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Chapter 12 Program Evaluation Review Technique: PERT

LEARNING OBJECTIVES

· 1. To define the scope and tools of project management.

· 2. Understanding the components of PERT analysis.

· 3. To understand how to use PERT for project management.

REAL WORLD SCENARIO

As the administrator of the Sunrise Care Center, a long-term care facility, Michael Sharp is preparing to add on a new assisted living wing. The wing will be built as an addition to the existing facility. There are many steps involved with building the addition, and care must be taken to fully prepare for all of them. Further, timing is vitally important, as units have already been sold to prospective patients. If the project takes longer than anticipated, there are financial implications. Mr. Sharp also needs to be aware of disruptions to ongoing care being provided in the facility. A project of this scope requires that each step be mapped out in detail and estimates be developed for completion time for each. Mr. Sharp has elected to use PERT analysis to manage the project.

This chapter presents Program Evaluation and Review Technique (PERT) and its application as a planning, scheduling, and control system to use with large scale projects. PERT was developed to support complex research and development projects. PERT provides the manager with a method to identify and sequence the many activities that comprise a complex project. It allows the manager an analytic tool to assess impacts when a change to the sequence or timing of required activities is needed. Such changes occur to finish the project by a specific date or as adjustments to changing circumstances once the project has begun.

Here we present single time estimate PERT, although other forms exist. Single time estimates create a “most probable” completion time when assessing proposed tasks. Other methods use multiple time estimates, such as optimistic and pessimistic time ranges. These may be desirable when project tasks are detailed, or when environmental factors could be an issue, such as cold weather or shipping time uncertainty. Here we examine single time estimate PERT to more easily develop the concept.

LEARNING OBJECTIVE 1: TO DEFINE THE SCOPE AND TOOLS OF PROJECT MANAGEMENT

A project is an activity done once. Building a new nursing home or modernizing a part of an existing hospital are examples of projects. Installing a new machine in a laboratory is a project. Developing a new capability, such as installing labor and delivery rooms in a hospital, is also a project. Installing a new computer system or a new computer capability to process patient accounts is a project. A project is a one-time activity intended to change the capabilities or capacity of the organization.

The antonym of a project is a program. A program is a repetitive activity. So while developing and installing a system for mothers to give birth in the same hospital room that they will use for the duration of their maternity stay is a project, using this new capability over and over again for many mothers is a program. Doing surgery in a newly renovated same day surgical suite is a program.

A project has defining attributes. It usually seeks to achieve a desired capability or capacity, and when that capability is achieved the project is, by definition, completed. As such, projects have formal beginning and ending points and do not continue past the point when the desired capability has been achieved.

Projects also evolve through many phases. Any project must move through at least three phases of development. The first is the concept phase. During this phase different ways to achieve the desired capabilities are considered and evaluated. Broadly defined project options are identified. Usually one or two of these conceptual options are taken further by gathering information and examining alternative methods to achieve the capability. Some projects spend hours or days in this phase, whereas others spend years depending on scope.

During the second, or definition phase, managers define exactly what resources are needed to achieve the desired capabilities associated with the specific project option chosen. These resources are defined in as much detail as possible. Usually a business plan or similar type of report is developed. At the completion of this phase, some type of organizational approval is sought to continue the project into its next phase. This approval may be based upon a detailed economic and/or financial analysis. In health care, some projects must also secure regulatory approvals, such as approval granted in the form of a Certificate of Need. If approvals are not received to move the project into the next phase—the project implementation phase—managers are expected to repeat the definition phase using different parameters, return to the concept phase, or are told that the organization no longer desires the capability.

The third phase is the implementation phase. During this phase of project management, resources and capabilities are installed in the organization in keeping with the intent of the overall project. It is during this phase that a project may involve new construction, buying new equipment, training staff, hiring new staff, revising job descriptions, and any other activities needed to implement the desired capability. This phase may also include an evaluation component to ensure the outcomes achieved were those planned, and if not, how the two differ and by how much. PERT is used in all phases of a project.

Projects typically involve altering existing capabilities as well as installing or implementing new capabilities. For example, expanding the capacity of a nursing home by 20% will require more rooms, beds, and staff to administer to the needs of additional residents. However, such a project may also require altering the nursing home’s existing capacity to park cars (e.g., more visitors and staff), process laundry (e.g., increased amount), feed patients and staff (e.g., more meals), and store heating oil.

