directly and indirectly related work as a result of the delay or change in work.

2. CPM Time Analysis on Contract Changes: The affect that changes or delays have on a CPM schedule is determined by a comparison of the schedules before and after the delaying activities are incorporated into the CPM Network. If such a comparison indicates that the predicted completion date will be affected, the contractor may or may not be entitled to additional contract time. Normally, the contractor is entitled to additional contract time only if the scheduled completion is delayed beyond the extended contract completion date.

Computer Analysis: The VACPM staff and/or CPM consultant would normally make the schedule analysis that requires the use of the computer. The computer is used when the time analysis is complex or when there are numerous change events that must be considered. This type of analysis is the only feasible method that can be used to accurately determine cumulative and concurrent delays on a schedule.
Manual Analysis - The contractor and resident engineer can normally make this analysis. The following procedures are followed to make a manual time analysis.
1. The changed work or delay is reviewed and the events are drawn on the network diagram or scratch sheets duplicating the network logic affected. The portion of the network under analysis should start with the existing event immediately prior to the alleged delay event(s) and finish with the existing event immediately following the alleged delay event(s).
2. Using the CPM Schedules with an as-of-date immediately before the time the problem was encountered or the contract change issued:
3. Two manual "forward pass" calculations are made and compared to see if project duration has changed.
  1. The first manual pass is made on the existing activity network without any consideration for the changed work or delay activities.
  2. The second manual pass is made on the same network except the changed work and delay activities are also included in the calculations.
  3. Once the number of event days lost has been determined, it is subtracted from the existing float. This comparison will indicate if all available float has been used and the workday impact on the predicted completion date.
  4. If the predicted completion date was delayed, it is compared to the extended contract completion date. This difference is the workday delay to the contract that is converted to a calendar day justification for additional contract time.

3. CPM Analysis for Time Extensions: Delays to the project because of strikes, weather, and other acts of God are usually the only scheduling problems that require an "after-the-fact" CPM analysis. The CPM information required for in-progress delays of this type cannot be estimated and is a totally unknown condition. Once work on the project resumes, the CPM analysis can be made to determine the delay impact to the schedule. The CPM procedure for developing and making a time extension analysis is the same as for any other type of delay.

4. Concurrent and Cumulative Delays: If there are relatively few delays or contract changes incurred in any one CPM updating period, a manual analysis, as previously described, can be used to determine total impact on the project schedule. However, all the CPM information for the alleged delays must be analyzed at one time rather than making separate calculations for each change.

Concurrent/Cumulative Affect Analysis can best be done only after all the contractor's proposal/requests for any one reporting period have been prepared. In addition, the alleged delays from previous reporting periods must also be resolved to avoid conflicting or erroneous analysis for the delays in question. Because of the above, concurrent and cumulative delays are usually made on a reporting period by reporting period basis only after all the proposals are received for the reporting period time frame in question.

The procedures and calculations are exactly the same for both the manual and the computer analysis. The computer is only used when the required analysis is too complex or cumbersome to perform manually.

Reviewed/Updated Date: May 1, 2006