A network diagram graphically represents the relationships between activities in a project through connected arrows and boxes. There are two main types: precedence diagramming method (PDM) which focuses on logical dependencies between activities, and arrow diagramming method (ADM) which focuses on the flow and direction of activities. To create an effective network diagram, one must understand the project's purpose, propose the proper resources, connect activities based on dependencies and time elements, and ultimately produce the final network diagram model.