As a project manager, you will have total system (or subsystem) performance responsibility (TSPR). TSPR characterizes all project management activities. As the project manager, you will be expected to install the “total package” of capabilities necessary to complete the project. Installing a new computer system that exceeds the capability of existing electrical circuits violates TSPR. Installing the equipment to do laser surgery without training the operating room staff to use the equipment violates TSPR. Consider the following example: An organization that specializes in eye and ear sub specialties contracts to provide those services to another major hospital’s emergency department. A cart containing all of the necessary equipment is installed in that hospital’s ED with the appropriate security measures (locks, etc…) and the key locations are known by all staff who would need access to the cart. Upon first use, the cart is wheeled to the hospital’s sanitation room for sterilizing which is required after each use. There it is found that the existing sterilization service volume does not accommodate a new cart and because the cart originates from an outside facility, the staff are even more reluctant to attempt to rework the schedule. In this instance the manager with project responsibility at the eye and ear facility violated TSPR by failing to consider the need for sterilization of the cart. As a result, the cart had to be transported back to the eye and ear facility after each use, which carried added cost and potential quality issues if during that time, other patients were in need of the cart. Having total system performance responsibility means defining the project to include all the capabilities needed to fully complete the project, which in turn also entails the effective integration of the project into existing work flows and capacity of the organization, or in the above example, the contracted organization.

Some projects are complex, involving many action steps, significant resources, and a number of people. However, the definition of complex is often situational. What may be complex to one organization may not be to another. Complex can also refer to the duration of a project. A project that will require 2 years to complete may be complex; a project that takes 1 day may not be considered complex.

Formal project management methods, such as PERT, are reserved for complex projects. Often these projects have significant financial implications created by the expenses associated with installing the new capability as well as the expense (e.g., lost revenue) associated with any delay in achieving the capability. Using PERT to meet the deadline to submit a Certificate of Need application may be justified by the implications associated with being late or unprepared.

Generally project activities are performed in a predetermined sequence. Some steps must occur before others can begin. For example, the framing of an addition must be complete before electrical work can begin. Further, some sequences are more efficient than others. In other instances, the timing of activities is also very important. For a project that requires a significant amount of time, it may be inappropriate to train staff as an initial step. Training needs may change over the course of the project. Some trained staff may leave before the project comes on-line. Staff may forget their training given the long gap between when training occurred and when they begin to use the skills acquired. Similarly it would be inappropriate to hire new staff for an expanded nursing home months before the staff was actually needed. PERT assists managers in identifying and sequencing all the activities that must be completed to complete the project.

Consider the project to expand a nursing home by 20%. The initial list of the needed activities or steps could include the following:

· 1. Get Certificate of Need (CON) approval.

· 2. Get zoning approval.

· 3. Hire an architect and approve plans.

· 4. Get the necessary construction financing.

· 5. Hire a construction company.

· 6. Build it.

· 7. Advertise for staff.

· 8. Interview staff.

· 9. Select staff and train.

· 10. Revise existing insurance policies.

· 11. Change the operating budget to reflect the project.

· 12. Determine the necessary new equipment, issue bids, and select the equipment.

· 13. Get the equipment delivered, unpack it, and set it up. Test equipment and secure replacements for any defective equipment.

When the steps necessary to implement project capabilities are defined, they should be listed in sequential order to the extent possible. For example, for this project we would seek CON approval before obtaining construction financing, etc. However, although some activities must be accomplished in a sequential order, other activities can be accomplished simultaneously or in parallel with others. Accomplishing activities in parallel can shorten the total time between when a project is begun and when it is completed. By authorizing and managing activities to proceed in parallel, projects can become more efficient, but also more difficult to manage and coordinate. PERT facilitates managing parallel activities, especially when the order of activities influences the overall time a project will take.

