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Program Evaluation and Review

Technique (PERT)

Project

• _{A project is a set of interrelated activities that}

must be executed in a certain logical sequence to complete the entire task.

• _{Every activity in a project requires time and}

resources for its completion.

• _{It cannot be initiated unless the other}

Project management

• _{Managing an entire project is a challenging job performed}

by a project manager; however, before the project goes on the floor, he has to perform a crucial task of providing an estimation of the project cost and duration to the client.

• _{Before any activity begins related to the work of a project,}

every project requires an advanced, accurate time estimate.

• _{Without an accurate estimate, no project can be}

PERT

• _{For doing this, the PERT (Program Evaluation}

and Review Technique) comes to the rescue.

• _{Making use of the PERT formula is one way to}

more accurately forecast project completion times to save your business money and keep others satisfied with the work completed.

• _{Time management is key to meeting customer}

Presentation outline

• _{We shall discuss what is PERT, and how it is}

Introduction

• _{The PERT technique is used in conjunction with} the Critical Path Method (CPM), therefore, it is also referred to as the PERT-CPM method.

• _{PERT stands for the program evaluation and} review technique, which is a method of

History

• _{PERT (Program Evaluation and Review Technique) is one}

of the successful and proven methods among the many other techniques, such as, CPM, Function Point

Counting, Top-Down Estimating, WAVE, etc.

• _{PERT was initially created by the US Navy in the late}

1950s. The pilot project was for developing Ballistic

Missiles and there have been thousands of contractors involved.

• _{After PERT methodology was employed for this project,}

Ingredients

• _{The PERT calculation takes into consideration} the shortest, longest and most likely amount of time you think it will take to complete a

project in order to help you plan your time in the most accurate way possible.

• _{When you are planning your business schedule} and communicating with customers, the PERT formula will help give you a feeling of

Why PERT?

• _{Instead of basing this date on your gut}

hunches or best-case scenarios, your

customers and your work team will have a

more realistic set of time expectations before the project begins.

• _{This results in greater job satisfaction as well}

Network diagram

• _{Also known as the PERT diagram, it is a pictorial}

representation of all the activities involved in the project. • _{The diagram is easy to understand, since it describes the}

logical relationships among the activities and the milestones they reach upon completion.

• _{The activities are denoted by arrows, while the} milestones are denoted by nodes on the network diagram.

Creating PERT Chart

How to Create a Pert Chart - Project Management Training,

https://www.youtube.com/watch?v=1bmaDMS Qe04

by

Critical path

• _{It is the longest time path on the network,}

which indicates that it is the longest time it takes to complete a project.

• _{Delay in any activity along the critical path will}

delay the project completion time.

• _{All activities on this path have a slack time}

Slack Time

• _{It is the amount of time an activity can be}

delayed before the project finish date is delayed.

• _{Formula to calculate the slack time is:}

– _{Slack Time (S) = Latest Start Time (LS) - Earliest}

Interpreting slack time

• _{S < 0: indicates the amount of time that must}

be saved so that the project finish date is not delayed.

• _{S > 0: indicates the acceptable delay so that}

the project finish date is not delayed.

• _{S = 0: indicates that the activity is a critical}

PERT

• _{PERT is an estimating technique that uses a}

weighted average of three numbers to come up with a final estimate.

– The most pessimistic (T_p) case when everything goes wrong

– The most optimistic (T_o) case where everything goes right

Formula

• The resulting PERT estimate is calculated as T_e = (T_o + 4 T_m + T_p) ÷ 6

• _{This is called a "weighted average" since the}

• _{You'll notice that the final PERT estimate is}

moved slightly toward either the optimistic or pessimistic value - depending on which one is furthest from the most likely

• _{Generally this ends up moving the final}

estimate toward the worst case, since the

Example

• _{let's say you estimate a piece of work to most}

likely take 10 hours.

• _{The best case (everything goes right) is six}

hours.

