What is a Program Evaluation Review Technique (PERT) Chart?

Fahad Usmani, PMP

August 10, 2024

A Program Evaluation Review Technique (PERT) Chart is a graphical technique showing project activities and key milestones on a timeline. This project management tool lets you develop your project schedule and communicate the timeline to stakeholders.

Developing a schedule is a complex task requiring a thorough knowledge of schedule network diagramming techniques and experience.

Diagramming techniques include:

Critical Path Method (CPM)
Critical Chain Method (CCM)
Gantt Chart
Program Evaluation and Review Technique (PERT)

You can use PERT when you cannot estimate the activity duration with certainty.

The U.S. Navy developed this technique in 1957 to successfully plan the schedule for the Polaris Project.

It is a statistical tool mainly used in research projects where you cannot accurately predict the duration of activities and must plan your work based on milestones. A milestone is a significant point or event in a project, like a kick-off meeting or completing a major deliverable.

The PERT helps you develop the schedule for large, complex, and one-time projects when no historical information is available. The PERT uses a three-point estimation technique.

How Does Program Evaluation Review Technique (PERT) Chart Work?

A PERT chart has circles and arrows. Circles known as nodes represent milestones, and arrows represent duration. PERT chart uses only one type of activity relationship: finish to start (FS).

Nodes are connected using an arrow, which denotes the duration between two milestones. If Node-1 is connected with Node-2, Node-1 must be achieved before you reach the second Node-2.

The image below shows an example of a PERT chart:

You can use the PERT chart to develop a project network diagram and estimate the project duration. Afterward, you can develop the project schedule, estimate the project cost, and then the budget.

A PERT diagram can have many paths; the path with the longest duration is the critical path, which is the duration of your project. The activities on this path are critical, and any delay in these activities will affect the project duration.

The PERT chart is similar to the Critical Path Network or Critical Chain Network diagram but with some differences. The PERT uses one type of activity dependency, Finish to Start, whereas the other two can use any task dependency. Also, on the PERT diagram, activity duration is on the arrow, and the node represents a milestone, while the other two have activities on their nodes.

Three-Point Estimate Technique (Using PERT Formula)

This technique uses three estimates to arrive at a final estimate. This weighted average method reduces bias and uncertainty from the estimation and improves accuracy.

These three estimates are:

Most Likely Estimate
Optimistic Estimate
Pessimistic Estimate

The PERT technique is based on beta distribution, a probability distribution suitable for factoring uncertainties in estimating.

A brief look at the beta probability distribution shows how the probabilities for most likely, optimistic, and pessimistic estimates are assigned.

The most likely estimate takes the highest probability (about 0.5 or 50%), while the pessimistic and optimistic take about 0.1 or 10%. The shorter duration represents optimism, while the longer represents pessimism.

Another insight from the beta distribution is a skew (flattening to the right), which tells us how (in most cases) our estimate is tilted towards optimism rather than the pessimistic end.

This distribution captures the reality of estimation.

The PERT Formula

The PERT formula to calculate the PERT estimate is as follows:

PERT Estimate = (Tp + 4Tm + To) / 6

and

Standard Deviation SD = (Tp – To) / 6 while

Variance is the square of the SD.

Where:

Most Likely Estimate (Tm): The chance of completing an activity is highest within this duration.

Optimistic Estimate (To): Here is a best-case scenario, considering all favorable conditions. This is the shortest duration to complete the task.

Pessimistic Estimate (Tp): This is a worst-case scenario. Here, you determine the estimate by considering all unfavorable conditions and the longest time the activity may take to complete.

The PERT estimate removes uncertainties around the duration estimate by providing three task duration possibilities. It provides a better estimate by considering all possible scenarios.

It is also useful in risk analysis, where it uses three estimates. In addition, it helps the Monte Carlo simulation generate a statistical analysis of the probability of completing the project within budget or schedule.

A Step-by-Step Guide to Creating a PERT Chart

You can follow the following steps to create a PERT chart:

1. Define the Project Scope

Identify all tasks or activities required to complete the project.
Break down the project into smaller, manageable tasks or milestones using a work breakdown structure.

2. Determine Task Sequence

Determine the order in which tasks need to be performed.
Identify which tasks are dependent on others and which can be done concurrently.

3. Establish Time Estimates

Estimate the time required for each task. Use three estimates: optimistic, pessimistic, and most likely.
Calculate the expected time for each task using the PERT formula.

4. Draw the PERT Chart

Start with a node for each event. Draw circles representing key milestones.
Connect the nodes with arrows to show the sequence and dependencies. The arrows point from the start of a task to its end.
Include labels or notes for each milestone to provide additional details.

5. Identify the Critical Path

Determine the longest path through the network of tasks. This path, known as the critical path, shows the minimum project duration and highlights tasks that cannot be delayed without affecting the overall project timeline.

6. Review and Adjust

Review the chart to ensure all tasks and dependencies are correctly represented.
Adjust the chart as needed based on project changes or additional information.