The Work Breakdown Structure

Before using PERT, any complex project must be first broken down into its component parts. Each piece of the project must be identified. A Work Breakdown Structure (WBS) is used to divide the project into appropriate and logical components and then subdivide each component of the project into even more specific parts. The WBS is a comprehensive listing of the components of the project listed in outline form. Some use a numbering system to ensure that macro as well as micro components of the project are identified and ordered. For example, the project to increase the capacity of the nursing home by 20% could be broken down into the following work breakdown structure:

· 1.0 Regulatory Approvals

· 1.1 Certificate of Need

· 1.2 Zoning

· 1.3 Fire Department

· 1.4 Highway Department

· 1.5 Building Inspection

· 1.6 Certificate of Occupancy

· 2.0 Physical Addition

· 2.1 Design

· 2.1.1 Building Design—New Space

· 2.1.1.1 Resident Rooms and Baths

· 2.1.1.2 Hallways and Storage

· 2.1.1.3 Work Stations

· 2.1.1.4 Common Areas

· 2.1.1.5 Other New Space

· 2.1.2 Changes to Existing Mechanical Systems

· 2.1.2.1 Heat

· 2.1.2.2 Fire Alarm

· 2.1.2.3 Electric

· 2.1.2.4 Telephone

· 2.1.2.5 Water

· 2.1.2.6 Air

· 2.1.2.7 Other Mechanical Systems

· 2.2 Build

· 3.0 Staff

· 3.1 Professional Staff

· 3.1.1 Registered Nurses

· 3.1.2 Licensed Practical Nurses

· 3.1.3 Social Workers

· 3.1.4 Therapists

· 3.2 Nonprofessional Staff

· 3.3 Consultants

This example only begins to illustrate the concept of a work breakdown structure. It is not the comprehensive WBS for this specific project.

Project managers, with input from many sources, create a WBS to define the project in terms of its scope and detail. A comprehensive WBS insures a comprehensive project. To create the comprehensive WBS, project managers ask what is necessary to achieve the desired project capability, categorize their answers into logical top level tasks (e.g., regulatory approvals, building design, staff, financing, etc.), and then continue to define subcomponents of each task until they feel that the project has been adequately defined in scope and detail. For example, building design could be further broken down into the subtasks of architect plans and contractor schedule. The latter could be further broken down into the subtasks of framing, plumbing needs, electrical work, dry walling, etc.

How much detail is included in the WBS is a product of managerial judgment. The WBS must be sufficiently comprehensive to include all necessary components and contain sufficient detail to guide the continued definition, implementation, and management of the project. In short, a good WBS lists all the pieces of the project.

Before the advent of PERT and similar methods in the 1960s, project managers used such a list of project activities to schedule activities. Gantt Charts, for example, listed all the activities associated with a project (i.e., WBS) on the vertical axis of a chart and used lines across a horizontal time axis to indicate when the specific activity was to begin and end.  Figure 12-1  is one simplified form of a Gantt chart.

Gantt charts provide the manager with a list of project activities and the estimated duration of each activity. These charts also provide the estimated start date as well as completion date for each activity. From a project management perspective, these charts have one serious flaw—they do not represent the relationship between and among activities. A Gantt chart does not indicate—although it does imply—which activities must precede other activities. Although these types of chart do indicate which activities can precede other activities, they fail to indicate which activities must precede other activities. PERT was developed to overcome this shortcoming.

Figure 12-1 Gantt Chart for Expansion Project

Gantt charts nonetheless remain an effective project planning and control approach for relatively simple projects. These charts provide the manager with appropriate scheduling information and a yardstick to use to compare actual experience with planned actions. Although easily created in any spreadsheet program, Gantt charts have been included in many specialized project management software packages available today.

LEARNING OBJECTIVE 2: UNDERSTANDING THE COMPONENTS OF PERT ANALYSIS

Although misnamed a “Program Evaluation Review Technique,” when it actually deals with projects, PERT is a formal method to define projects and support project management. Specifically it helps project managers to determine:

· 1. When the project will be completed.

· 2. What the scheduled start and completion date for each specific activity included in the project will be.

· 3. What activities are “critical” and must be completed exactly as scheduled to keep the project on schedule. This feature of PERT makes PERT a much more robust project planning and control system than Gantt charts.

· 4. How long “noncritical activities” can be delayed before they cause a delay in the total project.

Based upon timing and the specific activities, PERT segregates all activities into critical and noncritical activities. By definition, if the completion date of a critical activity is delayed, the completion date for the overall project will be delayed. If the completion date of a critical activity is earlier than estimated, the date for the completion of the overall project may be earlier than originally planned. Noncritical activities, by definition, do not affect the scheduled completion date of the overall project. As projects evolve and circumstances change, noncritical activities can become critical activities and vice versa.

