PERT/CPM

Program Evaluation and Review Technique/Critical Path Method

Introduction
Almost every industry worries about how to manage similar
large-scale, complicated projects effectively. It is a difficult
problem, and the stakes are high. Millions of dollars in cost
overruns have been wasted due to poor planning of projects.
Unnecessary delays have occurred due to poor scheduling. How
can such problems be solved?
Introduction
The first step in planning and scheduling a project is to develop the
work breakdown structure. This involves identifying the activities
that must be performed in the project. An activity is a job or task that
is a part of a project. The beginning or end of an activity is called an
event.
There may be varying levels of detail, and each activity may be broken
into its most basic components.
The time, cost, resource requirements, predecessors, and person(s)
responsible are identified for each activity. When this has been done, a
schedule for the project can be developed.
Introduction
The program evaluation and review technique (PERT) and the
critical path method (CPM) are two popular quantitative analysis
techniques that help managers plan, schedule, monitor, and
control large and complex projects. They were developed because
there was a critical need for a better way to manage projects.
PERT vs CPM
For every PERT activity, CPM is a deterministic
three time estimates are method since it is assumed
combined to determine the that the times are known
expected activity with certainty.
completion time. Thus,
PERT is a probabilistic
technique.
PERT / CPM
While these differences are still noted, the two techniques are so
similar that the term PERT/CPM is often used to describe the
overall approach. This reference is used in this chapter, and
differences are noted where appropriate.
How to use PERT / CPM
1. Define the project and all its significant activities or tasks.
2. Develop the relationships among the activities. Decide which
activities must precede others.
3. Draw the network connecting all of the activities.
4. Assign time and/or cost estimates to each activity.
5. Compute the longest time path through the network; this is called
the critical path.
6. Use the network to help plan, schedule, monitor, and control the
project.
Critical Path
The critical path is important because activities on the critical
path can delay the entire project.
Finding the critical path is a major part of controlling a project.
The activities on the critical path represent tasks that will delay
the entire project if they are delayed.
Questions answered by PERT.
1. When will the entire project be completed?
2. What are the critical activities or tasks in the project, that is, the ones that will
delay the entire project if they are late?
3. Which are the noncritical activities, that is, the ones that can run late without
delaying the entire project’s completion?
4. If there are three time estimates, what is the probability that the project will be
complete by a specific date?
5. At any date, is the project on schedule, behind schedule, or ahead of schedule?
6. On any given date, is the money spent equal to, less than, or greater than the
budgeted amount?
7. Are there enough resources available to finish the project on time?
Steps in PERT.
1. The first step is to define the project and all project activities.
2. Immediate predecessors are determined in the second step.
3. Activities and events are drawn and connected in the third
step.
4. The fourth step is to assign activity times.
5. The fifth step is to compute the longest path through the
network—the critical path.
The time estimates in PERT
Optimistic time (a) = time an activity will take if everything goes
as well as possible
Pessimistic time (b) = time an activity would take assuming very
unfavorable conditions. There should also be only a small
probability that the activity will really take this long.
Most likely time (m) = most realistic time estimate to complete
the activity.
Expected Activity Time (t) in PERT
PERT often assumes that time estimates follow the beta
probability distribution. This continuous distribution has been
found to be appropriate, in many cases, for determining an
expected value and variance for activity completion times.
How to compute for
Expected Activity Time (t) in PERT
The Critical Path
The critical path is the longest time path route through the
network.
Ex. A-C-F-H = 16 days, A-C-E-G-H = 22, B-D-G-H = 12; the CP is
A-C-E-G-H with 22 days
How to find the CP
To find the critical path, we need to determine the following quantities
for each activity in the network:
1. Earliest start time (ES): the earliest time an activity can begin
without violation of immediate predecessor requirements
2. Earliest finish time (EF): the earliest time at which an activity can
end
3. Latest start time (LS): the latest time an activity can begin without
delaying the entire project
4. Latest finish time (LF): the latest time an activity can end without
delaying the entire project
Example:
Steps 1 and 2 are already done. Now, we proceed to Step 3.
Example:
Step 4 is partially done, see
figure. Now, we just need to
find the expected time (t)
and the variance (v).
Example:
Now, we find the critical path.
Probability of Project Completion
PERT uses the variance of critical path activities to help
determine the variance of the overall project. If the activity times
are statistically independent, the project variance is computed by
summing the variances of the critical activities:
Project variance = ∑ variances of activities on the critical path
Project standard deviation = σ = √ Project variance
Probability of Project Completion
Due date - Expected date of completion
𝑍=
σ
Where Z is the number of standard deviations the due date or
target date lies from the mean or expected date.