The two formulas above are very important from a PMP Exam point of view, as you may see few questions based on these formulas.
I have discussed many activity on node diagram (AON) methods; e.g. critical path method and critical chain method.
Now is the time to discuss PERT. PERT stands for Program Evaluation and Review Technique (also known as Project Evaluation and Review Technique), is used to analyze the activity when there is no exact duration of activity is known. This technique was developed by the US Navy in 1957.
PERT is a statistical tool that is widely used in project management for developing the project schedule for very large, complex, and one time projects where usually no historical records are available to be reviewed.
At first glimpse, you may think that PERT Diagram Method is similar to the critical path method; however, there are many differences between these two techniques, such as:
- Critical Path Method (CPM) is activity oriented, while PERT is event oriented
- Critical Path Method is used when you have definitive time estimate, while in PERT there is no certainty in time estimate
- In CPM diagram, activity is shown on the node, while in PERT Diagram, activity is shown on the arrow, and nodes represent the milestones. (Therefore, PERT diagrams are also known as Activity on Arrow (AOA) diagram)
- PERT Diagram can only have a “Finish to Start” type of relationship, while the CPM method can have any type of dependency; e.g. Start to Finish, Finish to Start, etc.
- In CPM diagram, rectangles represent the nodes. In PERT diagram, circles represent nodes
PERT methodology is used mainly on very large and complex projects where time is a more important factor than the cost. PERT is mainly used in research type projects where you cannot predict the time duration of any activity accurately; therefore, you have to plan your work based on the milestones.
The critical path method is a deterministic model where you use a fixed time estimate for activities. CPM (critical path method) helps you run the project efficiently if the time estimates are definitive; however, if there is a variation in time estimate, it may affect your project badly. The solution to this drawback of the CPM method is built into the PERT methodology, which helps you complete project successfully with less cost and time.
Since there is an uncertainty in the duration of an activity, you will use three estimates to determine the PERT estimate for an activity so that the uncertainty in the activity completion time can be reduced. These three estimates are as follows:
- Most Likely Estimate
- Optimistic Estimate
- Pessimistic Estimate
Most Likely Estimate (Tm)
This is the time duration where there is a high probability of completing the task within the given time duration.
Optimistic Estimate (To)
In this scenario, the estimate is determined considering all favorable conditions; i.e. it is a best-case scenario. In other words, you can say that this is the shortest time in which you may complete the task.
Pessimistic Estimate (Tp)
Here, estimate is determined considering all unfavourable conditions; i.e. worst case scenario. In other words, this is the longest time the activity might require to complete itself.
The formula to calculate the PERT is as follows:
PERT Estimate = (To + 4Tm + Tp) / 6
Standard Deviation = (Tp – To) / 6
Benefits of PERT
Following are the few benefits of PERT:
- This technique is very useful where there is very little or no historical schedule data are available
- It makes planning easier
- It shows the critical path
- It reduces the uncertainty from the project; i.e. reduces the risk
- It gives a more accurate project completion date
- It helps management to optimize the resources
Limitations of PERT
Following are the few limitations of PERT:
- PERT requires a subjective time analysis of activities, and the accuracy of PERT estimate depends on these estimates. If people finding these estimates are either less experienced or biased, it might affect the schedule
- There is also difficulty in managing the critical path in the PERT network because it is not always guaranteed that the critical path will remain the critical path throughout the project completion
- Like Critical Path Method, this technique also assumes that all resources will be available to the project
- 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 told you that an activity you are working on is most likely to be completed in 20 days. However, in 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 and the Standard Deviation for this activity.
To determine the PERT estimate, we need the Optimistic Time, Pessimistic Time, and Most Likely Time for the activity.
The question says it is most likely that the task can be completed in 20 days, hence: Most Likely Time = 20 days
It further says that in the worst case it may take 30 days, hence: Pessimistic Time = 30 days
It also 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, PERT estimate for this activity is 20.83 days.
Standard Deviation = (Pessimistic Time – Optimistic Optimistic) / 6 = (30 – 15) / 6 = 15 / 6 = 2.5
Hence, the Standard Deviation is 2.5 days.
Here this blog post about the PERT is completed; I hope you would have enjoyed reading it.
If you have any thoughts or questions, you are welcome to add them in the comments section.