Developing the Network Table and Diagram

When completed, a PERT network table and diagram are tabular and graphical representations that show the relationships between project activities and the time estimated for individual activities as well as for the total project.

Step 1. List All Project Activities Using the Work Breakdown Structure

Each activity should be expressed using an action verb, such as “secure a Certificate of Need,” “build the new addition,” or “train new staff.” The list needs to be comprehensive and indicate all the activities needed to complete the project. In  Table 12-1  each project activity has been modified by the addition of an action verb. Using this approach, the work breakdown structure becomes an activity list that includes all the activities that must be completed.

Table 12-1 Activity List for Project of Opening a New Clinic

Office:
	Identify site and lease
	Make modifications to site
	Install equipment
	Aquire supplies
Staff:
	Hire staff
	Train staff

Step 2. For Each Activity, Indicate Its Immediate Predecessor Activity

In this step, the order of activities is determined. Each activity should be considered separately to determine which activity or activities must occur immediately before the next. This step begins to identify the essential sequence of activities of the project. The immediate predecessor for each activity is then listed ( Table 12-2 ). For example, it is essential that the organization hires staff (E) before it trains staff (F). It is also possible that a step will have more than one immediate predecessor, such as with step D in  Table 12-2 , Acquire supplies.

Table 12-2 Activity List with Immediate Predecessors

Activity		Predecessor
A	Identify site and lease	–
B	Make modifications to site	A
C	Install equipment	B
D	Acquire supplies	A, C
E	Hire staff	A
F	Train staff	E, D

Table 12-3 Activity List with Immediate Predecessors and Time Estimates

Activity		Predecessor	Time estimate (weeks)
A	Identify site and lease	–	3
B	Make modifications to site	A	3
C	Install equipment	B	2
D	Acquire supplies	A, C	2
E	Hire staff	A	3
F	Train staff	E, D	1

Step 3. Estimate the Time It Will Take to Complete Each Activity

When estimating the time each activity will take a common unit of time such as days, weeks, or years should be used. The estimate should be a reasonable estimate and not based on “best-case” or “worst-case” scenarios ( Table 12-3 ).

Step 4. Create a Network Diagram That Includes Time Estimates

Table 12-4 PERT Project Paths and Times

Path	Path Time
A-B-C-D-F	11
A-E-F	7
A-D-F	6

After identifying the immediate predecessor activities, project “paths” can be determined. Because some activities have more than one predecessor, separate paths must be mapped out. An example of this from  Table 12-2  would be the following. All paths start at the beginning or at activity A. Activity A must precede activity B, thus a path would start A to B. However, activity A also precedes activities D and E. Here, two other paths must be started, one that runs from A to D, and one that runs from A to E. Following the A to B path, we look for activities that require B as a predecessor. We see that step C lists step B as a predecessor. This path now reads A to B to C. We continue down each path in this way until step F is reached, which is the end of the project.  Table 12-4  lists out all the paths for this project. A PERT network diagram considers each path separately and places them visually in one diagram.  Figure 12-2  shows the components of a PERT network diagram. PERT requires the use of specific symbols. Circles indicate the completion of a predecessor activity and the beginning of the next activity and lines are used to indicate relationships between activities. These are shown in  Figure 12-2 .  Figure 12-3  shows the completed network diagram for this project. The activities are labeled using their designated letter between the activity completion nodes. The time estimates for each activity are placed below. It is important that each project, and thus network diagram, have only one start and one end. Visually, all paths lead to these two nodes.

The critical path is the longest time path through the network and is determined by adding all of the individual project step time estimates for each path. From  Table 12-4 , we find that the critical path is the pathway represented by activities A, B, C, D, and F. Adding the times for each of these activities yields a total minimum project time of 11 weeks. The path containing activities A, E, and F has a total minimum completion time of 7 weeks, and the path with activities A, D, and F has a total minimum completion time of 6 weeks. The critical path is thus 11 weeks, or the longest. This means that given the time estimates of the various activities, the project cannot be done in any less than 11 weeks. If any of the activities on the critical path becomes delayed, or take longer than anticipated, the overall time of completion for the entire project will also be delayed.

