Program Evaluation and Review Technique (PERT) 1

• Assumes an activity’s duration Program Evaluation Review

Technique (PERT)
follows a probability distribution
not a single value probabilistic
(Stochastic)
• Accounts for uncertainty in activity
duration estimates
• Provides estimates of project
duration probabilities
• Best used for highly uncertain
projects
 New product development
 Unique or first-time projects
 Research and development
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PERT (3-points estimation)
• These 3 points are Program Evaluation Review
Technique (PERT)
Optimistic Time (a) (extremely well)
Pessimistic Time (b) (extremely well)
Most likely Time (m) (probable time)
• Uses Beta Distribution Assumption or Triangle
distribution
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PERT (3-points estimation)

. hat is the probability of completing the following
project within 12 days?
Activity Predecessor a m b
A NIL 2 3 10
B A 1 2.5 7
C A 4 5 6
D B,C 0.5 1.5 5.5

PERT (3-points estimation) Calculations
Steps to find the probability
Get Te for each activity:
Get CP for project by using Te
Get Sigma for each critical activity :
Get the Variance for each critical Activity
Get The Summation of Vs (critical activities):
Get spath (standard Deviation of the CP) :
Get The Z value
spath
Get the probability form the table (normal distribution table)
4
Te = (a + 4m + b) / 6
(explained at next slide)
sactivity = (b activity –a activity) / 6
Vactivity = s2 = ((b - a) / 6) 2
Summation of Vs =Vtactivity
= spath = (summation) ½
Z = (Expected Completion Date – CP) /
 PERT (3-points estimation) 5

  
Activity Predecessor a m b Te s V=(s) 2
A NIL 2 3 10 4 8/6 1.78
B A 1 2.5 7 3 1 1.00
C A 4 5 6 5 2/6 0.11
D B,C 0.5 1.5 5.5 2 5/6 0.69
11 2.58
 
 CP= A + C + D = 11 d (of Tes)
sCP = Square Root of (Summation of Variance of Critical paths) = 2.58
sCP = (2.58) ½
= 1.6
Z = (Expected Completion Date – CP) / sCP

Z = (12 – 11) / 1.6
=0.622171

From a Z-table for standard normal distributions

Probability of completion = 71.3125

Z most of the time equals one of the 1 sigma, 2 sigma, 3 sigma, …, 6 sigma
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PERT (3-points estimation)
Step  to find Critical path of this project is:
 PERT (3-points estimation) 7

Activity Predecessor a m b Te s V=(s) 2

A NIL 2 3 10 4 8/6 1.78
B A 1 2.5 7 3 1 1.00
C A 4 5 6 5 2/6 0.11
D B,C 0.5 1.5 5.5 2 5/6 0.69
11 2.58

CP= A + C + D = 11 d (of Tes)

sCP = Square Root of (Summation of Variance of Critical paths) = 2.58
sCP = (2.58) ½
= 1.6
Z = (Expected Completion Date – CP) / sCP

Z = (12 – 11) / 1.6

=0.622171

From a Z-table for standard normal distributions

Probability of completion = 71.3125

Z most of the time equals one of the 1 sigma, 2 sigma, 3 sigma, …, 6 sigma
 Sigma and Probability Distribution 8

1. 1 Sigma (1σ) = 11  1.6 = 9.4 - 12.6 (probability of (68.2%) to be within this estimates)
2. 2 Sigma (2σ) = 11  3.2 = 7.8 - 14.2 (probability of (95.4%) to be within this estimates)
3. 3 Sigma (3σ) = 11  4.8 = 6.2 - 15.8 (probability of (99.7%) to be within this estimates)
4. 4 Sigma (4σ) = 11  6.4 = 4.6 - 17.4 (probability of (99.9%) to be within this estimates)

Te

68.2%

95.4%

99.7%

99.9%
σ
Mean
-4 -3 -2 -1 +1 +2 +3 +4

Probability Distribution Curve

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Sigma and Probability Distribution

Probability Distribution Curve

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PERT
Act. Pred. O M P
A -- 4 6 8

B -- 1 4.5 5

C A 3 3 3

D A 4 5 6

E A 0.5 1 1.5

F B,C 3 4 5

G B,C 1 1.5 5

H E,F 5 6 7

I E,F 2 5 8

J D,H 2.5 2.75 4.5

K G,I 3 5 7

1. What is the probability the project will be completed within (24) time unit?
2. What is the probability the project will be completed within (25.8) time
unit?
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PERT
Activity Expected Time Variance
A 6 4/9
B 4 4/9
C 3 0
D 5 1/9
E 1 1/36
F 4 1/9
G 2 4/9
H 6 1/9
I 5 1
J 3 1/9
K 5 4/9

ACFIK 23 2
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PERT
1. Case of 24
Vpath = VA + VC + VF + VI + VK
= 4/9 + 0 + 1/9 + 9/9+ 4/9
=2
spath = (2)1/2 = 1.414
Z = (X- CP) / spath

Z= (24 - 23)/ spath = (24-23)/1.414 = .71

From the Standard Normal Distribution table:

P = .7612

2. Case of 25.8
Probability the project will be completed within (25.8) time unit
Means 2s, so Probability = 0.5 + 95.4% / 2 = 0.977