Schedule baseline and cost baseline are the two most important performance measurement baselines for any project. Cost baseline helps you assess the cost performance of the project, while the schedule baseline involves the duration.
Clients are very interested in the schedule because any delay can affect their business. So, project managers should give schedule development a top priority.
Developing a schedule is a big task and requires a thorough knowledge of schedule network diagramming techniques and experience.
A few diagramming techniques are:
- Critical Path Method
- Critical Chain Method
- Program Evaluation and Review Technique
I have discussed the critical path method and critical chain method in other blog posts. Here, we will discuss the Program Evaluation and Review Technique.
What is Program Evaluation and Review Technique (PERT)?
PERT stands for Program (or Project) Evaluation and Review Technique. The US Navy developed this technique in 1957. This helps you find a duration estimate of activities when there are uncertainties.
It is a statistical tool and mainly used in research projects where you cannot predict the duration of an activity. Therefore, you plan your work based on the milestones. It helps you develop the project schedule for large, complex, and one time projects when no records are available. Here, time is important.
PERT is a Three-Point Estimation technique. This technique uses three different estimates to arrive at a final estimate. It is a weighted average technique that reduces bias and uncertainty from the estimation and improves accuracy.
These three estimates are as follows:
- Most Likely Estimate
- Optimistic Estimate
- Pessimistic Estimate
This technique is based on Beta Distribution.
Most Likely Estimate (Tm)
The chance of completing an activity is highest within this duration.
Optimistic Estimate (To)
This is a best-case scenario. Here the estimate is determined by considering all favorable conditions. This is the shortest duration to complete the task.
Pessimistic Estimate (Tp)
This is a worst-case scenario. Here the estimate is determined by considering all unfavorable conditions; the longest time the activity may take to complete.
The formula to calculate the PERT is as follows:
PERT Estimate = (To + 4Tm + Tp) / 6
Standard Deviation = (Tp – To) / 6
PERT vs CPM
At first glimpse, you may think PERT is like the critical path method; however, it is not. A few differences are:
- CPM is activity-oriented, while PERT is event-oriented.
- Duration estimates are definitive in CPM but not in PERT.
- The CPM diagram shows the activity on the node, while in the PERT diagram the activity is shown on the arrow. Nodes represent the milestones. Therefore, many experts call it an Activity on Arrow (AOA) diagram.
- The PERT diagram has only a “Finish to Start” relationship, while the CPM diagram can have any dependency: Start to Finish, Finish to Start, etc.
- On a CPM diagram, rectangles represent the nodes, while circles represent nodes onPERT diagram.
The critical path method is a deterministic model because the activities have fixed estimates. Any delay in an activity’s duration estimate will affect your schedule. The solution to this drawback is built into the PERT, which helps you build a schedule when a definitive time estimate is not available.
Benefits of PERT
The following are a few benefits of PERT:
- Planning is easier.
- Schedule uncertainty is reduced.
- It is useful when few or no records are available.
- The completion date is more accurate.
- It helps optimize resources.
Limitations of PERT
The following are a few limitations of PERT:
- PERT requires a subjective analysis of activities and the accuracy depends on these estimates. If team members who are finding these estimates are less experienced or biased, it might affect the schedule.
- Managing the critical path is difficult in PERT because it might change before the project ends.
- This is an optimistic model that assumes resources will be available.
- Updating, amending, and maintaining the PERT diagram can be time and cost consuming.
Now, let us look at an example on PERT and Standard Deviation.
Your team members tell you that an activity you are working on is most likely to be completed in 20 days. However, the worst case, it might take 30 days, and if all conditions are favorable, it might be completed in 15 days.
Determine the PERT time estimate for this activity.
We need the Optimistic Time, Pessimistic Time, and Most Likely Time for the activity to determine the PERT estimate.
The question says it is most likely that the task can be completed in 20 days, hence: Most Likely Time = 20 days
It also says that in the worst case it may take 30 days, hence: Pessimistic Time = 30 days
Finally, it says that if all conditions are favorable, it will take 15 days to complete the task, hence: Optimistic Time = 15 days.
PERT Estimate = [Optimistic Time + 4 X (Most Likely Time) + Pessimistic Time] / 6
= [15 + 4X20 + 30] / 6 = [15 + 80 + 30] / 6 = 125 / 6 = 20.83 days
Hence, the PERT estimate for this activity is 20.83 days.
PERT is a network diagramming technique that is used for large projects where uncertainties are high and time is the main constraint. This tool helps project managers to develop a sound schedule when there is little information on activity duration. In this diagram, nodes are milestones instead of an activity. The success of PERT depends on the experience of the professionals who have developed it. It is the job of the project manager to remove the biases from the estimation as this can affect your PERT schedule.
How do you develop your schedule based on the PERT diagram? Please share your thoughts in the comments section.
Further reading: What is PERT?