7. Update Regularly

As the project progresses, update the PERT chart to reflect any changes in task status, durations, or dependencies.

Example of PERT Chart

Your team members tell you that an activity you are working on will most likely be completed in 20 days. However, in the worst case, it takes 30 days; if all conditions are favorable, you can complete it in 15.

Determine the PERT time estimate for this activity.

Solution:

To determine the PERT estimate, we need the activity’s Optimistic Time, Pessimistic Time, and Most Likely Time.

The question suggests that you can likely complete the task in 20 days; hence, the Most Likely Time = 20 days.

It also says that in the worst case, it may take 30 days; hence, the Pessimistic Time = 30 days.

Finally, it says that if all conditions are favorable, the task will take 15 days to complete; hence, the Optimistic Time = 15 days.

Now, we can use the PERT formula.

PERT Estimate = [Optimistic Time + 4 X (Most Likely Time) + Pessimistic Time] / 6

= [15 + 4*20 + 30] / 6 = [15 + 80 + 30] / 6 = 125 / 6 = 20.83 days

Hence, the PERT estimate for this activity is 20.83 days.

Let’s examine the confidence of these estimates. If it is high, the spread between the min and max will be less, and the S.D. will be less.

SD = (Tp – To) / 6

= (30-15)/6

= 2.5

Imagine that the pessimistic estimate is 60 days. This implies a low level of confidence, a higher spread, and the deviation from the mean (PERT estimate) will be more.

SD = (Tp – To) / 6

= (60-15)/6

= 7.5

Pros and Cons of PERT Charts

A few advantages and disadvantages of PERT charts are as follows:

Pros

Visual Representation: It provides a clear, graphical view of project tasks and their interdependencies, making understanding the project structure easier.
Identifies Critical Path: This helps determine the longest path through the project, known as the critical path, which is essential for understanding the minimum project duration and managing deadlines.
Flexible and Adaptable: Allows for adjustments as project details and schedules change, making it easier to accommodate modifications and updates.
Improves Time Management: Assists in identifying potential bottlenecks and areas where delays could occur, enabling proactive management to keep the project on track.
Enhances Communication: Facilitates better communication among project stakeholders by providing a common reference point for understanding project progress and dependencies.
Supports Project Scheduling: It aids in scheduling and allocating resources effectively, helping ensure that all tasks are completed on time.

Cons

Complexity: It can become complex and difficult to manage for large projects with many tasks and dependencies, potentially overwhelming project managers.
Time-Consuming to Create: Developing a detailed PERT chart can be time-consuming, especially for projects with many tasks and relationships.
Requires Accurate Estimates: Relies heavily on accurate time estimates for each task. Inaccurate estimates can lead to incorrect scheduling and planning.
Limited Scope for Resource Allocation: It does not inherently address resource allocation or management; it focuses mainly on task sequencing and time management.
Maintenance: Updating the PERT chart as the project progresses can be labor-intensive, especially with frequent changes.
Potential for Overemphasis on Time: This may lead to an overemphasis on scheduling and time management at the expense of other important factors such as cost and quality.
This is an optimistic model that assumes resources will be available.

PERT Charts Vs Gantt Charts

Gantt and PERT charts are project management tools for different purposes. A Gantt chart shows tasks as horizontal bars along a timeline. It visually displays when tasks start and finish and how long they take. This makes it easy to see the schedule and track progress.

The image below shows a Gantt chart:

A PERT chart, on the other hand, uses nodes and arrows to show task sequences and dependencies. It focuses on the relationships between tasks and helps identify the critical path, the longest sequence of tasks that determines the project’s duration.

Gantt charts are better for tracking schedules and progress, while PERT charts are useful for understanding task dependencies and planning complex projects.

PERT Chart Vs CPM

Critical Path Method (CPM) and PERT are both project management tools for identifying critical activities and estimating project duration. However, they differ in their approach to time estimation.

CPM assumes deterministic activity times, meaning the duration of each task is known with certainty. It is ideal for projects with well-defined activities and predictable schedules.

PERT handles probabilistic activity times, using optimistic, pessimistic, and most likely estimates for task durations. This makes it suitable for projects with uncertain or complex activities.

The following are a few differences between PERT and the critical path method:

CPM is activity-oriented, while PERT is event-oriented.
Duration estimates are definitive in CPM but not in PERT. In other words, CPM uses deterministic values, and PERT uses probabilistic values.
The CPM diagram shows the activity on the node, while this is shown on the arrow in the PERT chart. Nodes represent the milestones. Therefore, many experts call the PERT result an Activity on Arrow (AOA) diagram.
The PERT chart has 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 on the PERT chart.

Summary

The PERT is a network diagramming technique for projects with high uncertainties. This tool helps project managers develop a sound schedule when precise activity duration is unavailable. In the PERT chart, nodes are milestones, and activities are on arrows.

The success of the PERT depends on the professionals’ experience. The project manager’s job is to remove biases from the estimation, which can affect the PERT estimation and schedule.

Further Readings:

This topic is important from a PMP exam point of view.