Project Evaluation and Review Technique (PERT)

Introduction to Project Evaluation and Review Technique (PERT)

The program Evaluation and Review Technique (PERT) model considers uncertainty in activity completion time. There are various project analysis methods available that give the time duration and cost for completion of the project. The most common techniques for evaluation and analysis of projects are CPM, PERT and Gantt Chart.

In the previous article, you have studied about the Critical Path Method (CPM) and network analysis. The CPM technique is easy to use, but it does not consider the impact of uncertainty, such as weather, equipment failure, or absenteeism, in the estimation of activity time. On the other hand, the

Project Evaluation and Review Technique (PERT)

Project managers can use a variety of scheduling techniques to develop, monitor, evaluate and control project schedules. The PERT is commonly used for the evaluation of projects. There are certain projects in which the time required to complete the activities is not known. PERT is ideal for such projects because it schedules, organises, and integrates various activities involved in the project. It pro- vides the blueprint of project for efficient evaluation of the project.

The first PERT chart was created for the US Navy’s weapons and defence projects in 1950s. Simultaneously, CPM was also developed. While CPM estimates the longest path for completion of the project, PERT estimates the shortest possible time each activity will take, the most likely length of time, and the longest time that might be taken if the activity takes longer than expected.

Ideally, PERT creates three different time estimates for the project, out of these three estimates, the project manager can adopt the shortest one or the most appropriate one as per the situation. The longest path represents the timeline for completion of project considering various contingencies. Let us understand the important terminologies related PERT in the upcoming section.

Three Time Estimates

For each activity, the PERT model includes three estimates- the opti- mist, the pessimist and the most likely time estimate to complete the project. The project manager usually communicates the most likely time estimate or ‘te’ to complete the project to the top-level manage- ment or the parties interested in the project. Let us discuss these three different time estimates:

Optimistic time (to)

It represents the estimation of the minimum possible time taken by an activity to be completed. This time estimate takes the most optimistic scenario into consideration meaning there are all the resources for the project are available and there is no possibility of any contingency happening. This is a hypothetical and unrealistic scenario because there may be a possibility of delay in the supply of raw materials or break down of machinery, strikes, lockouts or natural calamities.

Pessimistic time (tp)

It represents estimation of maximum possible time to complete an activity. It takes the pessimistic assumption into consideration in which resources are not available or are not in accordance with the project plan. It takes the possibility of delay in supply of raw materials or break down of machinery, strikes, lockouts or natural calamities into consideration. Thus, it is opposite to optimistic time estimate scenario.

Most likely time (tl)

It is the best estimate of the time required to accomplish a task, assuming everything proceeds as normal. It does not work on optimistic or pessimistic assumption of calculating times estimates. It rather assumes that the functions or activities of the project will run in normal manner. It also calculates the time estimate for carrying out repetitive activities by representing time as ‘t’.

The formula to calculate expected time of activity completion as per the principle of PERT, is calculated as:

te = (to + 4tl + tp)/6

‘te’ is the weighted average of all three times estimates.

Expected Project Duration

The ‘Expected Project Duration’ calculates the total time expected to be taken in completion of a task or an activity of the project. It calculates the amount of time from the expected start to expected finish of an activity.

The Microsoft Office Project is widely used for calculation of expected project duration for PERT analysis. It takes a weighted average of expected, pessimistic, and optimistic time and calculates the expected project duration for the project manager.

Expected Activity Durations

It estimates the number of work hours required to complete the individual activities in the project with estimated resources required for each activity. This process is very important in development of work schedule. The most accurate date for completion of the project can be estimated using expected activity duration because it gives time estimate of each activity. The collective estimated time taken can be communicated to interested parties to the project.

Variance of Activities

Variance is the difference between estimated and actual happening. In project management, the variance relates to activity time, cost, and scope of the project. The project manager closely monitors the parameters of the project and if there is any deviation from the standard that is if a variance in activity is noticed, corrective action is taken to ensure the completion of the project on time.

For example, if activity ‘A’ was estimated to be finished in 5 days but is taking more than 5 days then the problem should be checked, if it is related to supply of raw material, immediate supply of raw materials should be ensured to complete the activity on time.

Estimation of Probability

Estimation of probability is important in project management. The top-level management and the project manager are always interested in knowing the cost of achievement and the time outcome of the project. The probability of risk is thus very important that is what could be the risk if the activity is not completed on time.

Therefore, probability is closely related to possibility (estimated outcome) and creativity (actual outcome). If the project is progressing as per the estimates then the project manager does not need to consider other options or corrective measures but if there is risk of deviation from the estimate or standard time and outcome, then a corrective measure must be taken to finish the project on time.

Reading of Normal Tables

The normal distribution formula takes into account mean and the characteristics of a specific dataset. Mean is used to derive average value of the dataset and the standard deviation identifies the variation of data points related to the mean value.

Finding of standard deviation is very important for the project manager because based on this, if deviation is reported, corrective measures can be taken to improve the situation. the graph plotted based on these values is very effective from analysis point of view.

Difference Between PERT and CPM

Though both PERT and CPM are used for assessing the time taken in completion of the activities undertaken as a part of the project. Both techniques are used for analysis and evaluation of project at various stages to meet the deadline. Yet there are many differences between the PERT and CPM techniques. Let us understand these differences:

• PERT is a project management technique. It ascertains the uncertain activities of the project and manages it, whereas CPM is a statistic tool and is used by project managers to be applied to the project which includes well defines activities.
  
  
• PERT is a planning and control technique used in project management, whereas CPM controls cost, and time factor involved in various activities of the project.
  
  
• PERT considers the event that marks the start and end of the activity of the project, whereas CPM considers the activities of the project.
  
  
• CPM is ideal for construction-based projects, whereas PERT is ideal for research and development-based projects.
  
  
• A probabilistic model is used in PERT. PERT analyse the probability of the activities and events of the project, whereas a deterministic model is used in CPM as activities are well defined.
  
  
• PERT concentrates on time factor majorly, whereas CPM concentrates on both time and cost factor.
  
  
• PERT takes three time estimates into consideration, whereas CPM is based upon one time estimate only.
  
  
• PERT is ideal for projects that are based on time duration or for companies that give major emphasis on the completion time of the project, whereas CPM relies on reasonable and achievable time estimates.
  
  
• PERT is used for unpredictable and non-repetitive activities, whereas in CPM activities are predictable and of repetitive nature.
  
  
• CPM provides provision for crashing of the project and corrective actions may be taken, whereas there is no such crashing concept in PERT.