Program Evaluation Review

Technique (PERT)
Prof.G.Purandaran
M.Tech (I.I.T-Madras)
PGDM (I.I.M-Bangalore)

Objective of the
presentation
To understand the formula , the use
and the benefits of Program ,
Evaluation ,and Review Technic
(PERT) analysis .

What is the PERT ?

Program (Project) Evaluation and Review

Technique (PERT): is a project management tool
used to schedule, organize, and coordinate tasks
within a project. It is basically a method to analyse
the tasks involved in completing a given project,
especially the time needed to complete each task,
and to identify the minimum time needed to
complete the total project.

When we use PERT ?

PERT is used when activity times are uncertain.

Determine the duration of the project .
Decision making under risk (P for probabilistic)

Determine the duration of

the project
OPTIMISTIC TIME: Best time if everything goes
perfectly
REALISTIC TIME: Most likely time
PESSIMISTIC TIME: A worst-case situation
B + 4M + P
Expected Time = ------------------6

Determine the duration of

the project
Example:
For excavation activity let :
B = 12 days
M = 18 days
P = 60
What is the expected time for this activity?
Sol :

12 + 4(18) + 60
Expected Time = ------------------------6
= 24 days

Determine the duration of

the project

Determine the duration of

the project
D

C
Start

Finish

Determine the duration of

the project
D
F
D:6.33
ES:4
EF:10.33

D:4.5
ES:10.33
EF:14.83

A
D:4
ES:0
EF:4
C
D:5.17
ES:4
EF:9.17

Start
ES:0
EF:0
B
D:5.33
ES:0
EF:5.33

Finish
D:0
ES:19.51
EF:19.51
E
D:5.17
ES:9.17
EF:14.34

G
D:5.17
ES:14.34
EF:19.51

Determine the duration of

D
F
the project
D:6.33
D:4.5
A
D:4
ES:0
EF:4
LS:0
LF:4

ES:4
EF:10.33
LS:8.68
LF:15.01

ES:10.33
EF:14.83
LS:15.01
LF:19.51

C
D:5.17
ES:4
EF:9.17
LS:4
LF:9.17

Start
D:0
ES:0
EF:0
LS:0
LF:0
B
D:5.33
ES:0
EF:5.33
LS:3.84
LF:9.17

Finish
D:0
ES:19.51
EF:19.51
LS:19.51
LF:19.51
E
D:5.17
ES:9.17
EF:14.34
LS:9.17
LF:14.34

G
D:5.17
ES:14.34
EF:19.51
LS:14.34
LF:19.51

Determine the duration of

the project

Critical Path
Critical Path: A-C-E-G
Path A-D-F
= 14.83 work days
Path A-C-E-G = 19.51 work
days
Path B-E-G
= 15.67 work days

Determine the duration of

the project

Critical Path

Assessing Risks
Risk is a measure of the probability
(and consequences) of not completing
a project on time.
A major responsibility of the project
manager at the start of a project is to
develop a risk-management plan.
A Risk-Management Plan identifies
the key risks to a projects success and
prescribes ways to circumvent them.

Assessing Risks
With PERTs three time-estimates, we get a
mean (average) time and a variance for
each activity and each path.

We also get a project mean time

and variance.
In order to compute probabilities (assuming a
normal distribution) we need the activity
means and variances.
Most computer packages calculate this for you.

Assessing Risks
Path
(wks)
A-I-K 33
33
A-F-K 28
28
A-C-G-J-K
B-D-H-J-K
B-E-J-K

Time

12
27
48 15 63

12

12 F 22

2 12 14

53 10 63

67
Start
69
43

12
22
14 1 24

0
0

B 9

9 9

9
19
9 10 19

9 E 33
35 24 59

Latest
start
time

63 K 69
63 6 69

22 G 57
24
59

Finish

35
H

19
59
19 40 59

Latest
finish
time

59

J 63

59 4 63

Assessing Risks
What is the probability that our sample
project will finish in 69 weeks as scheduled?
100%

(Why?)

Because we used CPM!

(This means we were certain of all of our activity
times.)

If we werent certain, we should have used PERT

You cant do risk analysis if you use CPM

Assessing Risks
Calculate standard deviation
Standard deviation- average deviation from the
estimated time
SD=(TP-T0)/6

higher the SD is the greater amount of uncertainty

exists

Calculate variance
reflects the spread of a value over a normal
distribution
V=SD2

a large variance indicates great uncertainty, a

small variance indicates a more accurate estimate

Assessing Risks

What is the Probability of it taking 72

weeks?
Critical
Path = B - D - H - J K = 69 weeks
T = 72 weeks

itical Path Variance

C = 69 weeks

TC
z =path)2
= (variances of activities along critical

1.78 + 1.78 + 2.78 + 5.44 + 0.11 = 11.89

z = 72 69
11.89
Z = 0.870

Look up Z value in normal distribution table

Pz = .8078 or 80.78%
(Probability of it taking 72 weeks)

Assessing Risks

Look up the Z value (0.870) in the table of normal

distribution.
.8078 or 80.78% is the probability of the project taking up to
72 wks.
Going over 72 weeks would be 100 80.78 = 19.22%

Assessing Risks

Normal
distribution: Mean
= 69 weeks;
= 3.45 weeks

Length of
critical path
is 69 weeks
Probability of
taking 72 weeks
is 0.8078 or
80.78%

Probability of
exceeding 72
weeks is 0.1922
or 19.22%

69 72
Project duration (weeks)

Assessing Risks

Assume a PERT project critical path takes 40 days, and that

the variance of this path is 2.147
You wish to know the probability of the project going over 42 days.

Compute the standard deviation of the critical path. (Take the

square root of the variance of 2.147) Std. Dev. = 1.465
POM/QM software gives you the variance of the critical path.

Compute the Z value: Z = (absolute time difference) / Std.

Dev.
In this example, Z = (42 days - 40 days) / 1.465 = 1.365

Look up the Z value of 1.365 in a Normal Distribution table to

get the probability of the project taking 42 days.

Subtract it from 100% to get the probability of going over 42.

Assessing Risks

Look up the Z value (1.365) in the table of normal

distribution.
(In this case you need to interpolate between the Z values of .9313 and .
9147)

.9139 or 91.39% is the probability of the project taking up to

42 days.

Thank you for attention

Any Questions ????