Program evaluation and review technique

What Is Program Evaluation and Review Technique?

The Program Evaluation and Review Technique (PERT) is a statistical tool used in project management to analyze and represent the tasks involved in completing a complex project. It falls under the broader category of business operations and helps managers estimate the time required to complete each activity, identify the critical path, and manage project uncertainties. PERT is particularly valuable for projects where the time duration of activities is uncertain or highly variable, offering a probabilistic approach to schedule planning. This technique helps in visualizing task dependency and sequencing, thereby enabling more effective planning and control over intricate initiatives.

History and Origin

The Program Evaluation and Review Technique was developed in 1958 by the United States Navy Special Projects Office, in conjunction with Booz Allen Hamilton and Lockheed Aircraft Corporation. Its primary purpose was to manage the highly complex and time-sensitive Polaris missile program, which involved thousands of contractors and numerous interdependent tasks that needed to be completed ahead of schedule.¹⁶, ¹⁷ The Polaris program, a significant undertaking to develop a submarine-launched ballistic missile, required a new level of coordination and control over its development process. PERT provided a systematic way to analyze the time needed for projects by utilizing a statistical analysis of individual tasks, aiming to address the inherent timescale uncertainty in such large-scale endeavors.¹⁵ Its success in accelerating the Polaris project by two years led to its widespread adoption across various industries.¹⁴ Around the same time, the Critical Path Method (CPM) was independently developed by DuPont and Remington Rand, with both techniques sharing conceptual similarities in network analysis for project planning.¹³

Key Takeaways

• Program Evaluation and Review Technique (PERT) is a project management tool for analyzing and scheduling complex projects with uncertain activity durations.
• It uses three-time estimates—optimistic, most likely, and pessimistic—to calculate an expected duration for each task.
• PERT helps identify the critical path, which is the longest sequence of tasks determining the project's minimum completion time.
• It provides a framework for risk management by quantifying the uncertainty in task durations through statistical variance.
• PERT is particularly useful in industries involving research and development, large-scale construction, and software development, where precise timing and coordination are crucial.

Formula and Calculation

The core of the Program Evaluation and Review Technique lies in its method for estimating activity durations. Unlike deterministic methods, PERT uses a three-point estimation approach for each activity, which are:

• Optimistic Time ((O)): The shortest possible time an activity can be completed, assuming everything goes perfectly.
• Most Likely Time ((M)): The most realistic time an activity will take, under normal conditions.
• Pessimistic Time ((P)): The longest possible time an activity might take, assuming significant problems or delays.

From these three estimates, the Expected Time ((T_E)) for an activity is calculated using the following formula:

$T_E = \frac{O + 4M + P}{6}$

To quantify the uncertainty or variability in an activity's duration, PERT also calculates the Variance ((V)):

$V = \left(\frac{P - O}{6}\right)^2$

The standard deviation, which is the square root of the variance, provides a measure of the spread of possible completion times around the expected time. These calculations leverage concepts from probability distribution and statistical analysis to provide a more robust estimate than a single-point duration.

Interpreting the Program Evaluation and Review Technique

Interpreting the Program Evaluation and Review Technique involves understanding both the expected time for individual activities and the overall project. The calculated expected time ((T_E)) for each activity represents the most probable duration for that specific task. By summing the expected times along different paths within the project network, a project manager can determine the total expected duration for various sequences of tasks.

Crucially, PERT identifies the critical path, which is the longest sequence of dependent activities in the project. The duration of this path dictates the minimum time required to complete the entire project. Any delay in an activity on the critical path directly impacts the project's overall completion date. The variance calculated for each activity provides insight into the potential deviation from the expected time, allowing for better risk assessment. A higher variance suggests greater uncertainty, which can inform contingency planning and allocation of buffers.

Hypothetical Example

Consider a small software development project to create a new mobile application, with the "Develop User Interface (UI)" task. The project manager identifies the following time estimates for this task:

• Optimistic Time ((O)): 8 days (if the design is straightforward and no issues arise)
• Most Likely Time ((M)): 12 days (realistic estimate given typical challenges)
• Pessimistic Time ((P)): 22 days (if major design changes or technical hurdles occur)

Using the PERT formula for Expected Time ((T_E)):

$T_E = \frac{O + 4M + P}{6} = \frac{8 + (4 \times 12) + 22}{6} = \frac{8 + 48 + 22}{6} = \frac{78}{6} = 13 \text{ days}$

So, the expected time to "Develop User Interface (UI)" is 13 days.