Given the sequence of activities included in a PERT network, each activity has an earliest start date, which is simply the earliest time the activity can start after the project has begun. For example, activity B has an earliest start of 3 weeks and can only start after activity A has completed. Activity A is estimated to take 3 weeks to complete. Activity A, the first step in any project, by definition always has a start time of zero. The latest start time is the latest time the activity can begin without jeopardizing the total time estimated for the project. For activities on the critical path, the latest start time and the earliest start time are always the same. There is no flexibility in these start times, as any delay would delay the entire project. For activities not on the critical path, however, there may be flexibility in start times, and the earliest start time and latest start time can differ. For example, Activity E could begin as late as the seventh week without jeopardizing the 11 weeks estimated for the entire project. To calculate the latest start time for noncritical path activities, it is often easier to work backward from the end of the project. To stay within the estimated project time of 11 weeks, we would calculate the time needed to complete those steps to the end of the project, including the activity we are estimating. To do this we select the path the activity is on, because it is not on the critical path. Activity E is followed by activity F, which ends this project. Activity F takes 1 week to complete. This means that it must start at week 10 to stay on time. Activity E takes 3 weeks to complete. Therefore, the latest it can start and still end by the tenth week would be week 7.

The difference between the earliest and latest start times is called a slack time. Slack is the amount of timing flexibility that exists within an activity. It conveys the amount of time that an activity can increase without changing the estimated completion date of the overall project. Along the critical path slack equals zero. When slack is greater than zero, the activity is not on the critical path.  Table 12-5  has been updated to show slack time as well as a column designating whether the activity is on the critical path or not, a helpful, but not necessary, convention.

Table 12-5 Activity Times and Slack

Activity	Critical path?	Earliest start time (EST)	Latest start time (LST)	Slack
A	Y	0	0	0
B	Y	3	3	0
C	Y	6	6	0
D	Y	8	8	0
E	N	3	7	4
F	Y	10	10	0

Pert establishes the sequential schedule of activities that constitute the overall project. By sequencing the activities in an appropriate order and adding time estimates, the overall time necessary to complete the project can be estimated. Equally important is the identification of those activities that must be monitored to complete the overall project on schedule—activities on the critical path.

LEARNING OBJECTIVE 3: TO UNDERSTAND HOW TO USE PERT FOR PROJECT MANAGEMENT

Once developed as a project planning technique, PERT provides the manager the ability to evaluate and control the project. In projects with many activities and paths, PERT focuses the attention of the manager on those activities on the critical path. Although all activities are important and essential for the completion of the project, PERT indicates those special or critical activities that the manager must monitor and manage to complete the project within the original time estimate. If the manager can shorten the time associated with these critical activities, the completion date of the project can be shortened.

Once a project is begun, managers monitor all activities by comparing the estimated time for each activity with the actual time taken to complete an activity. The difference between the time estimated and the actual time is the variance. When the actual time is less than the original time estimate, a positive variance occurs. When the actual time is more than the original time estimates, a negative variance occurs.

Negative variances on the critical path delay the overall project. A delay is referred to as a slip or slippage. Managers must evaluate any negative variance to determine if it is associated with a critical or noncritical path activity. If slippage is related to a critical activity, the overall completion date of the project will be affected as will the date subsequent activities begin. If it is not on the critical path, then the manager must determine the impact of the activity slippage. It is important to remember that extreme slippage of an activity from the original critical path sifts the entire critical path of the network.

Some managers use “rolling wave” PERT for projects that involve long time durations. Under this approach, managers continue to update and change the original network based upon project experience (what actually happens) and new information about completion times and estimates. For example, if a snowstorm delays lumber shipments from Canada early in the project, all subsequent activities must be adjusted accordingly. Rolling wave estimates add more detail than was originally included in the network. To ensure appropriate project management, it breaks macro activities into many micro activities and monitors adherence to the revised schedule of activities.

PERT networks and charts can be cumbersome. For large projects, these charts can fill walls. To assist managers with the size of charts, some prepare PERT networks in levels. They use a master network to show large activities and individual charts to plan and control smaller or subactivities. Some organize their charts based upon the categories used in the WBS. Others are organized by scope. “Higher level” activities are those activities expressed in larger time durations, whereas “lower level” activities show the detail associated with one or more “higher level” activities.

As an evaluation and control system, PERT provides the manager the ability to monitor project activity and assess the impact of project accomplishments. It facilitates timely planning of subsequent activities and provides the manager the dual ability to monitor the micro as well as macro elements of a project.

