Building and adjusting the project schedule is a critical project management activity. Delivering a project on time is a strong measure of a project’s success. If a project is delayed, then there are typically costs associated with each day of delay—additional expenses, higher labor costs, and lost revenues from missed business opportunities. Many techniques are used, therefore, to calculate and analyze the project schedule.
Popular Project Management Techniques
Two popular project management techniques for the scheduling phase are:
- The program evaluation and review technique (PERT)
- The critical path method (CPM)
History of these Methods
Both methods were developed due to the critical need of a better way to manage large, complex projects. The U.S. Navy developed PERT in 1958 to plan and control the Polaris missile program. In 1957, J.E. Kelly of Remington Rand and M.R. Walker of du Pont developed CPM to assist in building and maintenance of chemical plants at du Pont.
Differences between PERT & CPM
PERT and CPM are separate techniques, but are similar in the basic approach. The main difference between PERT and CPM is the method to estimate the necessary time for each activity in a project. PERT uses a probabilistic approach, and CPM uses a deterministic approach.
PERT uses three different time estimates—best case, worst case, probable case—to calculate the project schedule. It draws the result, which includes dependencies, in a variety of different formats. PERT is very useful for analyzing the relationships between tasks. PERT diagrams are still in use today, especially on very large projects.
PERT and Probabilistic Approach
In the probabilistic approach, PERT provides three time estimates for each activity that are combined to determine the expected activity completion time and variance. PERT finds the probability the entire project will be completed by a specified due date. The three times estimates for PERT are the optimist time, most likely time, and the pessimistic time.
The optimistic estimate is based on everything that is associated with the project activity lining up correctly with absolutely nothing going wrong.
The pessimistic estimate assumes that everything that can go wrong will go wrong. This is also considered the worst-case scenario.
The realistic estimate is generally accepted as what a reasonable person would think the project activity would entail. This estimate assumes that there will be some obstacles to overcome but nothing that would completely derail the project (Project Management Institute, 2004).
This method can be very helpful when working with a person that is uncomfortable provided a single value for effort or costs, but is more comfortable with providing a range of optimist time, most likely time, and the pessimistic time.
Example of the Three Times PERT
The following is an example of the three times PERT uses in a project:
Calculating Project Effort Using Three-Point Estimation
You must first develop the three data points used in the formula: the optimistic, pessimistic, and most likely cost values. These values are then plugged into the formula
Estimated time = (optimistic + 4(most likely) + pessimistic)/6
For example, if the value for optimistic time is 6 weeks, most likely time is 7 weeks and pessimistic time is 11 weeks, then the time estimate would be the following:
Estimated time = (6 + 4(7) + 11)/6
(600 + 2,800 + 1,100)/6 = 7.5
The time estimate for this project activity would be 7.5 weeks and this is the value that we would use in our project planning.
Calculating Material Costs Using Three-Point Estimation
The same formula can be also used for material costs.
For example, if the material cost value for optimistic is $500, most likely is $700, and pessimistic is $1,200; then the cost estimate would be the following:
(500 + 2,800 + 1,200)/6 = 750
Estimated time = (500 + 4(700) + 1200)/6
Estimated time = (500 + 2800 + 1200)/6 = 750
The cost estimate for this project activity would be $750 and this is the value that we would use in our project planning.
Critical Path Method
Critical Path Method (CPM) is another network diagramming and scheduling methodology. It is very similar to PERT, but it only uses one time estimate. The terms are often used interchangeably. CPM was created during the same time frame as PERT—the mid-1950s—by Morgan R. Walker and James E. Kelly for the construction of a major chemical plan.
Scheduling tools tend to use their own flavor of PERT and CPM calculations to determine the project schedule. Critical path refers to the series of tasks that, if there is a delay in any one of the tasks, will delay the end date of the project. The critical path is dependent upon task dependencies and task durations. The critical path can change throughout the life of the project.
CPM and Deterministic Approach
CPM, in a deterministic approach, estimates the completion time for each activity using a single time estimate. The estimate is referred to as the standard or normal time.
The standard or normal time is the time estimate for the completion of the activity under typical conditions. CPM may also associate a second time estimate with each activity called a crash time. Crash time is the shortest time for the completion of the activity if additional funds and resources were allocated to the activity.
Example of CPM Approach
For the same project as shown for the PERT approach, the CPM approach may indicate the times as: