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CPM schedule

Understand the Critical Path method

. Determine cost estimates and how they are used in the CPM schedule

Purpose: The CPM schedule is an important tool for evaluating integrated cost-schedule risk. This type of

analysis is important for evaluating the critical review of resources and schedules.

CPM Schedule 2

Table 1: Activity List table for Risk Analysis project on Bank XYZ week
y ID

Activity Earliest

Activity Period Type of


A High-level Risk analysis
(formulation of a preliminary
list of activities expected to be
uncovered by the analysis)

Week 0 One week Sequential

B Selection of the bank’s affected

ATM machines

Week 1 One week Sequential A

C Analysis of the Bank’s
procurement policy

Week 2 Two weeks Sequential B

D Analysis of the bank’s
procurement records (ATM
procurement records)

Week 2 Three days Parallel C

E Analysis of the bank’s
agreements with ISO

Week 3 Three days Parallel C

F Analysis of records of
agreements between the ISOs
and their sub-contractors (Sub-
ISOs) held by the banks as well

Week 3 One week Parallel C

CPM Schedule 3

as the ISO and Sub-ISOs
licenses, registration
documents, lending
arrangements, armored
transportation vehicles
agreements, source of currency
replenishments for the ATMs
and all other relevant

G Compiling of list of ISOs and
Sub-ISOs the bank is in
partnership with and
conducting a background
investigation on each of them
from public databases

Week 4 One week Sequential F

H Compiling of list of identified


Week 5 One week Sequential C, D, E,
F, G

I Development of appropriate
mitigation and contingency
plans for the identified risks

Week 6 One week Sequential H

J Conducting a comprehensive
and detailed training to the
bank officials and employees

Week 7 One week Sequential I

CPM Schedule 4

alike on the identified risks,
probability of occurrence,
impact to the bank’s customers
and ultimately the contingency
plans suitable to respond to the
risks when they happen or
mitigation plan to avoid
occurrence of the risks.

The images below show the CPM chart created using SmartDraw. Figure one is an image of the
entire chart while figures 2 and 3 are split pieces taken from figure one for clarity purposes.
The Thick arrows show steps that are sequential while the thin arrows show processes that are

CPM Schedule 5

Figure 1 : CPM chart

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Figure 2 : Part 1 of the CPM chart captured in Figure 1 above

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Figure 3 : Part Two of the CPM chart captured in the CPM chart above

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The first step of the Critical Path Analysis for evaluation of risks XYZ bank is exposed to
involved a High-level Risk analysis. This was a preliminary step of the risk evaluation process
and involved the formulation of a preliminary list of activities expected to be uncovered at the
end of the analysis. It gave the analysis process a framework to work within as well as a list of
possible risk drivers that could be uncovered at the end of the process. The process took one
week. After completion of the high-level risk analysis, the next step of the analysis process
involved identification of ATM machines owned or sponsored by the bank which experienced
erratic behavior as the one that reported inaccurate figures on receipts to customers. This step
was important in the uncovering of the unmonitored ATM machines that are highly susceptible
to fraud (Sullivan, 2015). This step also took one week. During the High-level Risk analysis step,
the analysis identified improper or lack of due diligence to be one of the key risk drivers that
leave the bank vulnerable to technical errors of ATM machines or fraud. Due diligence here
referred to carrying out necessary instigations on ATM machines as well as their vendors before
purchase, or instigation on the ATMs the bank sponsors. To verify this speculation, the analysis
carried out investigations on the bank’s procurement policies to discern the measures put in place
by the bank to ensure it only transacts with legitimate Independent sales organizations (ISOs) as
well as procures legitimate machines. This step was also carried out concurrently with steps D to
F as shown in the Activity List table above. Step D involved analysis of the Bank’s procurement
records to identify all the ISOs and Sub-ISOs that the bank procures ATM machines from. The
step took three days to complete. Step E involved analysis of the bank’s partnership agreements
with ISOs and sub-ISOs. This also enabled the analysis come up with a list of all the ISOs and
Sub-ISOs that the bank transacts with (both current and former). This step took three days. At the

CPM Schedule 9
same time, the analysis reviewed the agreements submitted by ISOs showing all the sub-
contractors that the ISO’s transact business with, such as selling and managing of ATMs that the
bank sponsors. This step was crucial in discerning if the bank has a complete record of all the
ATM machines it sponsors as well as the subcontractors it is in business with. This step is
covered by step F on the Activity List table above. Once steps D, E and F were completed, the
analysis had a list of all the ISOs and subcontractors that the bank is in business with. This list
was analyzed against the identified ATM machines that were identified in step B of the analysis
to discern the ISOs and subcontractors who were mandated to manage the ATMs that were
faulty. This step enabled the analysis carry out a background investigation on the identified ISOs
and their subcontractors through public databases to uncover their legitimacy. It also gave a
guideline for reviewing all the licenses, registration documents, lending arrangements, armored
transportation vehicles agreements, source of currency replenishments for the ATMs and all
other relevant documents that the ISOs and Sub-contractors must have before entering into an
agreement with the bank. This step took one week.
Completion of steps C, D, E, F, and G helped the analysis process identify a list of risks
that XYZ bank is vulnerable to. Step H thus involved compiling all the identified risks in a
comprehensive manner. With the analysis now equipped with a list of risks that the bank is
vulnerable to, the analysis designed a list of contingency plans that may be used in case the risks
occur as well as mitigation plans for averting the risks all together. This step is covered in step I
and it took one week. Step J was the final step of the analysis process which involved training
the bank personnel (officials and employees) on the identified risks, their impact to customers in
case they occur and the various contingency plans applicable in case they occur or mitigation
plans to aid in avoiding them all together. The training was the final step of the analysis and it

CPM Schedule 10
took one week. The identified risks as well as their mitigation and contingency plans were
compiled and presented in the risk register document.

Similarities and differences between the CPM and integrated cost, schedule risk analysis
and joint confidence level.
The main similarity between CPM and integrated cost, schedule risk analysis and joint
confidence level is that all of them are founded on the popular concept that “time is money”
(Kerzner & Kerzner, 2017). For instance, CPM appreciates the value of saving time used to
complete a project as it recognizes the time requirements of activities within the project schedule
and the interdependence of the activities. It therefore accounts for the schedule risk in a
transparent and direct manner so as to factor in the cost and schedule risks of the project
(Kerzner & Kerzner, 2017). Similarly, schedule risk analysis expounds on the integrated system
costing by identifying risks that hinder the project’s schedule and give a rating of the various
risks according to their potential harm to the project schedule (Kerzner & Kerzner, 2017).
The main difference between the aforementioned risk and cost analysis methods however is the
approaches taken by each of the various methods. For instance, CPM focuses on optimizing the
path taken by the project so as to save time and cost (Kerzner & Kerzner, 2017). Schedule risk
analysis method on the other hand works through simulation of events to establish risks and

CPM Schedule 11


Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Sullivan, K. (2015). Money-Laundering Red Flags. In Anti–Money Laundering in a Nutshell
(pp. 159-169). Apress, Berkeley, CA.

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