The Time and Cost Tradeoff

Typically, but not always, a project can be shortened by adding more resources. Embedded in every time estimate is an implicit resource statement. For example, if the activity to modify the clinic site (activity B) is estimated to take 3 weeks, this could imply that it will take 3 weeks with a crew of four working 8 hours per weekday.

4 workers × 8 hours per day = 32 worker hours per day

32 worker hours per day × 15 work days = 480 worker hours

At $14 per hour, this would equal $6720 for staff time. Consider alternative ways to schedule 480 worker hours, which is the estimated amount of work that must occur regardless of how many workers or days are allotted.

If two workers were scheduled to work the 480 hours, the activity could be completed in 30 work days or 6 weeks (480 hours/2 workers × 8 hours per day = 30 days).

If six workers were scheduled to work the 480 worker hours, the activity could be completed in 10 days or 2 weeks (480 hours/6 workers × 8 hours per day = 10 days).

If four workers were used and required to work 12, in contrast to 8 hours per day, the activity could also be completed in 10 days or 2 weeks.

Requiring workers to work 12 hours per day, in contrast to 8 hours per day, would, however, change the expenses related to this activity. Mandatory overtime would have to be paid, usually at a pay rate 50% higher than the base hourly rate (i.e., 480 hours/four workers × 12 hours per day = 10 days). In this last scenario, the tradeoff between time and cost is very evident. As originally scheduled using four workers at 8 hours per day for 480 hours (15 days), the staff cost was estimated to be $6720. This is found by multiplying 480 worker hours by $14 per hour. Using four workers, 12 hours a day for 480 hours requires some calculation. Having the extra time shortens the number of days needed to 10. This means that for 10 days the four workers will receive $14 per hour for 8 hours and $21 per hour for 4 hours. In total, 320 worker hours are paid at the base rate and 160 worker hours are paid at the overtime rate. The base rate cost is now $4480 and the overtime rate cost is now $3360 for a total of $7840, an increase in our budget of $1120. In fact there are many possible tradeoffs that can occur here relative to the number of workers and the number of hours.  Table 12-6  shows the options for some of them.

Inherent in each of these alternatives are key assumptions. One is that each worker contributes equally to project tasks, e.g., that there is enough work to go around infinitely. It is the converse of the law of diminishing returns, which states that as more workers are added, the output provided by each marginal worker decreases, a more likely reality. It is unlikely that an unlimited number of workers could be added to a project, and so estimations need to consider the scope of what is needed. The second is that additional resources are available. Although more workers or equipment could help to move a project time forward, these things are not always available, and so projections again need to be made realistic.

The project manager understands the tradeoff between project time and project cost, and that there are many strategies available to complete specific project activities. Some of these options take more or less time than the time chosen for project planning. Some options involve higher costs. If cost concerns are not a factor, a project can be rescheduled using crash times, which are the quickest time that an activity can be completed given any amount of resources.

Table 12-6 Resource/Cost Tradeoffs

For a project with 480 total worker-hours
Workers	Hours per day	Days	Total cost
1	8	60.0	$ 6720
1	12	40.0	$ 7840
2	8	30.0	$ 6720
2	12	20.0	$ 7840
3	8	20.0	$ 6720
3	12	13.3	$ 7840
4	8	15.0	$ 6720
4	12	10.0	$ 7840
5	8	12.0	$ 6720
5	12	8.0	$ 7840
6	8	10.0	$ 6720
6	12	6.7	$ 7840
7	8	8.6	$ 6720
7	12	5.7	$ 7840
8	8	7.5	$ 6720
8	12	5.0	$ 7840
9	8	6.7	$ 6720
9	12	4.4	$ 7840

assumes $14 per hour and $ 21 per hour OT

Conversely, to lower project and activity costs, activities and projects can sometimes be lengthened. This will delay project completion. Even though such an action may have a system cost impact (e.g., the cost impact of a delayed opening of a new clinic), it may also lower the cost of the project. Delays may be caused by using fewer workers or less skilled workers who are paid less but require more time to complete the project. Delay may mean using manual labor to accomplish a task, even though the task could be done quicker, albeit more expensively, using an automated process with specific equipment.

The central point is to acknowledge the fundamental relationship between time and costs in project management. Within boundaries, the project manager is able to trade off one against the other.