• _{The worst case (everything goes wrong) is 26}

hours.

• _{You can use the PERT estimates two ways.} • _{You can provide these three estimates for all}

activities in your schedule

• _{or you can only use the PERT formula for}

Optimistic Time Estimate

• _{One of the measures included in the PERT}

formula is the optimistic time estimate.

• _{When plugging this value into the equation,}

choose the best-case scenario.

• _{Think about if every person in the project}

finished his part perfectly and if there were no need for extra parts and no time hangups

• _{For instance, if you are a contractor who is}

building a new, four-bedroom home, past

experience might show a 120-day completion time when everything goes perfectly.

• _{There were no budget slow downs, no missing}

• _{Of course, it is rare that things work this well,}

Most likely estimate

• _{Another value included in the PERT calculation}

is the most likely time estimate. This would be your average completion time for a project.

• _{Not everything goes according to plan on the}

Pessimistic time estimate

• _{While nobody really likes to think about it,}

sometimes things do not go at all as planned on a project.

• _{The PERT formula takes this value into account as}

well.

• _{This is your worst-case scenario for project}

completion, when a project was derailed for months due to factors outside of your control, and every

Volatility of estimate

• _{Speaking of variation - if you subtract your}

pessimistic value from the optimistic value and divide the result by six, you would have the

standard deviation, which is a measure of the volatility of the estimate.

• _{If the standard deviation was small, it would}

mean you were pretty confident in your

• _Suppose,

– Project T_E = Sum of Estimated Time of Individual Activities

– Project V_E = Sum of Variances of Individual Activities

• _{Once you have the aforementioned values related}

to a project, i.e., T_E and σ_E, you can calculate the chances of meeting a specific project scheduled time (T_S) using the probability theory formula:

– Z = (T_S - T_E) ÷ σ_E

• _where:

– _{Z = Number of Standard Deviations from the Mean} – T_S = Project Scheduled Time

• _{Using the computed Z, refer to the standard}

Steps for PERT analysis

1. Identify the activities in the project.

2. Determine the logical sequence of the activities. 3. Construct a network diagram.

4. Calculate T_e and V_e for every activity. 5. Determine the critical path.

6. Calculate T_E by adding up the values of T_e for

7. Similarly, calculate the V_E by adding up the values of V_e for every activity on the critical path. This value is the variance for the entire project.

8. Calculate the standard deviation of the project (σ_E), which is equal to the square root of the variance (V_E).

9. Calculate the project completion time with the desired probability by using the normal

Determine Late Start (LS) and Late Finish (LF) of acitivies in PDM network diagram

PERT Calculator

How to Calculate the PERT Estimate

Pros of using PERT

• _{PERT time estimates can be helpful when figuring out}

project and time management as well as best guesses on completion dates to communicate to the customer.

• _{Several pros of using PERT values are clear, including:}

– _{Potentially higher customer satisfaction} – _{Higher worker satisfaction}

– _{Lowered business costs}

– _{Increased project efficiency}

Cons of using PERT

• _{While PERT time estimates are often}

extremely helpful for large projects, this method is not without its faults.

• _{Some possible cons include:}

– _{PERT is not as accurate for small projects.}

– _{Optimistic, most likely and pessimistic values are}

still subjective values.

– _{PERT can be hard or impossible to calculate on}

Conclusion

• _{While PERT might not be right for every}

project, medium- or large-sized projects without too many variables are good

candidates for using these equations.

• _{For smaller or much larger projects, consider}

1. PERT formula is a three point estimate of Optimistic value, Most likely value and

Pessimistic value using the following formula: a) (T_o + T_m + T_p) ÷ 3

2. The activities are denoted by nodes, while the milestones are denoted by arrow on the

network diagram. a. True

3. When an activity is critical, slack time is:

4. PERT is not good for : a. Small projects

5. PERT provides a more realistic set of time expectations before the project begins.

Answers