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# PERT

Regardless of the technique you use, the tendency in project estimation is to provide one number for each estimate. In other words, if you have 100 activities on your schedule, each activity would have one estimate associated with it. This is generally viewed as the "most likely" estimate. In many cases you can be more accurate by applying a simple PERT (Program Evaluation and Review Technique) model. PERT is an estimating technique that uses a weighted average of three numbers (see below) to come up with a final estimate. The most pessimistic (P) case when everything goes wrong The most optimistic (O) case where everything goes right The most likely (M) case given normal problems and opportunities

The resulting PERT estimate is calculated as (O + 4M + P)/6. This is called a "weighted average" since the most likely estimate is weighted four times as much as the other two values. You'll notice that the final PERT estimate is moved slightly toward either the optimistic or pessimistic value - depending on which one is furthest from the most likely. Generally this ends up moving the final estimate toward the worst case, since the worst case value tends to be further out from the most likely that the optimistic number. For example, let's say you estimate a piece of work to most likely take 10 hours. The best case (everything goes right) is six hours. The worst case (everything goes wrong) is 26 hours. The PERT estimate is (6 + 4(10) + 26)/6. The answer is 72/6, or 12 hours. Notice that the number was pulled a little toward the far extreme of the pessimistic estimate, but not by much, since the result is still weighted heavily toward the most likely value. You can use the PERT estimates two ways. You can provide these three estimates for all activities in your schedule or you can only use the PERT formula for those activities that are of high risk. These are the ones where you're not really sure of the estimate so there's a wide variation between the optimistic and pessimistic values. Speaking of variation - if you subtract your pessimistic value from the optimistic value and divide the result by six, you would have the standard deviation, which is a measure of the volatility of the estimate. In our example above, the standard deviation would be 3.34 ((26 - 6) / 6). The larger this standard deviation is, the less confidence you have in your estimate, since it would mean you have a large range between the optimistic and pessimistic estimates. If the standard deviation was small, it would mean you were pretty confident in your estimate, since the optimistic and pessimistic estimates would be close. Remember the PERT formula and use it to make estimates when you have a high level of uncertainly.

Activities
Activities are the fundamental work elements of a project. They are the lowest level of a work breakdown structure (WBS) and, as such, are the smallest subdivision of a project that directly concerns the project manager. Although you can divide activities into steps, an activity's primary resource is typically responsible for managing and tracking the progress of an activity's steps, while the project manager is typically responsible for managing and tracking the progress of the overall activity. You can define the following information for an activity: Activity ID and name, which enables you to uniquely identify and describe the activity Activity start and finish dates Activity calendar Activity type, duration type, and percent complete type, which are used to specify which calendar applies to an activity; whether an activity is a milestone; how to keep an activity's unit values,

duration values, and resource units/time values synchronized; and how to calculate an activity's percent complete Activity codes and values, which enable you to classify and categorize activities Constraints on the activity's scheduled start and finish dates Expenses Predecessor and successor relationships, which are used to define relationships with other activities Work products and documents and deliverables Resources Notes and feedback, which are used to communicate with the resources working on an activity Roles, which enable you to identify skill requirements for staffing the activity Steps, which divide the activity into smaller units Work breakdown structure element

## Add expenses from the Activities window

1. Choose Project, Activities. 2. Select the activity that incurs the expense. 3. Display Activity Details, then click the Expenses tab. To display the Expenses tab, click the Layout Options bar and choose Bottom Layout Options. In the Available Tabs section, select Expenses, click , then click OK.

4. Click Add, and then type a name for the expense item. 5. Double-click in the Cost Account column, then click assign, then click the Select button. . Select the cost account you want to

6. Double-click in the Expense Category column, then click . Select the category you want to assign, then click the Select button. 7. Double-click the Accrual Type column, then select the expenses accrual type. 8. Type the number of budgeted or planned units you expect the selected activity to use. 9. Type the price of each unit. The module calculates and displays the expense's budgeted or planned cost (budgeted or planned units * price/unit) in the Budgeted or Planned Cost field. 10. To enter actual expense costs already incurred by the activity, type the cost in the Actual Cost field. To automatically calculate an expense's actual cost based on the activity's planned completion percentage, mark the Auto Compute Actuals checkbox. 11. Type the name of the vendor business or organization to which the expense is payable.