OTHER PERT METHODS

Multiple Time Estimate Pert

Multiple time estimate PERT provides the project manager with a probabilistic range of estimates of the time required to complete project activities, or the overall project. Using multiple time estimate PERT, the manager can trade off different levels of probability (i.e., the probability of completing an activity in a specified amount of time), which is sometimes referred to as a time/probability tradeoff. Because multiple time estimate PERT utilizes optimistic, pessimistic, and most probable time estimates, there becomes a need for assessing the probabilities that are associated with each time estimate. Given the probabilistic nature of the time estimates used in PERT, other versions of PERT incorporate more formal methods for the project manager to assess time tradeoffs, cost, and the probability of completion success or failure. For most projects, however, the use of multiple time estimate PERT is overly complex and unnecessary.

PERT COST

PERT COST was developed as a companion to PERT. It adds the ability to assess and trade off time and cost at the activity level. It requires each activity to have three costs estimates: an estimate associated with the optimistic time, pessimistic time, and most probable time. Other versions use boundary limits (e.g., crash time cost estimates) as a basis for these multiple cost estimates. PERT COST is a complex system best used in very specific settings. Project managers of major construction and research and development projects use PERT COST to plan, evaluate, and control project activity. By comparing the planned value of work scheduled with the planned value of work accomplished, the project manager is able to extend the use of variance analysis to manage project costs as well as project times. Computer programs exist to develop PERT networks and support a project manager’s use of multiple time estimate PERT and PERT COST. The application of these more advanced versions of PERT is usually restricted to large-scale, highly complex projects.

CONCLUSION

PERT remains the premier method to define, plan, schedule, and control a project. It provides the manager with the ability to consider alternative plans and change plans once a project has begun.

The PERT network is the outcome of the combined insight of many. Groups of managers and experts are typically used to construct the WBS for PERT analysis. PERT also provides the ability to do “what if,” or sensitivity analyses; for example, what if the project had to be completed in 8 weeks instead of 12? “What ifs” are common questions that project managers consider.

PERT requires comprehensive project planning. During the concept and definition phase of a project, project managers construct and consider many different project approaches using PERT as a basis for moving forward. As circumstances change or develop, the project may need to be adjusted to accomplish its objectives. PERT provides the tools to do this by stressing the interrelation of project activities. It further provides an explicit tool for measuring the time/cost tradeoff inherent in any large-scale project.

EXERCISES

· 12-1 Using the information in  Table 12-7 , construct a PERT network and answer each of the following questions:

· a. What is the expected project completion data?

· b. What is the scheduled start and completion date for each activity?

· c. Which activities are on the critical path?

· d. How long can noncritical path activities be delayed without jeopardizing the overall completion date for this project?

· 12-2 Assess the impact of the following changes to the time estimates provided in question 12-1. Individually, what is the impact if:

Activity	Predecessor	New Time Estimate
O. Advertise for new staff	N	4
P. Interview for new staff	O	6
Q. Select new staff	P	1
Collectively, what is the impact of these changes?

· 12-3 As project manager for the example included in question 12-1, what would you recommend to preserve the original project completion date if activity A was reestimated to take 8 weeks, not the original 4 weeks? Provide details.

· 12-4 Develop a WBS and PERT network with no more than 20 activities for each of the following projects.

· a. Buying a car

· b. Screening 1000 school-age children for high blood pressure and reporting the results to the child’s physician

Table 12-7 Project to Convert a 20-Bed Unit in a Nursing Home to Accommodate Patients with Dementia

Activity		Predecessor	Time estimate (weeks)
A	Secure state approval	–	4
B	Identify 20-bed unit to be used	A	1
C	Move existing residents	B	1
D	Clean space	C	2
E	Develop architectural plans	A	9
F	Install new heating and ventilation systems	E	4
G	Install security systems	E	2
H	Move walls; renovate	F	4
I	Identify new equipment	A	1
J	Order new equipment	I	1
K	Unpack and inspect new equipment	J	1
L	Install new equipment	D, K, H	3
M	Reassign staff	A	1
N	Identify new staffing needs	M	1
O	Advertise for new staff	N	3
P	Interview for new staff	O	2
Q	Select new hires	P	3
R	Develop care plan protocols	M	1
S	Train staff	R, Q, M, L	1
T	Modify quality assurance plans	S	2
U	Coordinate with hospital discharge planners	T	4
V	Complete internal audit	U, G	1

Figure 12-2 PERT Diagram Components

Figure 12-3 PERT Network Diagram for New Clinic Project