PROGRAM EVALUATION AND REVIEW
TECHNIQUE (PERT)

Program Evaluation and Review Technique (PERT) is a scheduling method originally designed to plan a manufacturing project by employing a network of interrelated activities, coordinating optimum cost and time criteria. PERT emphasizes the relationship between the time each activity takes, the costs associated with each phase, and the resulting time and cost for the anticipated completion of the entire project.

PERT is an integrated project management system. These systems were designed to manage the complexities of major manufacturing projects, the extensive data necessary for such industrial efforts, and the time deadlines created by defense industry projects. Most of these management systems developed following World War II, and each has its advantages.

PERT was first developed in 1958 by the U.S. Navy Special Projects Office on the Polaris missile system. Existing integrated planning on such a large scale was deemed inadequate, so the Navy pulled in the Lockheed Aircraft Corporation and the management consulting firm of Booz, Allen, and Hamilton. Traditional techniques such as line of balance, Gantt charts, and other systems were eliminated, and PERT evolved as a means to deal with the varied time periods it takes to finish the critical activities of an overall project.

The line of balance (LOB) management control technique collected, measured, and analyzed data to show the progress, status, and timing of production projects. It was introduced at Goodyear Tire and Rubber Company in 1941 and fully utilized during World War II in the defense industry. Even older is the Gantt chart, developed during World War I by Harvey Gantt, a pioneer in the field of scientific management. It is a visual management system, on which future time is plotted horizontally and work to be completed is indicated in a vertical line. The critical path method (CPM) evolved parallel to PERT. CPM is a mathematically ordered network of planning and scheduling project management; it was first used in 1957 by E.I. du Pont de Nemours & Co. PERT borrows some CPM applications. PERT proved to be an ideal technique for one-of-a-kind projects, using a time network analysis to manage personnel, material resources, and financial requirements. The growth of PERT paralleled the rapid expansion in the defense industry and meteoric developments in the space race. After 1960, all defense contractors adopted PERT to manage the massive one-time projects associated with the industry. Smaller businesses, awarded defense related government contracts, found it necessary to use PERT. At the same time, du Pont developed CPM, which was particularly applied in the construction industry. In the last 30 years, PERT has spread, as has CPM, as a major technique of integrated project management.

PERT centers on the concept of time and allows flexible scheduling due to variations in the amount of time it takes to complete one specific part of the project. A typical PERT network consists of activities and events. An event is the completion of one program component at a particular time. An activity is defined as the time and resources required to move from one event to another. Therefore, when events and activities are clearly defined, progress of a program is easily monitored, and the path of the project proceeds toward termination. PERT mandates that each preceding event be completed before succeeding events, and thus the final project, can be considered complete.

One key element to PERT's application is that three estimates are required because of the element of uncertainty and to provide time frames for the PERT network. These three estimates are classed as optimistic, most likely, and pessimistic, and are made for each activity of the overall project. Generally, the optimistic time estimate is the minimum time the activity will take—considering that all goes right the first time and luck holds for the project. The reverse is the pessimistic estimate, or maximum time estimate for completing the activity. This estimate takes into account Murphy's law—whatever can go wrong will—and all possible negative factors are considered when computing the estimate. The third is the most likely estimate, or the normal or realistic time an activity requires. Two other elements comprise the PERT network: the path, or critical path, and slack time. The critical path is a combination of events and activities that will necessitate the greatest expected completion time. Slack time is defined as the difference between the total expected activity time for the project and the actual time for the entire project. Slack time is the spare time experienced in the PERT network.

A vital aspect of PERT is the formula used for the calculation of expected project time. The project reads:

where T = expected completion time,
A = optimistic estimate,
M = most likely estimate,
B = pessimistic estimate.

Applying real numbers to the PERT formula, the result is as follows, where A (optimistic time) = 7 weeks; M (most likely time) = 11 weeks; B (pessimistic time) = 15 weeks:

(or T, expected completion time)

Once the expected time is computed, the critical path is established. The PERT network considers all potential variables, thus quantifying the scheduling and planning of the project. In a comprehensive view of PERT, it becomes clear that despite the fact that some steps of the process are independent, the next step will depend on the successful completion of prior steps.

Another key to PERT is to analyze and revise the data owing to a constant state of flux. Factors influencing project management take many forms, including personnel, materials, equipment and facilities, utilities, and environmental conditions. For example, absenteeism, sickness, vacations, and even strikes can affect personnel supply, or sudden changes in climatic conditions (snow, flooding from rains, etc.) may have an environmental impact. Various methods have been established to adjust the PERT network in order to allow for unpredictable situations. In recent years, computers have provided one major means of network analysis and revision, especially on larger projects. Computers are significantly useful for computations of the critical path and slack time. Smaller networks can generally be managed with manual computations and are usually developed, evaluated, and revised without great difficulty.

The basic difference in PERT and CPM is in how the diagrams are drawn. In PERT, events are placed in circles (or rectangles) to emphasize a point in time. Tasks are indicated by the lines connecting the network of events. In CPM the emphasis is on the tasks, which are placed in circles. The circles are then connected with lines to indicate the relationship between the tasks. CPM use has become more widespread than the use of PERT applications.

PERT has advantages as well as disadvantages, but time has seemingly not diminished its applicability. Planning a major network reveals potential problem areas and interdependent events that are not so obvious in conventional project development methods. One advantage is the three time estimate process, again useful in identifying difficulties as well as more effective interrelated processes. When utilizing the latest computer applications to PERT networks, managers have additional benefits with which to plan. A final advantage is the use of what is termed the management-by-exception principle, whereby data accumulated and analyzed by various means can be applied to the planning and execution of a major project. When managers have used PERT in integrated project management, experience gained is reapplied to future projects, especially in developing bids for project estimates. When appropriate costing techniques are implemented with PERT networking, the project sponsors realize significant financial benefits.

The PERT/cost system was developed to gain tighter control over actual costs of any project. PERT\cost relates actual costs to project costs. Job cost estimates are established from an activity or a group of activities on the basis of a time network. Labor and nonlabor estimates are developed for the network targeting the control of time and costs and identifying potential areas where time and cost can be traded off—all aimed at more effective, efficient project management.

As with all aspects of business, the Internet has become a powerful tool with respect to PERT. Managers can now locate PERT applications on the World Wide Web and apply them directly to the appropriate manufacturing project. In most instances, PERT diagrams are available that eliminate the estimating process and make PERT a more useful and convenient tool.

Clearly PERT is a manufacturing-based project planning and scheduling network. In many instances, managers have attempted to apply PERT principles to other types of projects, including hospital planning for such issues as costs and social security, educational planning and development, various accounting functions, and even real estate development.