Submitted By: Adnan

Roll #: 113
Class: BBA 6th
Section: C
Subject: Business Law
Submitted to: Sir Qasim
 PERT Estimation Technique

PERT (Program Evaluation Review Technique) is an estimation technique which was first

developed and applied by United States Defence establishment for their Ballistic Missile

development program. It was one of their most ambitious programs. Completion of this in time,

ahead of the other nations was critical for them. Such missile development program was filled

with huge amount of uncertainty, as it required large number supplier agencies working on new

technology development. This method of estimation which helped them build-in all the

uncertainties in their estimates and helped them to complete this program ahead of their expected

schedule.

PERT uses a three point estimation approach for a task. Any task filled with uncertainties can

have a wide range of estimate in which the task actually will get completed. Uncertainties

include both favourable conditions (opportunities) as well as unfavourable conditions (threats). 

PERT includes statistical analysis.

The 3 points of estimates are as below:

 Optimistic estimate – Estimate when all favourable things will happen (all opportunities

happen and no threats take place)

 Pessimistic estimate – Estimate when all unfavourable conditions happen (all threats

happen and no opportunities take place)

  Most Likely estimate – Estimate when both favourable and unfavourable conditions will

happen

For example, if we think about a task which involves travelling in a crowded city from a specific

location in the city to the airport. Actual time taken will depend upon the traffic condition on the

road. 

This may take optimistically 30 minutes, pessimistically 90 minutes and most likely 60 minutes.

So the range in which the travel time will fall is 30 minutes to 90 minutes. 

An average expected estimate is calculated by taking a weighted average of these 3 points of

estimates using below formula:

 E (Mean PERT Average) = (O+4ML+P)/6   (by giving more weightage to most likely

estimate)

 Standard Deviation (SD) = (P-O)/6

Actual time taken to travel will be anything within this range with the most likely duration as 60

minutes. PERT allows applying statistical concepts to study the probabilities of completing the

tasks in a particular estimate range.

 Assuming that the mean is exactly in the middle, and assuming the actual estimates will follow a

normal distribution within the extreme range of optimistic and pessimistic estimates, we can

predict the following probabilities of completing the task in certain range of time as below:
  Mean +/- 1 Standard Deviation range – Probability is 68.4%

 Mean +/- 2 Standard Deviation range – Probability is 95.5%

 Mean +/- 3 Standard Deviation range – Probability is 99.7% 

Conclusion

PERT estimation technique will be a practical approach for estimating when the tasks on hand

are filled with uncertainties, where the tasks may take up different estimates depending upon

certain conditions. Actual estimate is dependent on certain variables. PERT allows preparing a

more practical estimate by factoring the 3 point estimates into one as explained above. 

Limitations of PERT

The following are a few limitations of PERT:

 PERT requires a subjective analysis of activities and the accuracy depends on

these estimates. If team members who are finding these estimates are less

experienced or biased, it might affect the schedule.

 Managing the critical path is difficult in PERT because it might change before

the project ends.

 This is an optimistic model that assumes resources will be available.

 Updating, amending, and maintaining the PERT diagram can be time and cost

consuming.
Now, let us look at an example on PERT and Standard Deviation.

EXample

Your team members tell you that an activity you are working on is most likely to be

completed in 20 days. However, the worst case, it might take 30 days, and if all

conditions are favorable, it might be completed in 15 days.

Determine the PERT time estimate for this activity.

Solution

We need the Optimistic Time, Pessimistic Time, and Most Likely Time for the activity to

determine the PERT estimate.

The question says it is most likely that the task can be completed in 20 days, hence:

Most Likely Time = 20 days

It also says that in the worst case it may take 30 days, hence: Pessimistic Time = 30

days

Finally, it says that if all conditions are favorable, it will take 15 days to complete the

task, hence: Optimistic Time = 15 days.

Now,

PERT Estimate = [Optimistic Time + 4 X (Most Likely Time) + Pessimistic Time] / 6

= [15 + 4X20 + 30] / 6 = [15 + 80 + 30] / 6 = 125 / 6 = 20.83 days

Hence, the PERT estimate for this activity is 20.83 days.

Summary

PERT is a network diagramming technique that is used for large projects where

uncertainties are high and time is the main constraint. This tool helps project managers

to develop a sound schedule when there is little information on activity duration. In this

diagram, nodes are milestones instead of an activity. The success of PERT depends on

the experience of the professionals who have developed it. It is the job of the project

manager to remove the biases from the estimation as this can affect your PERT

schedule.