Now, let's calculate the Variance ((V)) for this task:

$V = \left(\frac{P - O}{6}\right)^2 = \left(\frac{22 - 8}{6}\right)^2 = \left(\frac{14}{6}\right)^2 = (2.33)^2 \approx 5.43$

This variance of approximately 5.43 indicates the spread of possible completion times for this task. The square root of the variance, the standard deviation ((\sqrt{5.43} \approx 2.33) days), suggests that while 13 days is the expected duration, the actual completion time could reasonably vary by about 2.33 days around this mean. This information is crucial for setting project milestones and assessing the overall project Gantt chart accuracy.

Practical Applications

The Program Evaluation and Review Technique is widely applied across various sectors for managing complex and uncertain projects. In fields like aerospace and defense, it's used for large-scale research and development initiatives, where innovation means unpredictable task durations. For¹² instance, in construction management, PERT helps in planning the intricate sequence of activities for building large structures, where weather, material availability, and labor issues can introduce significant variability.

In¹¹ software development, PERT assists in estimating timelines for complex coding, testing, and deployment phases, which often face scope changes and unforeseen technical challenges. It ¹⁰aids in optimizing resource allocation by highlighting potential bottlenecks and enabling project managers to make informed decisions about personnel and equipment deployment. Fur⁹thermore, it is instrumental in cost control by providing clearer time estimates that feed into budgeting processes. The⁸ technique is particularly beneficial for projects that are unique, non-routine, and have no historical data to rely on for precise time estimation. Exa⁷mples include launching a new product, managing large-scale infrastructure projects, or even organizing major events.

##⁶ Limitations and Criticisms

Despite its utility, the Program Evaluation and Review Technique has several limitations. One of the primary criticisms is the subjectivity involved in providing the three-time estimates (optimistic, most likely, and pessimistic). These estimates are often prone to human bias, with project teams sometimes overestimating the optimistic time or underestimating the pessimistic time, leading to unrealistic overall project schedules. Wit⁵hout reliable historical data, these estimates can be mere guesses, undermining the accuracy of the PERT analysis.

An⁴other limitation is the assumption that the activity durations follow a beta distribution and that the critical path remains static. In reality, multiple paths might become critical during project execution if delays occur in non-critical activities, which PERT, in its basic form, does not dynamically account for. The technique also tends to be complex and time-consuming for very large-scale projects, making its diagrams difficult to interpret and update as the project progresses. Fur³thermore, PERT focuses primarily on time and does not inherently account for resource constraints or cash flow implications, which are crucial aspects of real-world project management. Thi²s can lead to schedules that are theoretically feasible but practically impossible due to limited availability of personnel or materials. For robust project optimization, PERT often needs to be complemented by other tools that address these factors.

Program Evaluation and Review Technique vs. Critical Path Method

The Program Evaluation and Review Technique (PERT) and the Critical Path Method (CPM) are both powerful project management tools, often used in conjunction, but they differ fundamentally in their approach to time estimation. The main distinction lies in their handling of uncertainty.

PERT is a probabilistic tool designed for projects where activity durations are uncertain, often due to their novel or research-and-development nature. It uses three time estimates (optimistic, most likely, and pessimistic) for each activity, providing a weighted average for the expected duration and a measure of variance. This allows project managers to assess the probability of completing the project by a specific date, making it suitable for projects with high uncertainty and little historical data.

In contrast, CPM is a deterministic tool used for projects where activity durations are relatively well-known and predictable. It employs a single, fixed time estimate for each activity. CPM's primary focus is on identifying the longest sequence of tasks, known as the critical path, to determine the shortest possible project completion time. It also lends itself well to techniques like "crashing" (expediting activities to shorten the project duration) and "fast-tracking" (performing activities in parallel) because of its fixed time estimates. While both methods utilize network diagrams to visualize task dependencies, PERT is event-oriented, focusing on the completion of milestones, while CPM is activity-oriented, emphasizing the tasks themselves.

##¹ FAQs

What types of projects benefit most from Program Evaluation and Review Technique?

Projects that involve a high degree of uncertainty regarding task durations, such as research and development, new product launches, or complex engineering and construction initiatives, benefit most from the Program Evaluation and Review Technique. It is particularly useful when there is little historical data to predict activity completion times accurately.

How does Program Evaluation and Review Technique account for risk?

PERT accounts for risk by using three different time estimates for each activity: optimistic, most likely, and pessimistic. This allows for the calculation of an expected duration and a variance, which quantifies the uncertainty of an activity's completion time. By summing variances along the critical path, managers can estimate the probability of meeting project deadlines, helping with project planning and proactive risk mitigation.

Can Program Evaluation and Review Technique be used for resource allocation?

While the Program Evaluation and Review Technique primarily focuses on time estimation and scheduling, it can indirectly support resource allocation. By identifying the critical path and tasks with little float (or slack), PERT highlights activities that require immediate attention and resources to avoid project delays. However, it does not inherently optimize resource loading or leveling, and project managers often combine PERT with other tools for comprehensive resource management.