The tool amalgamates all these variables into a single calculation that provides a far more realistic answer as to the time needed to complete a given project. So, what is PERT and why is it such an important project planning tool?
Project Evaluation and Review Technique
PERT was developed by the U.S. Navy in its pursuit to streamline the development of the Polaris submarine. The military wasn’t really concerned about costs, but was concerned about ensuring the project’s timeline was respected and completed. However, even time itself was a variable they simply could not nail down. In fact, there were too many unknowns and the Navy decided it must first find a way to determine a realistic time for completion. However, how could this be done with so many variables?
Accounting for Multiple Variables
The calculation takes a number of undetermined variables within a given project and assigns three time estimates for each in order to arrive at a more realistic time frame for project completion. For instance, when you stop and think about a given task, what are the initial questions that come to mind? Well, you’ll probably wonder what the best case scenario is, what the most likely scenario is and what the worst case scenario is. These are the three estimates or scenarios found in the PERT Variables.
- Opportunistic Time Estimate (Best Case Scenario)
- Realistic Time Estimate (Most Likely Scenario)
- Pessimistic Time Estimate (Worst Case Scenario)
The Calculation
The Project Evaluation and Review Technique calculation takes these aforementioned scenarios or variables and asks the project manager to assign a value to them. The calculation establishes these values and states that the best case scenario should be multiplied by 1, the most likely scenario by 4 and the worst case scenario by 1. These three variables are added and then divided by 6 to provide a “Beta” variable.
- Opportunistic Time Estimate = A
- Realistic Time Estimate = B
- Pessimistic Time Estimate = C
- PERT Calculation: Time to completion = {A(1) + 4(B) + C(1)} /6
The Calculation in Action For a Sat-com Earth Station
Since project planning is such an involved process, assigning a value to these variables is often a best guess – especially when it’s the first time the company is attempting a given project type. In this sense, PERT is improved with experience but the first application can be seen as a learning experience. Regardless, the tool is still able to nail down a more realistic time for completion as opposed to those companies that use speculative business approaches predicated on assumptions. Factual assertions are different than assumptions in that they rely upon an aspect of reliability.
While the calculation itself is rather straightforward, it’s putting the calculation to work, and tracking the variables, that takes time. I’ll base the example on a project of mine that was run while I worked in Telecom. This example is a short snapshot of what was done for a terrestrial earth station installation for a large Sat-com (Satellite Communications) client.
In the table above, the BOLD BLUE area titled “TWTA Installation” is not a critical path. In this sense, it’s a task that can be done in conjunction with other tasks and is not task that must be completed before moving to the next task in the process. Therefore, if we sum up all the tasks (with the exception of the above TWTA installation), we get an estimated time of completion that looks like this: 2+5+2.5+2.8+4 = 16.3 weeks.
While the analysis is not an exact science, it is far more reliable than any other approach and is therefore considered a key project management tool. Companies improve upon their PERT analysis by improving process and time management so as to ensure that each new project accounts for any previously encountered roadblocks in prior projects. There are many applications for the calculation. In fact, a number of companies use it to improve their sales forecast accuracy.
If you want to see how the calculation can be used to improve your company's sales forecasting, then please see: How Do I Improve Our Sales Forecast Accuracy?
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